Local manufacturer will pay over $3.6M to resolve allegations of COVID-era PPP loan fraud

GRAND RAPIDS, Mich. -- The United States Attorney's Office announced on Tuesday that Exo-s US LLC, a manufacturing company with plants and offices in Howe, Ind. and Coldwater, Mich., has agreed to pay $3,628,819.44 over allegations that it "falsely obtained a Paycheck Protection Program (PPP) loan for which it was ineligible."

“The PPP provided important relief to eligible small businesses and other entities,” said U.S. Attorney Mark Totten. “Today’s resolution demonstrates our continued commitment to work with the Small Business Administration to protect taxpayer dollars and investigate allegations of fraud on critical government programs.”

When the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the American Rescue Plan Act (ARPA) were passed, in 2020 and 2021, respectively, it "enacted a program to provide emergency financial assistance to individuals and businesses suffering economic and public health effects caused by the COVID-19 pandemic," the U.S. Attorney's Office said.

"ARPA continued the CARES Act’s PPP loan program administered by the Small Business Administration (SBA), creating a second-draw PPP loan that allowed eligible businesses that had previously received a PPP loan to apply for a second loan," authorities said. "One of the eligibility requirements for receiving this second-draw loan was that the applicant had no more than 300 employees, including employees of affiliated entities."

The United States government is alleging that in March 2021, Exo-s US LLC obtained a second-draw PPP loan, which the SBA subsequently forgave, even though they would not have been legally eligible for the loan due to the fact that they had more than 300 employees.

“The favorable settlement in this case is the product of enhanced efforts by federal agencies such as the Small Business Administration working with the U.S. Attorney’s Office, other federal law enforcement agencies, as well as financial institutions or private individuals who uncover misconduct to recover the lending program’s damages,” said Therese Meers, SBA General Counsel.

According to the company's website, Exo-s is a designer and manufacturer of plastic functional systems using the injection and blow molding process with over 50 years of experience.