David X. Sullivan, United States Attorney for the District of Connecticut, today announced that the Affirmative Civil Enforcement (ACE) Unit of the U.S. Attorney’s Office for the District of Connecticut recovered more than $9.2 million since June 2026 through settlement agreements resolving allegations that various companies violated the False Claims Act by providing false information to obtain millions of dollars in pandemic-related Paycheck Protection Program (PPP) loans for which they were not eligible.
“PPP loans were intended to help eligible small businesses experiencing economic uncertainty caused by the COVID-19 pandemic,” said U.S. Attorney Sullivan. “These settlements reflect our office’s strong commitment to protecting government programs and American taxpayers from fraud. We will continue to aggressively pursue and hold accountable individuals and businesses that disregard federal program requirements.”
Congress created the PPP in March 2020 under the Coronavirus Aid, Relief and Economic Security (CARES) Act. The PPP was administered by the Small Business Administration (SBA), and was intended to support small businesses struggling to pay employees and other expenses during the COVID-19 pandemic. When applying for PPP loans, borrowers were required to certify that they were eligible for the requested loans and that the information they provided was true and accurate. In December 2020, Congress approved funding for a second round of forgivable PPP loans, which became available to borrowers beginning in January 2021. This “second-draw” loan program included additional eligibility requirements. Applicants for second-draw loans were required to certify, among other things, that they had fewer than 300 employees. Applicants were required to include the employees of any foreign and domestic affiliated entities.
The District of Connecticut has entered into settlement agreements with the following companies to resolve allegations related to false certifications on their PPP loan and forgiveness applications:
Beaver Paper & Graphic Media, Inc. (“Beaver Paper”) and its affiliated companies have paid $2,933,219.96 to resolve False Claims Act (“FCA”) allegations related to a $1,203,787 second-draw PPP loan. Beaver Paper, headquartered in Duluth, Georgia, is a company that distributes sublimation paper, tissue, and graphic fabrics for the dye-sublimation and digital print industry. It is owned by Delaware-based Koehler Invest Inc. Koehler America Inc. is an affiliate of Beaver Paper and is headquartered in Stamford, Connecticut. Koehler Paper SE, Beaver Paper GmbH, and Koehler Holding SE & CO., KG are German corporations that are affiliated with and/or share certain management with Beaver Paper.
The government contends that, together with its affiliates, Beaver Paper had more than 300 employees in March 2021 and therefore was ineligible for the second-draw PPP loan. The government alleges that Beaver Paper applied for the second-draw loan despite its accountants’ advice that it was ineligible due to its size, and excluded its affiliates’ employees on the application despite knowing it was required to include them. After receiving forgiveness of the loan, the government contends that Beaver Paper and its affiliates opted to keep the loan proceeds rather than following their accountants’ advice to return the money. Instead of repaying the loan, Beaver Paper considered the forgiven loan funds a financial liability until it believed the risk of a government audit expired. This settlement resolves allegations originally brought by a lawsuit filed in the U.S. District Court for the District of Connecticut under the qui tam provisions of the FCA, captioned U.S. ex rel GNGH2 Inc. v. Koehler America, Inc., et al . (Docket No. 3:24cv1463). The relator, GNGH2 Inc., will receive $293,322 as its share of the recovery.
Fabbrica LLC (“Fabbrica”) has agreed to pay $2,581,250 to resolve FCA allegations relating to a $2,000,000 second-draw PPP loan. Fabbrica is a company that produces building façade systems and has its principal place of business in Windsor, Connecticut. Fabbrica is an indirect subsidiary of a global construction company headquartered in Italy. The government alleges that, in March 2021, Fabbrica falsely certified on a second-draw PPP loan application that it had fewer than 300 employees. The government contends that Fabbrica knew or should have known that it was ineligible for the second-draw loan because Fabbrica and its foreign affiliates collectively employed more than 300 individuals. This settlement resolves FCA allegations that were originally brought in lawsuits filed in the U.S. District Court for the District of Connecticut under the qui tam provisions of the FCA, captioned U.S. ex rel. GNGH2 Inc. v. Fabbrica LLC (Docket No. 3:24cv1004), and U.S. ex rel. Blockquote Inc. v. Fabbrica LLC (Docket No. 3:24-cv-1362). The relator, GNGH2 Inc., will receive $258,125 as its share of the recovery.
United Abrasives, Inc. has paid $3,088,605.45 to resolve FCA allegations related to a second-draw PPP loan. United Abrasives, a North Windham company, manufactures industrial-grade abrasives and accessories. It is a subsidiary of SAIT Finanziaria S.p.A., a company headquartered in Italy. The government alleges that, in February 2021, United Abrasives applied for a second-draw PPP loan for $1,983,555, falsely certifying it had fewer than 300 employees. At the time, United Abrasives and its affiliates collectively employed more than 300 employees. The government contends that United Abrasives should have known that it did not satisfy the size standards for the second-draw loan. This settlement resolves FCA allegations that were originally brought in a lawsuit filed in the U.S. District Court for the District of Connecticut under the qui tam provisions of the FCA, captioned U.S. ex rel. Daniel Foster. v. United Abrasives, Inc. (Docket No. 3:25cv1732). The relator, Daniel Foster, will receive $308,860 as its share of the recovery.
