Maryland Country Club Agrees to Pay Over $1 Million to Resolve False Claims Act Allegations of Improper Receipt of Paycheck Protection Program Loan

WASHINGTON - The United States Attorney's Office for the District of Columbia announced today that it has reached a civil settlement agreement with Woodholme Country Club Inc. ("Woodholme"), whereby the club will pay $1,042,500 to resolve allegations that the club violated the False Claims Act when it applied for and received a loan under the Paycheck Protection Program ("PPP") for which it was not eligible.

When Congress enacted the Coronavirus, Aid, Relief, and Economic Security ("CARES") Act, it authorized forgivable PPP loans to eligible small businesses for job retention and certain other expenses. The PPP loan program was administered by the Small Business Administration ("SBA"). At the time of the loan covered by this settlement, certain entities organized under section 501(c) of the Internal Revenue Code were not eligible for PPP loans, including section 501(c)(7) organizations.

In early 2020, Woodholme, a Maryland country club, applied for a PPP loan in the amount of $695,000 and certified that it was eligible to receive the loan even though it was ineligible as a section 501(c)(7) nonprofit organization. After receiving the PPP loan, Woodholme sought and received forgiveness of the entire loan amount. The United States contended that Woodholme knowingly falsely represented its eligibility to receive the PPP loan, and that it caused the SBA to pay lender fees to the bank that processed the loan. Woodholme will pay $1,042,500 to the United States to resolve these allegations.

The settlement resolves claims brought under the qui tam or whistleblower provisions of the False Claims Act. Under these provisions, a private party can file an action on behalf of the United States and receive a portion of the recovery. The qui tam complaint was filed by Relator Aidan Forsyth and is captioned United States ex rel. Aidan Forsyth v. Woodholme Country Club Inc., et al., Civ. A. No. 24-1175 (D.D.C.). Mr. Forsyth will receive a total share of approximately $104,250 in connection with the settlement.

The civil settlement resulted from an investigation by Assistant United States Attorney Sean M. Tepe and Auditor Timothy C. Hurley with the support of attorney Caitlin J. Kelly of SBA's Office of the General Counsel.

Tips and complaint regarding potential fraud affecting COVID-19 government relief programs can be reported by calling the Department of Justice's National Center for Disaster Fraud (NCDF) Hotline at (866) 720-5721 or by submitting a NCDF Web Complaint form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

The claims resolved by the civil settlement are allegations only, and there has been no determination of liability.