Case 1:22-cv-00028-HYJ-PJG *SEALED* ECF No.1*SEALED*, PagelD.1 Filed 01/11/22 Page 1 of 16 FILED - GR UNITED STATES DISCTRICT COURT sarc cou reir FOR THE WESTERN DISTRICT OF MICHIGAN wegyl5i DISTRICT COURT Draw scan ey: UNITED STATES OF AMERICA, ex el . MACKINAC CENTER FOR PUBLIC 1:22-cv-28 POLICY, Hala ¥. Jarbou Plaintiff, CASE NO. U.S. District Judge vs JUDGE COMPLAINT AND DEMAND FOR THE MICHIGAN EDUCATION JURY TRIAL ASSOCIATION, and THE MICHIGAN FILED IN CAMERA AND UNDER EDUCATION SPECIAL SERVICES SEAL PURSUANT TO 31 USC. ASSOCIATION, §3730(b)(2) ‘Defendants. Plaintiff-Relator The Mackinac Center for Public Policy (“The Mackinac Center”), on behalf the United States of America, for its Complaint against Defendants, The” Michigan Education Association (the “MEA”) and The Michigan Education Special Services Association (“MESSA"), states the following: I. INTRODUCTION 1, This is an action to recover damages and civil penalties on behalf of the United States of America arising from false statements and claims made by Defendants or their agents ‘and employces in violation of the False Claims Act, 31 U.S.C. §§ 3729 et seq. (the “FCA”. 2, This action seeks to recover money lost when the Defendants fraudulently obtained millions of dollars in forgivable federal loans distributed under the Paycheck Protection Program (the “PPP”),Case 1:22-cv-00028-HYJ-PJG *SEALED* ECF No. 1*SEALED*, PagelD.2 Filed 01/11/22 Page 2 of 16 3. The PPP is a loan program created by the federal Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), Pub, L. No. 116-136, 134 Stat. 281 (2020). The purpose of the PPP was to help certain businesses, self-employed workers, sole proprietors, and non-profit organizations continue paying their workers in spite of economic difficulties and uncertainties created by COVID-19. 4. The CARES Act clearly stated which types of employers were eligible to apply for PPP loans. Furthermore, the United States Small Business Administration (“SBA”), which was responsible for administering the PPP program, published interim final rules, FAQs, and borrower application forms that further clarified which employers were eligible for PPP loans. 5. Non-profit corporations registered under sections S01(c)(5) and 501(¢)(9) were not among the employers eligible to receive PPP loans. 6 The MEA is @ 501(0\(5) corporation, and MESSA is a 501(c)(9) corporation. ‘Thus, Defendants were not eligible to receive PPP loans. 7. Nonetheless, Defendants submitted applications to the SBA in which they affirmatively certified that they were eligible to receive PPP loans. 8 Asa direct result of their false and fraudulent statements, Defendants collectively obtained more than $12 million in PPP loans. 9. Asa direct result of the Defendants’ false and fraudulent statements, the United States Government paid fees to process the Defendants’ fraudulent loan applications. 10. Im so doing, Defendants clearly and undeniably violated the False Claims Act, entitling the United States Government to statutory penalties and treble damages. I. THE PARTIES 11, Plaintiff-Relator The Mackinae Center is a research and educational institute that advances the principles of free markets and limited government. The Mackinac Center is a 2Case 1:22-cv-00028-HYJ-PJG *SEALED* ECF No. 1*SEALED*, PagelD.3 Filed 01/11/22 Page 3 of 16 Michigan non-profit corporation registered under $01(c)(3) of the Internal Revenue Code. The Mackinac Center's registered office is in Midland, Michigan. 12, The Michigan Education Association is a labor union representing about 120,000 teachers, education support professionals and higher-education employees throughout the state of Michigan, The MEA is a domestic non-profit corporation registered under section 501(¢)(5) of the Internal Revenue Code, The MEA’s registered agent is Michael Shoudy, and the MEA's registered office Is located at 1350 Kendale Blvd, East Lansing, MI 48823. 13. The Michigan Education Special Services Association is a voluntary employees" benefit association that provides insurance benefits to its members. MESSA is a domestic nonprofit corporation registered under section $01(cX9) of the Intemal Revenue Code. MESSA’s registered agent is Ross J. Wilson, and whose: registered office is located at 1475 Kendale Blvd, East Lansing, MI 48823. I, JURISDICTION AND VENUE 14, This Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. § 1331 and 31 U,S.C. § 3732, the latter of which specifically confers jurisdiction on this Court for actions brought pursuant to31 U.S.C. §§ 3729 and 3730. 15. This Court has personal jurisdiction over the Defendants pursuant to 31 U.S.C. § 3732 because Defendants- reside and transact business in this judicial district, and because Defendants engaged in an act proscribed by 31 U.S.C. § 3729 in this judicial district by knowingly presenting false or fraudulent claims for payment or approval, and/or knowingly making false records or statements material to false or fraudulent claims. 16. Venue is propor in the Western District of Michigan pursuant to 28 U.S.C. § 1391(b) because both Defendants reside in and transact business in this judicial district, andCase 1:22-cv-00028-HYJ-PJG *SEALED* ECF No.1*SEALED*, PagelD.4 Filed 01/11/22 Page 4 of 16 because a substantial part of the events or omissions giving rise to these claims occurred in this judicial district. Ivy. THE PPP LOAN PROGRAM 17, The Paycheck Protection Program (the “PPP") is a loan program created by the federal Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), Pub. L. No. 116-136, § 1102, 134 Stat. 286-294 (2020). Although the CARES Act was amended in May 2020 and on multiple occasions thereafier, the Defendants’ violations of the False Claims Act occurred in April 2020, and thus all citations to the CARES Act in this Complaint refer to the CARES Act as originally enacted on March 21, 2020. A. Overview of the PPP. 18, Congress ereated the PPP to help certain businesses, self-employed workers, sole proprietors, and non-profit organizations continue paying their workers in spite of the economic hardships and uncertainty created by COVID-[9. ©To that end, Congress appropriated '$349,000,000 for the PPP loan program in the CARES Act. Jd. at § 1107(a)(1), 134 Stat. 301. 19, The CARES Act placed the task of administering many aspects of the PPP on the United States Small Business Administration (the “SBA”), The SBA published interim final rules relating to the PPP on April 2, 2020, which had an effective date of April 15, 2020. (Exhibit) The SBA also published a Borrower Application Form on Aptil 2, 2020 (Exhibit 2), various FAQs, and other informational and governing documents on its website. See ny fring loans/edvid-19-relief-options/ rogeam (last accessed on January 4, 2022), 20. Under the PPP, eligible employets could apply for loans worth up to two months? of their average monthly payroll costs from the last year, plus an additional 25% of that amount.Case 1:22-cv-00028-HYJ-PJG "SEALED. aoe alas *SEALED*, PagelD.5 Filed 01/11/22 CARES Act, Pub. L. No. 116-136, § 1102(a)(2)(E), 134 Stat. 289 (2020). All loans were subject toa $10 million cap. Id. 21. Eligible employers could apply for a PPP loan by filling out the SBA's Borrower Application Form and submitting it to an SBA-approved lender, (Exhibit 2). If the application ‘was approved, the lender would issue the approved loan amount to the applicant, Each loan issued under the PPP was guaranteed by the SBA. CARES Act, Pub. L. No, 116-136, at § 1112{a)(1), 134 Stat. 309 (2020). 22. When the lender disbursed payment under the program, the lender submitted SBA Form 1502 to the SBA seeking a payment of PPP Processing fees. SBA Procedural Notice No. 5000-20091 issued February 8, 2021 (Exhibit 3). 