Tellico Village Property Owners Association to pay $1.3 million after receiving ineligible PPP loan
The DOJ said the association applied for, received, and obtained forgiveness for the PPP loan after Congress created it in March 2020 as part of the CARES Act

KNOXVILLE, Tenn. (WVLT) - The United States Department of Justice said Tellico Village Property Owners Association (TVPOA) agreed to pay more than $1.3 million after receiving a Paycheck Protection Program, or PPP, loan it was ineligible for.

The DOJ said the association applied for, received, and obtained forgiveness for the PPP loan after Congress created it in March 2020 as part of the CARES Act.

TVPOA, a nonprofit organization, applied for and received the PPP loan in April 2020. In its application, the DOJ said the association represented that it was eligible to receive the loan. It later applied for and received forgiveness of its loan.

The DOJ said TVPOA cooperated with the United States’ investigation and said that “any misstatements in its application were inadvertent.”

The settlement, a total of $1,361,992.22, resolves a lawsuit filed under the whistleblower provisions of the False Claims Act, which allows private parties to sue on behalf of the government for false claims and receive a share of any recovery, the DOJ said.
 
DOJ: Tellico Village Property Owners Association to pay over $1.3 million after receiving PPP loan despite ineligibility
TVOPA cooperated with the federal investigation and said that any mistakes on the application were unintentional, the United States Department of Justice said.

KNOXVILLE, Tenn. — WBIR.COM-The Tellico Village Property Owners Association (TVPOA) has agreed to pay $1,361,992.22 million after it was found to receive a Paycheck Protection Program (PPP) loan that it was not actually eligible for, the United States Department of Justice said. 
 

Congress created the PPP during the pandemic to provide relief to small businesses. Although certain nonprofit organizations were eligible to receive these loans at different times throughout the program, 501(c)(4) nonprofit organizations were never eligible, according to the DOJ.

TVPOA, a (501)(c)(4) nonprofit organization applied for and received a PPP loan. The application for the loan required applicants to identify their business type from a list of eligible options or to select "other." The application also required applicants to certify that they were eligible for the loan, the DOJ said. 

On TVPOA's application, "C-Corp" was selected as the entity type. TVPOA cooperated with the federal investigation and said that any mistakes on the application were unintentional. 

The settlement between TVOPA and the U.S. resolves a lawsuit filed under the whistleblower provision of the False Claims Acts.

Previous story from May 20, 2024

According to the notice below, the Tellico Village Property Owners Association will be required to repay the federal government $1,361,922.22. Apparently, the POA was not entitled to receive federal PPP money.

See letter below.

As President of the Tellico Village Board of Directors, it is my duty to inform the property owners that an issue has arisen with the Paycheck Protection Program (PPP) loan that the POA received back in 2020. The history is as follows.

On March 27, 2020, President Trump signed the CARES Act into law. Part of this Act included the PPP program, which was intended to provide emergency assistance for small businesses affected by the pandemic. The PPP program was administered through the Small Business Administration (SBA) and authorized lenders. A primary purpose of this PPP program was to allow small businesses to protect and retain employees.

In late March 2020, the POA, through its then CFO and Controller, began working directly with an SBA-authorized lending institution (Lender) to evaluate the POA’s eligibility for a PPP loan. These former POA employees engaged significantly with Lender to review the applicable Regulations for PPP loans and interim federal guidance. Pursuant to the guidance of Lender and Lender’s outside counsel, the POA submitted an application for a PPP loan on April 15, 2020, in the amount of $1,184,200.

The POA’s application for the loan was submitted through Lender’s online portal in good faith based upon the recommendation from Lender and the limited federal guidance available at the time. Lender was one of the particular lenders authorized by the SBA to administer the PPP program. Ultimately, the POA’s loan was processed and approved by Lender as the agent for the SBA.

A key provision of the PPP program allowed participants to have their loans forgiven upon completion of certain reporting requirements. One of the primary requirements was that participants retain their existing employees and use the loan proceeds for payroll and other authorized expenditures. Through careful management, the POA was able to retain all 236 of its employees during the pandemic.

On November 2, 2020, the POA submitted documentation to request forgiveness of its PPP loan to Lender. This application was approved by Lender, and the POA’s PPP loan, plus applicable lender fees and accrued interest in the amount of $1,225,793, was ultimately forgiven by the SBA.

Nearly three (3) years later, on November 27, 2023 the POA received a letter from the U.S. Department of Justice (DOJ) claiming that the POA was not eligible for this PPP loan as it did not meet the criteria for an eligible “nonprofit organization” or “other business concern” under applicable PPP

Regulations. The letter further indicated that a formal investigation had already been initiated.

Although the investigation was confidential, it apparently was evaluating whether the POA violated the Federal False Claims Act (FCA) by applying for a loan it was not technically eligible for. Because the investigation remained confidential, the POA was prohibited by the DOJ from disclosing it to anyone other than the POA’s directors, executive management, and legal counsel. Pursuant to an FCA claim, the POA could have potentially been liable for treble damages of up to $3,677,379.00, plus civil penalties, attorneys’ fees, and interest.

Upon receipt of this letter, the POA immediately contacted our attorney, and his law firm commenced an investigation into this issue. After thorough investigation and review, the firm determined that the POA was indeed not eligible for PPP loan funding as it did not constitute either a “nonprofit organization” or “other business concern” under applicable PPP

Regulations and SBA guidance.

In January of 2024, the POA authorized our attorney to enter into negotiations with the DOJ to attempt to settle this matter. After several meetings with the DOJ, the DOJ agreed to accept the amount of $1,361,922.22 as full and final settlement of the matter. This settlement includes all interest and other expenses arising out of forgiveness of the POA’s PPP loan.

Our investigation into this matter revealed that hundreds of POAs and private country clubs around the country are being investigated for similar applications. Many of these investigations have already been settled. In fact, in one settlement in California, a POA repaid its PPP loan plus a $500,000 penalty.

This settlement, which does not include any legal penalty or enhanced damages, reflects the POA’s good faith efforts to evaluate its eligibility for the PPP loan under rapidly changing guidelines, its reliance upon an authorized SBA lender, and its timely cooperation in resolving this matter. After

evaluating, investigating, and discussing this matter, the POA Board has voted to approve this settlement. The repayment will be made out of the POA funds once the settlement is processed by the DOJ, and the POA Board is now

communicating this information to our property owners as soon as it was legally permitted to do so.

Robert Brunetti

President TVPOA Board of Directors

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