A judge ordered a Woodland Hills-based corporation and its owner to pay more than $1.5 million after knowingly keeping a duplicate COVID-19 small business loan that was wrongly sent to them, federal officials announced Monday, Jan. 26.
U.S. District Court Judge Michael W. Fitzgerald granted a summary judgment saying JMG Investments Inc., a corporation that also runs a rehabilitation center, and owner Jeffrey Schwartz must pay the federal government after spending the fraudulent loan from the Paycheck Protection Program, according to the U.S. Department of Justice.
In August 2024, federal prosecutors accused JMG Investments and Schwartz of improperly receiving two PPP loans in December 2020 and not repaying the duplicate loan as required, according to the DOJ. Keeping the loan resulted in a loss to the Small Business Administration, which purchased a guaranty on the duplicate, the judge decided.
The PPP was created in 2020 to help small businesses that were struggling to afford expenses like payroll during the COVID-19 pandemic. Loan applicants were required to certify that they wouldn’t receive more than one PPP loan before Dec. 31, 2020.
“PPP loans were intended to provide critical relief to small businesses,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division in a statement. “The department is committed to pursuing those who knowingly violated the requirements of the PPP and obtained relief funds to which they were not entitled.”
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