Connecticut Pharmacy, LLC (“Connecticut Pharmacy”), Connecticut Pharmacy East Rock LTC LLC (“East Rock”), Scott Wolak, and Bryan Lentini agreed to pay, on an ability to pay basis, $400,000 pursuant to the FCA to settle allegations that they made false representations in connection with the forgiveness of two first-draw PPP loans and two second-draw PPP loans. Connecticut Pharmacy and East Rock are pharmacies that service primarily a senior population of nursing homes, group homes, and hospice-at-home patients. Connecticut Pharmacy has its principal place of business in Norwalk, Connecticut. East Rock has its principal place of business in Wallingford, Connecticut. Wolak and Lentini are Connecticut residents and the majority owners of both Connecticut Pharmacy and East Rock.
Connecticut Pharmacy received a $531,700 first-draw PPP loan in April 2020 and a $448,150 second-draw PPP loan in January 2021. East Rock received a $374,100 first-draw PPP loan in April 2020 and a $334,277 second-draw PPP loan in February 2021. Connecticut Pharmacy and East Rock applied for forgiveness of those loans, and the loans were subsequently forgiven, including accrued interest, by the SBA. The government alleges that Connecticut Pharmacy, East Rock, Wolak and Lentini falsely certified on their loan forgiveness applications that the funds were used for authorized purposes, including payroll costs. Connecticut Pharmacy, East Rock, Wolak and Lentini in fact used the majority of the PPP funds to repay outstanding business loans borrowed by a separate Wolak and Lentini-owned company, which was not an authorized use of either first-draw or second-draw PPP loans. This settlement resolves allegations originally brought by a lawsuit filed in the U.S. District Court for the District of Connecticut under the qui tam provisions of the FCA, captioned U.S. ex rel Gettings and Chan v. Connecticut Pharmacy East Rock LTC, et al . (Docket No. 3:22cv348). The relators, Angela Gettings and Kawa Chan, will receive $60,000 as their share of the recovery.
National Mental Health Corps , formerly known as Health360, Inc. (“Health360”) and Particia Harrity have paid $217,978 pursuant to the FCA to settle allegations that they made false representations in connection with the receipt and forgiveness of a PPP loan. Health360, located in Newtown, Connecticut, was a non-profit entity with a stated mission to promote health equality in underserved communities. Harrity was its Chief Executive Officer. In May 2020, Health360 received a PPP loan in the amount of $137,638. Health360 applied for forgiveness of that loan in October 2020 and the loan was subsequently forgiven, including accrued interest, by the SBA.
Prior to SBA forgiving the loan, Health360 received several grants from AmeriCorps and from the U.S. Department of Health and Human Services. AmeriCorps is a federal agency that manages and funds, through grants, national service programs focused on education and health. AmeriCorps provides grants to entities such as Health360 to recruit and place AmeriCorps volunteers, generally known as “members” into national service programs. As part of that process, AmeriCorps members are provided with modest living allowances/stipends.
The government alleges that Health360 and Harrity committed fraud in several ways related to the PPP loan. Harrity falsely represented that the AmeriCorps members were its “employees” and she also falsely inflated Health360’s average monthly payroll by including the stipend payments made to the AmeriCorps members as wages. In addition, Health360 “double-dipped” from federal funds by falsely claiming that the PPP loan proceeds had been used to pay employee payroll after already having sought and received reimbursement for those same costs from federal grant money provided by AmeriCorps and the U.S. Department of Health and Human Services.
The government’s investigations were led by Assistant U.S. Attorneys Sara Kaczmarek, Anne Thidemann, and Richard Molot. U.S. Attorney Sullivan also recognized attorneys Christopher McClintock, Caitlin Kelly, and Franka Cepele of the SBA Office of General Counsel for their assistance with these investigations.
In addition, the Connecticut Pharmacy matter was investigated by the U.S. Department of Homeland Security Office of Investigations and the Health360 matter was investigated by the AmeriCorps Office of Inspector General and the U.S. Department of Health and Human Services Office of Inspector General.
On April 7, the Department of Justice announced the creation of the National Fraud Enforcement Division (“Fraud Division”). The Fraud Division is laser-focused on investigating and prosecuting those who commit fraud against the American people. The Department’s work to combat fraud supports President Trump’s Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.
Source: U.S. Attorney’s Office — Connecticut — U.S. Department of Justice press release.