23. For First Draw PPP Loans made before December 27, 2020, the SBA paid the lender a one percent (1%) processing fee for loans of at least $2,000,000. Id. at 1 24. Revipients who used the PPP loan money for specified purposes and who met certain requirements could apply for loan forgiveness through their lender. The full loan emount would be forgiven as long as: + The: loan proceeds are: used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8 week period after the loan is made; and + Employee and compensation levels are maintained Paycheck Protection Program (PPP) Information Sheet: Borrowers (published 3/31/2020) (available at https:/Mnome.treasury gov/systen/files/136/PPP--Fact-Sheet.pdf); ‘Sée also CARES Act, Pub. L, No. 116-136, § 1106(b), (d), 134 Stat. 298-299 (2020) 25. If the loan was forgiven, the SBA would issue payment to the lender for the amount of the forgiven loan. Id, at § 1106(c)(3), 134 Stat. 298,Case 1:22-cv-00028-HYJ-PJG *SEALED* ECF No: 1*SEALED*, PagelD.6 Filed 01/11/22 Page 6 of 16 26, Recipients who were not eligible for complete loan forgiveness were subject to a 1% interest rate and a 2-year repayment requirement. Paycheck Protection Program (PPP) Information Sheet: Borrowers (published 3/31/2020) (available at https:/home.treasury.gov/s 36/PPP--Fact-Sheet pdf). B. Eligibility to Participate in the PPP Loan was Limited to Select Entities 27. Only the following organizations were eligible to receive PPP loans under the CARES Act as originally passed: * “small business concems, {and) any business concem, nonprofit organization, veterans organization, ot Tribal business concern described in section 31(b(2\(C) ... if the business concern, nonprofit organization, veterans organization, ot Tribal business concem employs not more than the greater of...(1) 500 employees; or (II) if epplicable, the size standard in number of employees established by the Administration for the industry in which the business concem, nonprofit organization, veterans organization, or Tribal concem operates” (Pub. L. No. 116-136, § 1102(a)(2)(D)(i), 134 Stat, 288); ‘+ “sole proprietors, independent contractors, and _ self-employed individuals” who met certain requirements (fd. at § 1102(D)(i)}; and ‘© “[blusiness concems with more than 1 physical location ... that employf} not more than 500 employees per physical locations of the business concern and that fare] assigned a North American Industry ClassificationCase 1:22-cv-00028-HYJ-PJG *SEALED* ECF No.1 *SEALED*, PagelD.7 Filed 01/11/22 Page 7 of 16 System code beginning with 72 at the time of disbursal..." could also apply for PPP loans (7d. at § 1102(D)(ii))." Importantly, the CARES Act defines “non-profit organizations” as “an organization that is described in section 501(c)(3) of the Internal Revenue Code of 1986 and that is exempt from taxation under section 501(a) of such Code.” Jd. § 1102(a)(2)(A)vil), 134 Stat. 286 (emphasis added). ‘The SBA included the following statement regarding eligibility in its interim final rule published April 15, 2020, reiterating that only the following entities were eligible for PPP Joans: a. Am | eligible? You are eligible for a PPP Joan if you have 500 or fewer employees whose. principal place of residence is in the United States, or are a business that operates in a certain industry and meet the applicable SBA employee-based size standards for that industry, and: i. You are: A. A small business concern as defined in section 3 of the Small Business Act (15 U.S.C. 632), and subject to SBA's alliliation rules under 13 CFR 121.301(f) unless specifically waived in the Act; or B. A tax-exempt nonprofit organization described in section Only businesses in the accommodation and food services industry are assigned a NAICS code beginning with 72. 7Case 1:22-cv-00028-HYJ-PJG *SEALED* ECF No. 1*SEALED*, PagelD.8 Filed 01/11/22 30. \ypes of entities were eligible for PPP loans, The Borrower Appl: Page 8 of 16 501(c)(3) of the Internal Revenue Code (IRC), a tax-exempt velerans organization described in section 501(c)(19) of the IRC, Tribal business concern described in section 31(b)(2}(C) of the Small Business Act, or any other business; and You were in operation on February 15, 2020 and either had employees for whom you paid salaries and payroll taxes or paid independent contractors, as reported on a Form 1099-MISC. ‘You are also eligible for a PPP loan if you are an individual who operates under a sole proprietorship or as an independent contractor or eligible self- employed individual, and you were in operation on February 15, 2020, SBA Interim Final Rule, published April 15, 2020, located at 13 CFR Part 120, available at https:/fhome treasury. gov/system/iles/136/PPP-~ IFRN%20FINAL.paf Finally, the SBA’s borrower application form also made it clear that only certain jon Form available in April of 2020 requited applicants to “check” a box listing what type of entity they Were, ‘The only available selections were the following: Check One: 1Sole proprietor Partnership 1 C-Corp US-Comp LLC \W Independent contractor 1 Eligible self-employed individual 2 501(c)(3) nonprofit 2 501(¢)(19) veterans organization Tribal business (sec. 31(b\(2(C) of Small Business Act) U1 Other (Exhibit 2) a ‘The CARES Act, the SBA interim final rules, and the SBA Borrower Application Form thus made it abundantly clear that only certain, specific types of entities were eligible forCase 1:22-cv-00028-HYJ-PJG *SEALED* ECF No, 1*SEALED*, PagelD.9 Filed 01/11/22 Page 9 of 16 PPP loans. ‘Two types of entities thal were clearly and unmistakably not eligible for PPP loans were non-profits registered under 501(e)(S) and $01(c)(9) of the Internal Revenue Code, Eligible non-profit entities were limited to those orgenized under section S01(c)(3) of the Internal Revenue Code. V. DEFENDANTS FALSELY CERTIFIED THAT THEY WERE ELIGIBLE FOR PPP LOANS AND COLLECTIVELY OBTAINED MORE THAN S12 MILLION IN FEDERAL MONEY. 32, The SBA Borrower Application Form required applicants to make the following certifications, among others: © [have read the statements included in this form, including the Statements Required by Law and Executive Orders, and J understand them. © The Applicant is eligible to recelve a loan under the rules in effect at the time this application is submitted that have been issued by the Small Business Administration (SBA) implementing the Paycheck Protection Program under Division A, Title I of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (the Paycheck Protection Program Rule). (Exhibit 2) (emphasis added) 33. Even though the MEA is a 501(c)(S) corporation and MESSA is a 501(c)(9) corporation, both organizations submitted PPP loan applications in April 2020 in which they certified that they were “eligible to receive a loan under the rules in effect at the time this application is submitted.” 34. As a direct result of their false certifications, MESSA was approved for {$6,130,300 PPP loan on April 28, 2020, and the MEA was approved for a $6,420,500 PPP loan ‘on April 29, 2020. (Exhibit 4)Case 1:22-cv-00028-HYJ-PJG "SEALED" ECF No. 1*SEALED*, PagelD.10 Filed 01/11/22 Page 10 of 16 35, Asa direct result of their false certifications, upon information and belief, the SBA paid the Defendants’ lenders a processing fee in excess of $100,000 for processing the Defendants’ loan applications and disbursing payment under the PPP program, 36. MESSA’s and MEA’s false certifications resulted in a reduction of PPP loan funding available to eligible recipients. 37, In fact, many applicants who were eligible for PPP loans were unable to obtain or obtaining loans because the $349,000,000 initially appropriated for the PPP was delay ec exhausted within just 13 days. See htps://www.pbs.org/newshour/polities/t-took-13-days-for- the-paycheck-protection-program-to-run-out-of-money-what-comes-next (last accessed on January 4, 2022). VI. THE MACKINAC CENTER DISCOVERS THAT THE MEA AND MESSA FRAUDULENTLY OBTAINED PPP MONEY 38. ‘The SBA released data in July 2020 revealing the identity of most PPP loan recipients, as well as the amount of money each recipient received. (Exbibit 4). 39. The SBA did not release any information regarding a recipient's business type (€.g. 501(6)(3) corporation, tribal entity, etc.). Further, certain information was not provided pursuant to FOTA exemptions 4 and 6. Exemption 4 protecis “trade secrets and commercial or financial information obtained from a person {that is] privileged or confidential." 