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Springfield company to pay more than $1.2 million over pandemic loan it was ineligible for

Prefere Melamines LLC admitted it reported 36 employees on a 2021 Paycheck Protection Program application, when its German parent company and affiliates brought the total above the program's 300-employee limit.

Prefere Melamines LLC, a company headquartered in Springfield, Mass., has agreed to pay $1,247,744 to resolve allegations that it violated the federal False Claims Act by obtaining a Paycheck Protection Program loan it was not eligible for, the U.S. attorney's office in Boston said Thursday.

As part of the settlement, Prefere admitted that it received a $799,025 second-draw PPP loan in 2021 and later sought and received full forgiveness of the loan, according to the U.S. attorney's office. In its application, the company certified that it was eligible and said it had 36 employees, including employees of its affiliates.

To qualify for a second-draw loan, a business had to have fewer than 300 employees, counting the employees of its foreign and domestic affiliates.

Prefere was a wholly owned subsidiary of the German company Prime MidCo GmbH at the time. Once the employees of Prime MidCo and its affiliates were counted, Prefere had more than 300 employees and did not qualify for the loan, according to the facts the company admitted.

The Paycheck Protection Program offered forgivable loans to small businesses to keep workers on the payroll and cover certain approved expenses. It was created under the CARES Act, which Congress passed on March 29, 2020, and was run by the U.S. Small Business Administration. First-draw loans became available in March 2020, and a second round was announced in January 2021.

The settlement gives Prefere credit for its cooperation under Justice Department guidelines that take voluntary disclosure, cooperation and remediation into account in False Claims Act cases.

U.S. Attorney Leah B. Foley and the Small Business Administration announced the settlement.

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