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Three Companies Settle for $13 Million Over Improper Paycheck Protection Loans
Federal authorities alleged that the firms, affiliated with a New Jersey-based holding company, falsely certified eligibility for pandemic relief funds under the Paycheck Protection Program.
Three companies affiliated with a New Jersey-linked corporate group have agreed to pay a total of $13 million plus interest to resolve allegations that they improperly received and retained funds from the federal Paycheck Protection Program (PPP), U.S. Attorney Alina Habba announced.
The companies—C&J Welding & Construction of Pennsylvania, Industrial Services Group Inc. (ISG) of South Carolina, and NexGen Industrial Services Inc. of Pennsylvania—are all indirect subsidiaries of Rema Tip Top of America, Inc., a holding company incorporated in Delaware with a wholly owned subsidiary based in New Jersey.
According to the federal government’s claims, the companies applied for and received a combined five PPP loans between April 2020 and October 2021, despite being ineligible under Small Business Administration rules. The PPP, created by Congress in March 2020, was designed to provide forgivable loans to small businesses suffering from the economic impact of the COVID-19 pandemic. Eligibility was based on employee headcounts or revenue caps, and applicants were required to certify the accuracy of their submissions and the truth of their eligibility.
Investigators allege that C&J Welding, ISG, and NexGen failed to disclose their affiliations with each other and with Rema, which caused them to exceed the size limits for PPP eligibility. This misrepresentation led to the companies receiving a total of over $8.85 million in forgiven loans and related interest, along with more than $209,000 in federal lender processing fees.
The settlement resolves a civil suit brought under the False Claims Act’s whistleblower provision, which allows private individuals to sue on the government’s behalf and share in any recovery. In this case, the whistleblower will receive approximately $2.34 million from the settlement.
Assistant U.S. Attorney Susan J. Pappy and SBA official Christopher J. McClintock led the case for the government, with support from the SBA’s Office of General Counsel. The lawsuit, United States ex rel. Scissors LLC v. Rema Tip Top of America, Inc., et al., was filed in federal court under Civil Action No. 23-20790.
The claims resolved by the settlement are allegations only; no finding of liability has been made.