5 U.S.C. § 552(b)(4). Exemption 6 protects information when the disclosure “would constitute a clearly unwarranted invasion of personal privacy,” 5 U.S.C. § 552()(6). 40. On July 6, 2020, the Detroit News reported that the MEA had received a $6.4 million dollar PPP loan, (Exhibit 5) According to the Detroit News, MEA spokesman Doug Pratt made the following statement to the Detroit News:Case 1:22-cv-00028-HYJ-PJG *SEALED* ECF No.1 *SEALED*, PagelD.11 Filed 01/11/22 Page 11 of 16 “With 285 employees across Michigan, we're proud of the fact that we've been able to do the right thing and continue to pay employees during the pandemic, despite uncertainty ‘on the horizon...The PPP Program has helped us do that.” Id. 41, After learning that the MEA had obtained a PPP loan, The Mackinac Center ‘conducted its own investigation. ‘The Mackinac Center reviewed the SBA loan data to confirm the report, and in so doing also learned that MESSA had also received a PPP loan. 42. The Mackinac Center then reviewed Defendants’ filings with the IRS, which revealed that the MEA is a $01(c)(5) corporation and that MESSA is a 501(¢)(9) corporation, 43. ‘The Mackinac Center then filed a FOIA request with the SBA, requesting: 1. A copy of any applications for Paycheck Protection Program (PPP?) loans by the Michigan Education Association (MEA”) and Michigan Education Special Services Association (*MESSA”).. 2. Any documents in SBA’s possession which demonstrate that MEA and MESSA are eligible for PPP funding, despite being 501(€)(5) and 501(¢\9) organizations respectively. 3, Aniy documents in SBA’s possession which demonstrate that MEA’s and MESSA’s eligibility for PPP funding was not independently reviewed by the SBA, 4. Any documents provided to SBA: that altest to MEA ‘and MESSA maintain the non-profit status required to be eligible for PPP funding, (Exhibit 6) 44, ‘The SBA responded with a letter dated October 21, 2020. In relevant part, the SBA stated that “{a]ll publicly available information regarding PPP loans can be found at the following link: wwrw.sba.govippp...Please note, loan applications are filed and maintained with the Lender, and the Agency does not have those applications.” (Exhibit 7)Case 1:22-cv-00028-HYJ-PJG *SEALED ECF No. 1*SEALED*, PagelD.12 Filed 01/11/22 Page 12 of 16 45. The Mackinac Center requested comment from the MEA’s lender, Comerica Bank, but Comerica refused to comment. 46, The Mackinac Center then presented the MEA with some of its findings, and requested a comment, (Exhibit 8) MEA Spokesman Liz Boyd responded with the following statement on January 10, 2021 (Exhibit 9) At the time of applying for the PPP loans, we believed doing so. was the right decision given the guidelines available at the time and the tremendous uncertainty facing our organizations. However, as each organization independently prepared for the loan forgiveness application and reviewed final rules promulgated after the loans were funded, the organizations each believed we would be ineligible for forgiveness. As such, both MEA and MESSA paid back the PPP loans in full prior to the end of the calendar year. 47, After receiving the MEA’s statement, The Mackinac Center reviewed the MEA’s Form LM2 Labor Organization Annual Report. The Form LM2 is an annual report thal labor organizations with more than $250,000 in annual receipts must file with the U.S. Department of Labor. The MEA filed its LM2 on November 25, 2020. (Exhibit 10) The “period covered” by the LM2 was September 1, 2019 through August 31, 2020. (ld., Box 2) Schedule 9 of the LM2 is entitled “Loans Payable.” Under the heading of “Loans Obt 1ed During Period C,” the MEA listed a loan of $5,604,200, Under the heading of “Loans Owed at End of Period E”, the MEA revealed that it still owed $5,604,200. (Id., Schedule 9), This is clearly inaccurate, as the MEA’s PPP loan was for $6,420,500, and it also reveals that the MEA had not repaid its loan as of August 2020, 48. More tellingly, the SBA data regarding loans distributed with values over $150,000, which was updated on March 3, 2021, states that the MEA did not repay its PPP loan until January 14, 2021 — four days efter The Mackinac Center asked the MEA to comment on its investigation findings. (Exhibit 4, Line 407841). 12Case 1:22-cv-00028-HYJ-PJG *SEALED* ECF No. 1*SEALED*, PagelD.1 Filed 01/11/22 Page 13 of 16 49, The same SBA report does not provide any information suggesting that MESSA repaid its PPP loan. (Exhibit 4, Line 407860) 50, On November 29 2021, the MEA filed its LM2 for the period of September 1, 2020 through August 31, 2021. (Exhibit 11). Under the heading of “Loans Owed at Start of Period (B),” the MEA listed a loan of $5,604,200, Under the heading of “Repayment During Period Cash (D)(1)”, the MEA revealed that it paid $5,604,200, and claimed that it owed no ‘more loans at the end of the period. Vil. CONCLUSIONS Sl. As a result of its independent investigation, The Mackinac Center reached the following conclusions: F i, The MEA and MESSA were ineligible for PPP funding. ii, In spite of the clear limitations on which employers were eligible to participate in the PPP program, the MEA and MESSA filed borrower application forms in which they falsely certified that they were eligible for PPP loans. Asa direct result of their false claims, Defendants misappropriated more than $12 million in PPP funding. iv. When confronted with the MEA’s violation of the law, the MEA falsely claimed that it had retuned the money. Four days later, the MEA actually did return the money'to the SBA. vv. There is no evidence to suggest that MESSA has yet retumed its PPP funding. 52. At the conclusion of its investigation, and prior (o filing this Complaint, The Mackinac Center disclosed its findings to the United States Attorney’s Office. 13Case 1:22-cv-00028-HYJ-PJG *SEALED* ECF No. 1*SEALED*, PagelD.14 Filed 01/11/22 Page 14 of 16 COUNTI VIOLATION OF THE FALSE CLAIMS ACT 3LUS.C. §§3729(a)(N{A)-B) 53. The Mackinac Center realleges and incorporates by reference the allegations contained in paragraphs | through 46 above as though fully set forth herein. 54. This is a claim for treble damages and penalties under the False Claims Act, 31 U.S.C. § 3729, ef seq., as amended. 55. 31 U.S.C, § 3730 authorizes a private person to “bring a civil action for violation. of section 3729 for the person and for the United States Government.” 56. By virtue of the acts described above, including but not limited to falsely certifying that they were eligible for PPP funds, Defendants knowingly presented, or caused to be presented, false or fraudulent claims to the United States Government for payment or approval, in violation of 31 U.S.C. § 3729. 57. By virtue of the acis described above, including but not limited to falsely certifying that they were eligible for PPP funds, Defendants knowingly made or used, or caused to be made or used, false or fraudulent records or statements material to false or fraudulent claims for payment by the government, in violation of 31 U.S.C. § 3729. 58. By virtue of the acts described above, including but not limited to falsely certifying that they were eligible for PPP finds, Defendants presented a false claim for money to a lender, where the money was to be spent or used on the Government's behalf or to advance a Goverment program or interest, and the Government has provided any portion of the money requested or will reimburse the lender for any portion of the money which is requested or demanded, in violation of 31 U.S.C. § 3729. 59. Asa dircct result of Defendants’ false certifications, MESSA obtained $6,130,300 in PPP funding on April 28, 2020, and the MEA obtained $6,420,500 in PPP funding on April 4Case 1:22-cv-00028-HYJ-PJG *SEALED* ECF No.1*SEALED*, PagelD.16 Filed 01/11/22 Page 15 of 16 29, 2020, Defendants would not have received any money hed they not falsely claimed they were eligible for funding, 60. As a direct result of the Defendants’ false certifications, the SBA paid the Defendants” lenders substantial processing fees in excess of $100,000. 