WASHINGTON, DC – In a significant legal settlement, Secession Golf Club, Inc., a country club based in Beaufort, South Carolina, has agreed to pay $1,047,991 to resolve allegations of violating the False Claims Act. The settlement stems from claims that the club improperly applied for and received a loan under the Paycheck Protection Program (PPP) despite being ineligible for such assistance.
The PPP was established through the Coronavirus, Aid, Relief, and Economic Security (CARES) Act to provide forgivable loans to eligible small businesses and nonprofits for job retention and other expenses. At the time of the loan application in 2020, organizations classified under section 501(c)(7) of the Internal Revenue Code, such as country clubs, were not eligible for PPP loans. Nonetheless, Secession Golf Club applied for a loan of $630,750, falsely certifying its eligibility and ultimately receiving full loan forgiveness.
This settlement resolves claims brought under the qui tam provisions of the False Claims Act, which allow private citizens to file lawsuits on behalf of the government. Aidan Forsyth, who filed the complaint, will receive approximately $115,279 as part of the settlement. The investigation was conducted by Assistant United States Attorney Sean M. Tepe and Auditor Timothy J. Hurley, supported by attorney Caitlin J. Kelly from the Small Business Administration (SBA).
The Department of Justice has been actively combating fraud related to COVID-19 relief programs, recently announcing the formation of the National Fraud Enforcement Division to investigate and prosecute misuse of taxpayer dollars. Residents who suspect fraudulent activity related to pandemic relief can report their concerns to the Department of Justice’s National Center for Disaster Fraud hotline.
While the claims resolved by this civil settlement are allegations only, and there has been no determination of liability, the case underscores the government’s commitment to maintaining the integrity of relief programs designed to support businesses during the ongoing economic challenges.
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