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Trax Retail to pay about $3 million to settle PPP loan fraud allegations

The company admitted it had more than 300 employees when counted with its foreign parent and affiliates, making it ineligible for the second-draw pandemic loan it received, federal prosecutors said. A whistleblower will collect about $300,000.

Trax Retail, Inc. has agreed to pay about $3 million to settle allegations that it falsely certified to the U.S. Small Business Administration that it qualified for a Paycheck Protection Program loan, the U.S. attorney's office in Boston said Thursday.

Under the settlement, Trax admits that it received a second-draw pandemic loan in February 2021 and certified that it was eligible under the program's rules, prosecutors said. At the time it applied for the loan and later sought to have it forgiven, the company, together with its foreign parent company and affiliates, had more than 300 employees, according to the settlement. Businesses above that threshold were not eligible for second-draw loans.

The Paycheck Protection Program, created by Congress in 2020 as part of the federal pandemic relief law, offered forgivable loans to small businesses to keep workers on payroll. In guidance issued May 5, 2020, the Small Business Administration said applicants had to count the employees of their U.S. and foreign affiliates when determining whether they met the size limits.

The case began with a whistleblower complaint filed under the False Claims Act, which allows private parties to sue on the government's behalf and collect part of any recovery. The whistleblower will receive about $300,000, prosecutors said.

The settlement credits Trax for cooperating with the investigation, according to the U.S. attorney's office.

This brief was drafted by AI from a public agency press release and published by The New England Signal. Why we use AI for stories like this one.

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