61. Through the Defendants’ actions, the United States has been injured and suffered damage in a substantial amount to be determined at tral. 62, Additionally, the United States is entitled to the maximum statutory penalty of not Jess than $11,655 and not more than to $23,331 for each incident of Defendants’ unlawful conduct, pursuant to 31 U.S.C. § 3729(a)(1) and 28 C.F.R. § 85.5 63, ‘The Mackinac Center’s claim is not barred by the public disclosure provision in 31 US.C. § 3730 because Plaintiff:Relator is an “original source” of much of the information provided in this Complaint, as described in 31 U.S.C. §§ 3730(¢)(4)(A)-(B). Although the simple fact that the Defendants had received PPP funding was publicly disclosed by the SBA, ‘The Mackinac Center, through its extensive independent investigation, obtained knowledge that is independent of and materially adds to the publicly disclosed allegations or transactions, and yolunterily provided the information to the Government before filing this action. 64, In the altemative, even if The Mackinac Center does not qualify as an original source, the Government has the power, under 31 U.S.C. § 3730(e4)A), to oppose any motion to dismiss based on the public disclosure ber, and, in that circumstance, the Court may not dismiss this action. PRAYER R RE) WHEREFORE, qui tam Plaintiff-Relator The Mackinac Center prays for judgment against the Defendants as follows: 15Case 1:22-cv-00028-HYJ-PJG *SEALED* ECF No.1*SEALED*, PagelD.16 Filed 01/11/22 Page 16 of 16 That Defendants return all PPP money still within their possession, plus appropriate interest; 2. That Defendants cease and desist from violating 31 U.S.C. § 3729 er seas 3. ‘That this Court enter judgment against Defendants in an amount equal to three times the amount of damages the United States has sustained because of Defendants” actions, plus a civil penalty of not less than $11,665 for each violation of 31 U.S.C. § 3729; 4, ‘That Relator be awarded the maximum amount allowed pursuant to § 3730(d) of the False Claims Act; 5. That Relator be awarded all costs of this action, including attorneys’ fees and expenses; and 6. That Relator recover such other relief as the Court deems just and proper. DEMAND FOR A JURY TRIAL Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Relator hereby demands a trial by jury, MILLER JOHNSON Attomeys for Plaintiff Dated: January 11, 2022 By Hawt “SO ~Jamles R, Peterson (P43102) Business Address: 45 Ottawa Ave, SW Suite 1100 Grand Rapids, MI 49503 Telephone: (616) 831-1700 Email: petersonj@millerjohnson.com 16 MJ_DMS 3297462102Case 1:22-cv-00028-HYJ-PJG *SEALED* ECF No. 1-1 *SEALED*, PagelD.17 Filed 01/11/22 Page 1 of 1 UNITED STATES DISCTRICT COURT FOR THE WESTERN DISTRICT OF MICHIGAN UNITED STATES OF AMERICA, ex rel MACKINAC CENTER FOR PUBLIC POLICY, Plaintiff, CASE NO, vs. JUDGE ‘THE MICHIGAN EDUCATION ASSOCIATION, and THE MICHIGAN EDUCATION SPECIAL SERVICES ASSOCIATION, Defendants. INDEX OF EXHIBITS TO COMPLAINT FILED IN CAMERA AND UNDER SEAL PURSUANT TO 31 U.S.C. $3730(b)(2) Exhibit 1. SBA interim final rules Exhibit 2. Borrower application form Exhibit3, SBA procedural notice 20091 Exhibit4. SBA spreadsheet ExhibitS, Detroit news article Exhibii6, FOIA Exhibit 7, FOIA Response Exhibit 8, Mackinae request for comment Exhibit 9. MEA response Exhibit 10, 2020 LM2 Exhibit 11, 2021 LM2 Mi_DMS S3948604v4 49992Case 1:22-cv-00028-HYJ-PIG *SEALED* ECF No. 1-2*SEALED*, PagelD.18 Filed 01/11/22 Page 1 of 8 EXHIBIT 1 EXHIBIT 1 EXHIBIT 1 EXHIBIT 1*SABPA:22-cv-00028-HYJ-PJG *SEALED* Page 2 of 8 ECF No, 1-2 *SEALED*, PagelD.19 Filed 01/11/22 zo611 Rules and Regulations ederal Register Vol et, No. 73 Wodnondey, Ap 18,2020 ‘This section of the FEDERAL REGISTER ‘ADORESSES: You may submit comments, und authority through the Act to modify ork ejay doeaneria avg geo dont by number SBA~2020-U0i8. exist loax progunse and extablsh« applicability and legal elfect, most of which Brought ‘the Federal eRulemaking Portal; ew loan to assist small ape nsecated nto coma. Mpshuweguleonagov Follow to busitnsnadolda ares He ‘Instructions for submitting comments. the OQVID=19 fs Stiespemeniesuseso. Maarten eapmatagcenmens Imac Shad ofthe Act mney ‘he Code of Feder egaton ie ey wemmoguotionagay.Ityoa wis to permits SBA to gutrates 100 prea of the Superintendent of Oaeuments, ‘SMALL BUSINESS ADMINISTRATION. 9.CFR Pant 120 [Doekat No, SBA-2020-0015] FN s24s-And ‘Business Loan Program Temporary Changes; Paycheck Protection Program’ AGENCY: U.S. Small Business Administration. form final ru This interim Fined ale Smounves the iplomeatation of Secilous 1102 ond 1106 of te Goronsvirus Ald, Rellet, and Boonomde Sv Act (CARES Acton the Ae Section 1202 ofthe Act temporarily dis anew product titled Ge “Paycheck Protection Program,” to tho Us. Smull Business Administration's (She 7) ann Pare Sector 08 ofthe Act provides for forgivenaae of othe full piocipolanoustol ‘quafying loans guaranteed uzder tho Riyenecd Protection Progr Tho ‘Pajebock Protection Programm abd loan forgiveness ere intendod to provide tcatomic relief to email business, ‘ationwige adversely impacted trdor ihe Coronavirus Diseaso 2019 (COVID 16) Btmergeney Declaration (COVID-10 inexgency Declaration) issued by Prosigant Trump on March 19,2020. toterin fine] rule outlines tho kay provisions of SBA's impleazenttlon of Fections 1102 and 1100 of tie Actin Tormal guidanes and roqucets public count. ares: jective dole: This ioteia final rule Isetlortive April 15,2020, ‘applicebity date: he tnterin foal role appitesto applications subrtted Ser ho Pryce Protncon Progam ‘rough june 30,2020, or unt Gan nude avllele for this purpose are elas. ‘Comment Due: Comments must be recelved on or before May 15, 2020. submit confidential business Enoton 8 deed nib oe Natt et worrngulationr gov, Zetex ema to ppp-fs@sba gv. Figulgat th inféeouon tt ou ‘ester tobe CBt and explain lly you felfove SBA should bold tie {Meenatfon cx confidential SBA veil {ete tn information and nae ie ‘Sil determination westhoc i wall Publish the intesaton fon FURTHER WORUATION CONTACT: Cll Contr Roposonative m 838-872-0502, or the local SBA Field Office; the list of Sftcs canbe fund at Hpi? Nm gov/ool/oca-axstance! isotopic SureLcMnrasy REORWATION: 1, Buckground Information Ou March 19, 2020, Pretdeat Younp sectoral the ongoing Coraswizes ‘Disease 2019 (COVID-19) pandemic of pues ev ad aga ‘aman a emergency decraton te, eared the Disa of Golub With the COVD=19 femergency, many smal) businesses fedehwrds are okperiencing ecnealo hardship as a direct result of the Fderel Stato, and local pie hots mowers that are being 0 TEluialv tbo pub's exposure to the vin. Thowe moasuro aon of hi Segoremmannancie wt folowentod nlcnveie and include tet corres ofrxtarant bare, ad ign il ted be ‘of public health aes, ae Sedov suche keeptig we dlatancn om elore ton ey. ‘home orders, are baing implemented, Fal aieoe derma ‘comune efi arto pli volds Sere sons d obr ‘Ga March 27,2020, the Point signed the Coronary Ail Rei, exd Etonomie Socurity Act he CARES Act or tho Aci) (Pub. 1.116136) to provide Sivrgancyanlguance and beat x. fenponoo or maivigels, aig, 28 Pilzonee lected by se corner panda: The Siall Busines ‘Administration (SBA) received funding Yo leass under anew program tiled thy "Paychck Proteetion Progam." Soction 1106 ofthe Act provider for forgivensss of ua tothe fll principal mount of gelling loan guaranteed “under the Paycheck Protection Program. ‘Amor detailed aiscusion of sections Ti wad 1108 of the Aas found is section iL below. 