One of Rochester’s most prominent social clubs and, separately, one of the area’s largest automobile dealership group allegedly filed false claims for pandemic relief loans.
The cases involving alleged abuse of the Paycheck Protection Program loan program arise from a newly announced settlement and unsealed federal complaint.
Genesee Valley Club has agreed to pay $1.05 million to resolve allegations that it falsely claimed eligibility to obtain a $705,000 loan, then sought and received forgiveness for the loan amount. Federal authorities argued private clubs that limited membership for any reason other than capacity were ineligible.
Separately, Mary Catherine “Kitty” Van Bortel, along with at least five dealerships within the family’s Van Bortel Automotive Group, are accused of filing fraudulent PPP loan and loan forgiveness applications totaling more than $7.3 million.
The complaint was brought by California-based PPP Eligibility Experts LLC, an entity formed to identify potential fraud. Filed under seal in October, the complaint was unsealed this week at the request of the federal government, and first reported by the Rochester Business Journal.
“The Paycheck Protection Program was designed to support small business during the COVID-19 Pandemic,” U.S. Attorney Michael DiGiacomo said in a statement. “As evidenced by the numerous settlements we have obtained involving PPP loans, this office continues to work tirelessly to recover taxpayer dollars that were improperly obtained by ineligible entities.”
In a statement, Genesee Valley Club President Tom Hildebrandt said the club would repair the loan that was “approved and forgiven by the government in error.” He said the 140-year-old club anticipates no adverse effects on operations or employment.
A message left with Van Bortel’s attorney was not immediately returned.
In the Van Bortel case, PPP Eligibility Experts is proceeding on the government’s behalf, after the U.S. Attorney’s Office declined to intervene. However, court records show federal authorities have sought additional time to consider doing so. That request was filed under seal because it discusses “the content and extent of the investigation,” records show.
According to the complaint, Van Bortel should have reported the collective size of its operations but instead reported individual dealerships in its loan requests. That allowed them to obtain the loans and their lender Canandaigua National Bank and Trust Co. to collect tens of thousands of dollars in processing fees.
“Defendants knowingly made false statements about their size when they did not identify or otherwise provide information on all affiliated entities in their PPP loan applications,” the complaint reads. “Without these false statements, the United States would not have provided defendants with the millions of dollars in PPP loans the defendants received.”