1, Comments and Inumesiate Effective Date ‘Tho intent ofthe Acs that BA provide rll to Americas sm Dasinesas expeditiously This tant, slong with th dramatic dacrasa in fcmnomis ecivity afonvide, provides food cause for SDA to dapance with tbe Ssdey dleyed elfotive date rovided in the Administrative Procedure Ac. Specifically, anal bsineseas need tobe Inlermrl o how to apply for oan ad the fenas of tho oan tinder aoction 1202 afthe Actas soon s possible bucause the last ciny to apply for and reedve & Jona is Jone 30, 2020, The immediate atectve dato of thier final rule ‘il Bonet al bnsnases so that thay a cediely apy eth Lown Gull understanding of loan torme Ad conditions, This intusim aa rle {Seffetive without advance notice snd publiccommont baconse encion 1114 of tho Act suthorizs SBA to tie rogulaons to implement Tide 1 of the ‘At without rqard ta note foquiements, Tai ele is boing sue {oatlow for immediate inplementation oft program, Although enters Fal ale eectiva iamitay, ccammonts eo golicited irom intersted ‘members of to public cn all aspects of {he interim fnal rue, including poeton below, These comments must be suubmilted on or before Ray 16,2020. ‘The SDA will consider thase comments and the noed for making any revisions sa rosult of these comments, LU. Temporary New Business Loan Program: Paycheck Protection Progcam Overviow "The CARES Act was onscted to provide immodiate wslstance to Fraivdoats omilios, end bustnesesCase 1:22-cv-00028-HYJ-PJG *SEALED* ECF No, 1-2*SEALED*, PagelD.20 Filed 01/11/22 20812 __Fedural Register/Vol, 85, No. 73/WcHGada9! Aprit 15, 2020/Rulos and Regulations affect bythe COVID-10 ornergn rman the provisions contain inte CARES Act are provisions cuthorizing SHA to temporarily guarantee loans ‘under a new 7(a) Loan program titled the Protection Program.” Loans guarnlend unde the Paycheck 'rolaction Programa (PEP) wil be 100 percent guaranteed by SBA, und the full Fotoal amomt of he lone jualify for loan forgiveness. Tho ° lowing outlines tbe kay provisions of ‘ePeP 1. Gonorel SBA is suthoricad to gusrentoe lowns undo the PPP through June 30, 2020. Congress wuhorzas progr: Level of '$349,000,000,000 to provide gunranteod oans under this naw 7(a) programm. The intont ofthe Act ls that SBA provide relief to America’s small busiesces ‘mpeditioualy, which is expressed fn the Actby giving el lenders delegated santhorty and stoemlining the roquiroments of the regular 7() loan fuego. or example, fnne made ‘under the PPP, SDA will not require the Tondars to comply with suction 120.180 "What are SBA’s lending citeria?.” SBA wil allow lenders to rely on Certcations of tha barrower in order to fiotarnine eligibtity of tke borrower tnd use of loan proceeds and to rely on specified documonts provided by ‘borrower to determine qualifying loan simount and eligibility far loan forgiveness, Vendors must comply with the applicable lender bligations set fords this interim fina ru, but wil be held harms fr boost flrs to comply with program exter ‘omedias for bareowor violatlans oF fiaud aro soparately addresced inthis intore nal ule. Toe roquitmments of the PPP identified in this rule tompornily snpersedo any confeting Loae Programe Requlzetaunt {as dofinod in 18 GFR 320.10). 2, What do borrowar mond to know and a. Am I ligiblet ‘You uro eligible for «PPP loan ifyou ‘hava'600 oF fewor employeas whose principal place of residence iain the Gnited sttos, oar a tusinoss that operales in #cortain industry and meet Le applicable SUA employse-based size stand for a industry, anes ‘AC Asmall business concom as dafined tn section 3 of the Small Business Act (16 US.C. 632), and subject to SBA’s afBlintion rules undor 13CFR 121.801(9 unlese specifically waived in the Act; or ‘B.A tax-exempt nonprofit orgiutzation described in section 0 ire ee Sc Soe seaman oat an a our sae garaeea eta ie ar oe ceeninearee ite seemsres Eecgeerercat setineaaateart aoe tae Taare ae. sais a. zac y ecxenriain, foe barower tt provide othae support ocumentation, such ax bank ecards, sufficient to demonstrate the quallying payroll amount, "SBA intends fo prenaply issn sdditional guidance with regard tothe ppl fits 1121208 an 121.303 to PPP loaus, 1, Could Ibe inoligshlo even if moet the eligitity nqutrtnente [af above? You ae ineligible for PPP Jaa if for exam 1, Yo ao engaged {a any ativty that teil onder, slat, oF oe ra are x household employer tindiridocls who employ bouschotd fniployeor such as andes Soutokerpers; 1 An owner of 20 porcon or more of tho equity of tie applicant is Snarid on yin on cal; rosently subject oan indictment, ‘mina information, araignmeat ot ‘ther moana by whieh formal ermine ‘chug are brought in uny jaredilion: fr lins boon convicted ofa flony within thelist five yon: or fv, You, of any iuslnoss owned ot controlled by you or azy of your ‘ets, ies ever cblalned » director unrantond Ln fan SBA or any other federal agency that is corny delinquent or has defaulted withia the leet oven years and omused loss tothe government "Tho Adaninstrato, im consultation ‘vith the Secretary of ie Treasury (the Secretary), determined that household employers ae inalgble because ey {renol burinessas, 33 GFR 120.00. Businesses that are not eligible for opiaaratamanstie Co ee tars eeserancnt a, ete ent Sonproltorgnieeors mithodzod ‘under the Act are eligible, (SOP 5010, can be found at hitps://mew.sba,gov! document/sop-50-10-5-lender- Pa 4, Thave dateemined that I am eligible, aire im aceasta ie sonar dian { posollcbred form spoded i Act. as expluined below, ater nea nei went Ten in racasnmteree.si ee seplicants a Leta icatarecnrtm A eae Uitte Ste chnowya tara, Suanuam Se eT a payroll costa (divide tne amettnt Srom opis oa YT or dg ee ay Eeaareiene tee peer rme, aes Slee ort een a anes PE coer ie eel seat eaten See eee cm ees inte soap CE a nectar sige tog Se oasis Mastin fn rox $250,000Case 1:22-cv-00028-HYJ-PJG *SEALED* ECF No, 1-2 *SEALED*, PagelD.21 Filed 01/11/22 Federal Register/Vol. 85, No. 73/Wétaed.9! Qprit 15, 2020/Rules and Regulations 20813 fil, Example t~No employous wakes ‘iors than $100,000, outstanding ‘Average yrall: $20,000, ‘lip hy 25 > $25,000 ‘Aka EIB loan 9 $50,000 = $95,000 Masi loan arouat ie $38,000 tv. Example Some employees make mors than $100,000, outstanding EDL loan of $10,000 ‘Anmal payeoll: $1,800,000 Sublract compeasation amounts in ‘excoss of an annual ealary of $100,000: $1,200,000, ‘Average monthly $100,000 Multiply by 2.5 = $250,000 ‘Adid EIDL loan of $10,000 ‘qualifying payeall: 60,000 ‘Maximum loan amount is $260,000 1. What qualifies as “payroll cost Payroll costs consist of yeasution, to employoos (whose principal place of Zecidance fe the United States) nthe orm of lary, ages, commissions ot similar corponston:eash ps o the gel sod on ployer acon past (ips or, in ne abseus records, a ressot ‘employer astimata tips) of such faith ment Tor vacate, pent, fail, Jeon or ack neve; llwance for fopanition of sis; poynent forthe provision of employee benefits ‘coneisting of group health ct oversee, fnclnlingatennca precio and ‘atime payanent feat ad lead ‘es arson om compensston of contractor or sole propria omissions, nae 0 loyoes; und for en independent from selfemployment, or similar compensation, 4g-1e there anything that is expreasly excluded from the dofinition of payroll costs? ‘Yes. The Act oxprossly wxcludes the following: 4. Ay compensation of wt employee whose peinefpalpltcn of residence te ontside of tha United Stator; 4, The compens fon af an individval employee in exente of en ennual slay 9f'$100,000, prorated as necessary; {ik Federal employmont taxes inmpoaed or withheld between February 415, 2020 and June 30, 2020, eluding the employee's und employer's share of FICA (Federal Lusurancy Contributions Aci) aad Railroad Reliroment Act texas, ‘nd income taxes req withhold from employees; and Fv, Quali fad (0 be iad sick ancl family loavo ‘wages for which a credit is allowed ‘under suctions 7001 rnd 7003 of tho Families First Coronavirus Response ‘Act (Pub. L. 116-127), 1 Do indopeauout contractors court as employer for purposes of PPP loan eueulatonst No, Independant contractors have the snip eply for Plan on tne ‘own go thoy donot count for pusposss of e borrowers PPP loaa celctlaton- {What hint to a “ramen mwa vce fate CEE muni ns poco flare ale appropri Fund it proviger low cost feed borrowers to meet eligible payroll costs snd other olighle expenses during this temporary period of economic Allocation causod by the caronavieus, Second, for lenders, tho 100 basis potats ‘offers an atzuctivefatarost rate rlativo to the cost of funding for comparable ‘muturftios. Por exauple, tho TDIC's ‘wooly nalonal avarege rate fora 24- ‘oath GD daposit product for tha week ‘of Maro 30, 2020 fs 42 basie points for nonjumbo and 4a basis points for jumbo (tips flc gov! ‘rogulations/resouzees/rates. Third the {stort vat ia higher Uban the yield on ‘Teeasury socuritiea of comparahlo xwaturity, For example, the yield on the ‘Treasury twosyanr note ts approxieataly ‘13 basis points. This higher yield ona with fact Sonn 20 100 percent, y ‘Sit the ae tt caer wil ocevea i foo fromm the SBA {o participate in ths PPP, jets “ety nm i alent eas te Cerin oan aris Adi ministre Js poqmaitaton with the Sur oman isc eaten gr temporary economic dislocations. oy mesa tthaw, Seto cp Se a Sante sea beer decease ieee rer seater at thetr PPP loans. con apy omer tan one PPP Ne-The Administator,in censiltation with the Secretary, Ghlurmined tal no eligible btfovr fay woeive more thax one PEP oun, Fide means Ut you opp fare PEP loan you should consider ‘tera anoust Wil th A lees not oxprosaly provide that sot sligikle borrower tay only recave one PPP loan, the Adirinistater bes determined, i consultation withthe Secretary, that because all PPP lous ‘ust bo mado on or before juno 30, 2020, «ane lasn por borrower Iiniation ‘gmvasary fo ip ara att many ‘ligible bazowors aa possible oben PEP oun pte il so hulp advance Congress goal ol Keeping workers pald and employed sero ho United Stan 1. Gan 1 use signatures or e-consont if ‘borrowor har multiple owners? ‘You esignelure or -consonts can be sed regardless ofthe number of wm, lstho PPP “Bsst-come, frstacrved?” Yes. 1m i ae ogni ea uns ea vou ellie ae my paymonts for six months following the Santee le increta seers pec sn ee ea mousiets oade tae eae React alan te Steyta Sma ee See asi IBlret ate oe pect eo POF ane ‘and the loan foigiveness provisions Son ehce -o, Can my PPP loan be forgiven in segments th ef nan susan tae mney io Sarsnens tare ear see cn duced Se er an igre nna coat oe Spe craton cra Papa pee Seder ee are eer Berar ttt sy peer Renee oe Seeker aaa ‘he loan, However, not more than 25 a eae Ce et eee eee provides that Recovers : ee rer a bauel ocho poral ato noCase 1:22-cv-00028-HYJ-PJG *SEALED* ECF No, 1-2*SEALED*, PagelD.22 Filed 01/11/22 20814 Federal Register/Vol. 85, No. 73/WeaSaiag! April 15, 2020/Rulos and Regulations any payuients of morgage intarest,rnt, thc ites, ie Admstetor bas ddetaminad that tho nea-payeol portion ‘ofthe forgivable loan amount ould be Tilted ta effectuate Ub core purpose of the statuto and eaguro iste programa resourues ara devoted primarily to Poyroll The Admistatretor hes fboenind in comulaon wih tho ry thal 75 pect i ant approprictopercontag in ight of tho ‘As ceeracing foc Roe ‘workers paid and omployed. Furor, tho Administrator and ta Soret believe that applying thie thrachold to Joan fongivanees is consistant with the structure ofthe Act whlch provides @ Joan amount 75 poroent of which ie squivala to oigit weoks of payroll (6 weeksi2.8 months « 86 days!76 days = 74 paroant rounded up to 75 percent). “Limiting nen-payrell ortsto'25 percent ofthe forgivaaess smount wil align those olements ofthe program, and will dso help to ensure that the fait appropriations avaiable for PPP toon Joglvenoss ae dleectad toward peyrall ‘protection, SBA vel enue additatal ‘guidance oa loan forgives. 1.Do independent contractors count at Tmplayeoe for parpores of PPP loan ferpivenoest No, fudepaodant contretors hve the cat aly fr gn ot wa fo they do nal count: of fa borrower's PPP loan forg vanes. What forms do Tnsad and ow do Sibmitan application? ‘The applicant must eu SOA Form a2 chek ton rae oe Todor must ubmit SBA Porm 2404 (Paycheck Proteion Progra lender's ‘Appllation for 1) Loan Guaranty) ‘lestronealy tn acbranes wilh logan eginennt and siti the int abd supporting doctmonatoa ities = How can PPP loans be used? “Tho ptoooade uf «PPP loan aroto be "pal conte on defined in tho At oll cost (an defined in tho. ani in 2): 3, ct lato hn onion of group Health care bonis during frie ae ty eav, tnd Insurance prema SL narigoge inert payment pot morgage propaymenls or principal paymsnte) ‘v.roat payin Te atly pepo; Yi intadlt paymons on any other debt chliatons tha were fciared tefre Febeusry 15,2020; andlor ii efinanlng on SBA IDL toon sutde btwonn jutey #4, 2020 aad Api 300 yon ace on SPA ‘IDL oes fm Jenuary 3, 2020 Tough Ape 2, 2020, yo can spy for Pet lem if your SID. loun wae act “nd fr pl cots, doesnot eect your eligbty for s PrP loa. your BDL Tom was and fr ppl cat ous BPP oun eat bo used to refine Yous EDs os Pecos om ay TSvance up to $100000 om the ton wl be datoctd foes the loan Forgiveness amount onthe PPP toe, Hoover atlas 75 parcant ofthe PEP loa proceeds shall be ured for Jal cn, Forpurpote of Roaralaing te pecntagy of ue of ‘roveeds for peytall cot tae umount ‘nay STOL tobrnced wil be ide For purpose of lens fogivnose ccunoat de pecs trod "pyc lecuout the prods used fr pay osteo ord (o date ho aot SfTogiveness, Whit he Act proven that HP Toe proceeds maybe aod fer th pupores lated above ead fart ‘llowatlo uso dscribed in wcton 7) ‘tthe Smal Pustones Act 09 US 26) the Adana elves that finite appropriations and th sacra ofthe Ad wart a requirunest Gt Serene stn porno loan proces or puyol cats, consact wile Cngee?eveerehing fon ofkeoping woster paid tnd Ecployed Ast he tailor Tiniaton on he frgieneee amount copltned one, he Admission Sobran ith the Scrtety, as Saran at 75 pean a nperoentagy Cnt el align {ifs elanent of the program wilh tho loupe 7s pre of rh tgutaleat to ght wont ielimiation ou se ftom finda sel ease athe Da we Adsted toward peel proton, fr ech oon tet is tanted deplete the Sppropdation, roperdlas of heter Potions of toon ae ater fives ‘5 What happons if PPP loan funds aro misusodt ou ng PP fd or wana ones SUA wll eet yt Ente amounts yoo knowingly reba funds for unauthorized purposes, you wil bebe oad ity uch as eharpes for asd one ‘Sarloldees meiner, o partis eee PDP funds foe unauthorized purpora, ‘SBA will buve recourse against the Shareholder, seme ot pare othe uuthorizd oe. {. Wat comtifcations need to be made? Oa the Paycheck Protection Program application, an authorized reprosentative ofthe applicant mast cerlily in good falth to al of Uze bolows* 1, The applicant was in operation on Fobeuary 19,2020 and had employoo foe whom it ald sles and paral taxns of paid independont contractors, a6. ‘on a Ferm 1000-NISC. 1 Game oneal uneranty tts loan request necessary to et th angologopernona ofthe ant, “Tho Funds wall be used fo rota workges and imatstain payroll or mike erga tes gyrase symonts, and uty paymons; ‘Endesand tat th ans are knowingly used for unauthorized he Fedoral Government may old ane lgelly isle suds fur hargan of aud. As expetced above, fot more than 25 percent of foam proceeds may be daed for non payroll ta. iv. Documentation veriying the suis affllcine elvan employecs ou payrall us well us the Soler inounts af payrall cost, covored mortgage intrest payments, cvverad tant paynisnts, and covered utilities for tho olgat woul period following this Joan will he provided tothe lendoe. Laan forgivenocs el be provided for tho som of documented peyrell casts, covered morgage interest Payments, covered Fent payments, and favored ilies. Ax explained aboro, Zot moze than 25 porcout of Ue forgivon ‘amout may befor non-payeell costs. ‘i During the period begining an ‘February 15,2020 and ending on Depember 34, 2020 the eppliant has not and will hot delve antber loan nner ths program, vile [further early thot tho {formation provided i tis aplication and tho information provided in all Syprang doses nd ora stan ‘accurate in all meterial rospocts. 1 ‘undorstand that kauwingly mt {als stotoment to obtain « guarautoud Joan from SBA is punishable under the Jaw, inelnding wndar 18 0.8.6. 1001 sand 3871 by imprisonment of aot more ‘han Give years and/or a Sine of up to $250,000; under 15 U.S.C 045 by [imprisonment of uot mare them two yours and/or afine of not more than 15,000, and, tf suhmitad to federally ‘bururod invitution, under 18 U.S.C. 2014 by imprisonment of ot more then thirty yours and/ara fine of not more hau’ $3,000,000, vee ofthe acne ot fon lke bcatarer alo Uonepreraive ‘egal onherived oe 0Case 1:22-cv-00028-HYJ-PJG *SEALED* ECF No. 1-2*SEALED*, PagelD.23 Filed 01/11/22 Feileral Register/Vol. 85, No. 73/WeAGSs%09! Sprit 18, 2020/Ruleo and Regulations 20815 vill. Lucknowlodgu that theTendor station, or tho BSA requirements of the comparmble federally reguiated will confi the aigble oan amount an equiva oder regulated institution, such may include tuning tnx documents Thave eubmitted, Snariial istinatfon; Hus boon operating s customor kdenticatfon program (CIP), Tafftaa tint these tax documents are since allosst Februsry 16, 2010, and has which includes identifying and ideatical to those submitted fo the ‘originated, maintained, and serviced verifying thoir PPP borrowers idontities Iternul Rovonuo Servic Talso ‘wore tim $80 million in business loans Gncluding eng, date of birth, address, understand, acknowledge, and ugres or othor commarcel nancial ‘sud taxpayordenification number), thatthe Lender can shara the tax ooelvables during a cansocutlve 12 and, if tat PPP borrower i a company, information with SBA'ssulhorinad month period in tha past 96 months, or following any applicable bono representatives, inchuding authorized ervice provider to any innmed | ownetship information collection eprosontativer oftho SBA Office ef dopository institction that has a contract requirements. Altraatively, if avalabl Inspector General, forthe purpose of to support such institution's lending enti may roly on the CIF of a compliance with SBA Loan Program _octiviuos in accordance with 12 U.S.C, federally insured depository institution ‘Requirements and sll SRA reviews. 1867(c) or. fodarall ven ‘er union sah 4. Whit dolenders aesdtoknow end RM ra onablched CO spat of AME ior ‘.aliid. and It.will be sutematically should also understand the nature and. & Whois oligiblote make PPP loans? qualified tinder delogated athorty by purpose of thelr PEP customer Maser Tali ctinte il re ee wigh SBA 70d lendert are op Act Section 1202 Londar Agreement profiles, Such entities wil alao dena on a dologated bas (SBA Foc 2906) utloss they currently generally have to identify and report non a diegated Vas cay no desimvied in Troubhed Cushion by evtlnsuspiclous actly to the US. piel Act provides that theauthority ene dant mpiliorar we Dopurtnto the Treasurys Fama additional lenidars dotarmined by the ea irra] enforesrsent ection en 4 ‘oir primary Federal repulatortht Yreuch entities have questions wi stator and to Seemlary tohave gus unde orunsound lending Tepard fo meting these requicemants, tw necessery quallfictions to proooes, aus they should eoutaet the MACEN close, disburse, and scrviee loans made Preeti i Rogulatery Support Section at FROG With the SBA gusranles, Since SBA is, Whet dolondors heve to doin tors fineem gov. ba audition, FinCEN bas tuthorized to make PPP loaiis up to of lon undarwelting? ‘rested » COVID-19-specifc contact 55340 hillion by Jone 30, 2020, the ach lander shall: ‘hitmel, viaa specific dropdown Adminstrator and the Secretary have i. Confirm receipt of borrower ‘category, for entities fo communicate to Jolatly detemnined thot authorizing gatifeations contained m Payeock — ‘FinCEN COVID-10.elstod conceme audditiona lendors is necessary to Proloction Proyeuna Application form while adhering to their BSA obligations, achlove the purpose ofallowingas | teyued by the Administrotion: ‘Entles that wish fo communicato cuch smany aligible borrowers as possible to ‘Confirm receipt of information. ‘COVID-19-related concerns to FinCEN recaive Joan by the June 30, 2020 demonstrating that borrower had shauld goto www.FinCBN. gow, click on oadline. ‘smiplayoo for whom the borrower paid “Need Assistanco,” end select ait THe following tyes lenders alargs an payroll txns on or aroind “COVID the abject dompelown ve been determined to meet the February 15, 2020; ist. ctitoria aud are oligiblo to make PPP Confirm tie dollar amsouat of “Each lender's underwriting obligation ‘owes unless they eurrontly are averoga monthly peyrol costs for the undar tbe PPP is lulled tothe items (oignted ia fubled Cotton ty recede yer iy eiowing shove wd worn the Peete (heir priaumy Fodoral regulator or are thy payroll documentation submitted Protection Application Form.” svbjtto a oral enforcement acon withthe borrowars aplialion:and ‘Roreware mut subi such with their primary Federal xezultoc thet “Iv, Foiow epplicuble BSA lopumontation as i wocossary to Addresees Unsafe or unsound lending eequiremants: establish eligibility such as payroll precticas Tvederally tasured deposttory reer rene, pryol ts lings, oF T.Any federally Insured depository insltutions and federally insured credit Form 1099-MISC, or income and ‘institution or any fedarally insured unions shontld continits to follow their oxpouscs from u solv proprietorship. Par credit union: ‘existing BSA protocols whien tanking borrowers that do not have may rach (cdhty Firm Ge Sytem nsttton FPP luna ober ney reiting document, he barower st a than the Federal Agricul tomers who ae lighlobomewers provide oer support ects Corio adap sa, snder tbo PPP eas or nnn EScumestaton, etch ax banirocort, 2002() hat applies tha customers will not soqulrere- fufciont to detaonstrate the qu See ee eee 1 eee edema st eee es ‘Acland i implementing regulations roquizements, wales otherwise ie ete (collectively, BSA) asa federal cated by the inrtaton'erisk-baned §, Ca Tenders rly on Losrower | regulated financial intiution, ‘pprooch to BSA compliance. jocumentation for loan forgive functionally equivalont requis Entities that wre net prosently ‘Yes. The lender dovs not nocd to thatare not cltared by this rula;and subject to the roquirememts of the DSA, conduct any verification if the borrower sy dopository ot mon-lopository should, prior to engugiug in PRP lending submits documentation supporting its ‘loancing provider taut originates, sclivities, including making PPP loans request for loan forgivaness and alteste maintain, end services business lone to either new or existing customore who that it has acqunately verified tho or othor commercial finan ate alighle borrowers under tha PPP, payments fot eligible costs. Th bloc and paricipation intents: exfablish ox ent-encacy I elise: wil old hanless soy in (AML) compliance proprm equvaiont lender thet rolie on suck borrower ptosis soqulrements under ioBSA to Ot ofa compare federly documents and eisltion from © as ufodurally regulated financial cogulated institution, Depending upon —_orrower. Tha Administrator, InCase 1:22-cv-00028-HYJ-PJG *SEALED* ECF No. 1-2*SEALED*, PagelD.24 Filed 01/11/22 20816 Federal Register/Vol. 85, No. 73/WeadGsde9! April 15, 2020/Rules and Regulations ‘SBA. Agents may aot colloct fees from torrawer since th loan wes disbucsod dotermined that onder reliance on a tho borrower ot ba paid out ofthe PPP thot the lender used to determing th borrower's rquized documents and. loan procesds, Tho total amount that an expected forgiveness amount, whic testation {s necessary end sppropristo agent may colfoct from tholender for should include Une some documentation Snlight of section 1108(h) af the Act, ssairtance to preparing an appliestion _roiulzed to apply for louu forgivoucss which probibits the Admiaisttor from for @PPP loan (including roteral tothe sue wy payroll ox flings, cancalled {aking bn enforemon ston oF Tender] may nol exceed inka, und otorpeymnct mpetigg pmaioe et loader has "One AY parceot forloms oft _oeusentation el eayeitonal recived ¢bonowerateatioa, 2 i than mali ae Adnaar ny 4. Wht foes willlendors be paid? sgsi.000 and lose than Su mllin; and TUMte to. determaine whether ‘he SUA wil pay landers foe for ‘ins perest or fano of ariasts2 expect fogvuness count is procossing EPP loans inthe following million, eee, Sea oetrn The Act authorizes the Adminisator Gene that seven woks ithe T:Five(6) pecan forloas ofnat too yoo agent oe ‘more | than $250,000; Administrator, in consultation with the ‘alotorum period of tima nepessary for ‘lender to reasonably determine the {i Thawe (8) poreent for oars of more Secretary, determined tht ths open fee eee sel Lihat the eget fee Doct fngionaoeaapount for «PPR ‘5880000 und lee than $2,000,009; lise fart above ia septa rcaan amu FPP and ‘based upon the aplication ii, Guo 1) percent for loans oft lost atomotte and tae os that eaders 124 NW progm ad the Iklihood that eet seve for making FEF lowe, tha lender. The expected forglveness 4, Dolendors have to apply the “crwlit Con PPP loans bo sold into the mount may not exceed the total elsewhere eet" Ssoandary markett snount of principal on the PPP loon or Tlvetawingnentionty “Eatriettatendiate iaietiee meee ambit stan ter tn 2ST INE ee tet gna spply ha "credit lower on (asso isinanod, AEP toes may be sold on rmovt of he PPP Ioan) within 15 Fee a ction TOI) at he Sa eee ee ene em yor ne Glo on which che Business Act (19 US.C. 690) and SHA divenuntto par value. SBA wil ‘Adminitater rocafvs compato regulations at13 GFR 120.01) guldanentogeing any advance oper tha demonstrate that te 44 What do both borrowers and Jonders Purchase for loan old in the secondary expected forgiveness smn is ndoed feed to kzow and dot erket reasonable, a, What are the Ioan terms and: 7 Can. ar purchase someorall ofthe 5, Additional Information onditions? fan in advance ‘Aion guaranteed bythe SRA ‘Voans wil bo guarateod undar tho Yes-Alender may request thatthe p"yuot tothe GAES Recoil be rrifumice hess emma conditions SBA purchase the puted oneness ea te Tapreeneey arouse) oana,with snauatafaP¥? toa orpool ofppp” madecouten wil conesuon arian changer inloding but aot Toans ot the ond of wook soven ofthe Sigioutidberty inctudaag the lest iiated to : period. Tho expected ‘Auuendiect tothe Constiuton the Tithe gusrantes percaalage s 100 fongtounene monte th amount of Aust! Late Coaalion percent. - Joan principal the lender roasonably —_1}'s¢ 200nbb-1 and bb-a, and SBA No collateral will bexeguired, expottetheoruwer fo expand on. Yegulatinn at 13 GFR 113.84, which Ml, No pereonal gusrantesé will be payroll costs, coyered miorlgays interest, Provides tuat nothing in SDA. re Eovorod nk and covered uty 7 on nga HIRD norte wil be bade vend areal foc cutee all points or one percent. after loan disbursement. At least 75 association, educational institution or . All loans wil bo provossed by all percent of the axpocted forgiveness aetaty with rarpect to the membncship Tons unde dlegsied authori and Pea’ shall ie er peel coguyas “cea npnt a ha memo led il iaparea oreo, Meded wee Tonakalapet ion pura wigesoyrirm wok determine eligibility ofthe borrower ropon Sonnected with the ctrying oo by much and the use of loan proceeds, Foquesting edvancn purchase with the fpstitution oe socity of ils zeligious re there any foo waivers? expeced forglveness amount tothe rte, SHA intend ta promptly 1 That wl be np up-bont guarntao SUA, Tapzeper hal isclade the ipa adloalgldanc wil tegen Pee hrinnes testa Aepialon Fors (GBA Form 2669684 Frogan 7 sorvan foe on-going gueeaty fo") SAY HuppOrIn docurmnilon TA vida thor guldma, it Payable to SUA: abmtttad th guch mppicason: ©, nocd, through SBA notices and a Te litogentniy rae esis opyn ee oe eich a en v There will bono foo payableto «(SUA Form 2404) and any supporting BA's websito at www.sba.gov. ‘SBA for any guarantee sold {ato the documentation; a detailed narrati ‘Questions on the Paycheck Protaction becondry maskel planing the aasnpons uae fo la) Loans may be dizected to delorminiey the exportodpivoneso tho Louder Reletions Spoctallt ix Uso Who pays the foe to an agent who gmount, the basis for thom aasumptions, local SDA Tisld Ofjco. Tus local SDA ansitts aborrowert sumptions considered, and Field Office may be found at Jittps:// Agent fees will be paid by the lender wiy alternative assumpti yore Hot, whools/local-assisionce/ conte On for Cha lender cle es y rom tho distintoffice.Case 1:22-ev-00028-HYJ-PJG *“SEALED* ECF No. 1-2*SEALED*, PagelD.25 Filed 01/11/22 Fed Register/Vol. 3 Wellies 9! April 15, 2020/ ul 10817 Compliance With Executive Orders 12008, 12988, 1319, and 13771, the Paperwork Reduction Act (44 US.C. ‘Ch. 35), aud the Rogalatory Flexibility Act (51.8.6, 601-612) . 12060 and BO. 19568 ecomainically signi ‘porposas of Execullve Orders 12066 snd expeditiously to mitigate the current ‘geanomic conditions arising from the COVID-19 omorgency. This rulo’s Aesiguation under Executive Order 1771 will be informed by public “Fas Tul i cocersacy to ompleont Soctions 1102 and 1108 of te CARES ‘Actin ordurio provide econoue relief ‘oamall bosinesees nationwide ativoaaly impacted wor the COV SwEmorgency Dacron. fntilpute thet the rl wil nut in Substantial bones to small basiesses, teirwmployees gud tbe coxmrunitios they surve Hoyrovor, soak daa to tote tha affects cf tie rn ecutive Order 12068 SDA has drafted this ro tothe cextont practicable, in accordunce-ith the standards set forth In section 3(a) Bnd af] o xoeutive Order 1205 rninimize ltgaton liinate fnbiguiy, and reduce burden, The ro ius no preeptiv orretroactv oft Baxccutve Order 13532 ‘S04 bas dotorminod that this rulo veil not have submantal dirwe lec ‘on thn Slang om th relationship Seowaon the National Govermman and {he State, or onthe distfbution af Dower and responsibilities anions tho Yarious loyars of governmoat, Therefore, SHA hos doteriminad tht tn ra has fo fodevliam implications wareeting Dreparatcn of a aera sesostomt Paperwork Reduction Ac, 44 USC. Ghoptor 35, SGA has determined that this rule vill impose rocordeoaping or reportiog Tequiotoents under Retin act PR obtained emargency approval OME Control Numt Bees-0407 for the {information collection (1) required to {implosont tho progam doselbed above This IC consist of Form 2489 {Paycheck Protecioa Program ‘Application Fore), SBA Forza 2484 {aychock Protection Program Lender's ‘Application for 7a) Loun Guaranty), and SBA Form 9508 (CARES Act to Section 1102 Lender Agremnt, and SGA For S807 (CARES ar Section 10a Londer Agwcment—Noo-Donk nd ‘Non-iured Doportoryfaltuton, Under Tho cole approved for ‘ro unt epee 90,2023, Rogolotory Fest Act (REA) toe tat wicks eee? aly eles hat wie em e029 {louee a proposod rule, orem Tle Franc secton 85900 of APA cr roth ay he agency ast prpare 2 feqalatory Sextbthy anys meets Tbreqateront of ho RFA ond publish evel ane ysis inthe Federal Register S USC, 60, 604, Spectfclly, {he EA nocmally ular agencis to deprive te fapect of arvemaling ox fallentnngypoidng gegliny itp eel Scan ast taken the onideaton of reptat imate Tossen the eso SHoctof tho uloon smell niin Tho SOA detnoo ssa ent a8 (0) propelory dca tg the size ‘Efgearde ofthe Soll Busnes ‘dministeten (SBA): 2) monproSt fae tt igs Selden goveroment futedicton wit «population of los {ha so 000, US. S013), Excapt forrachmall govornmest jason, ‘uber Slate tr lua govern ro al ntti” Sins, for poses clthe EA, inv prns ta Soul exten "ino rguement to conduct « coguntery nga nalts doe not Spy ibe i guy ate The ral wll oti promised, fave niga econ pact, eihbtesl mumbor of smal estan” $US. eto) The agency mun, Foweve publish te enatien nthe Federal Regnier tthe tins of pebltation of th ul, “along with 2 Foteeent providing to fal Sais for Suc catiction "1 tho egsucy hoad fasot waived the eqetrements a regulatory debity antysia in jon, and no other RFA exception ‘plies, the agency must prepare regulatory Soxdbllity analysis and ‘publish iLin the Federal Register at tho fimo of promulgation or, ithe rale is ‘pramulgated in response to an that makos timely ‘Compliance iapracticoble, within 180 ddays of publication ofthe final nile, § USC. 6o4(a), oon). Rulos that are axerapt from notice aud ‘comumont aro aloo oxeunpt froma the RFA requirements, including conducting a regulatory flexibility analysis, when femong oltor things tho agency for good ‘cause finds that notice and public jprocodurs are impracticable, unnecessary, ot contrary to the public ‘interest, Small Business ‘Administration's Offica of Advocacy {gulde: How to Comply with the Regulatory Flexibility Ac. Ch. p. ‘Accordingly, SBA is not to comdut a eguletory Esty analy "Authority: 15 U.S.C. 58618)(98); Coronavirus Aid, Relief, and Economic Security Act, Public Law 110-136, Section 1134, Jovlta Carranza, ‘Adnietetor. ‘kDa, 1020-97072 kd 40-28 4 ph una ecoe F ‘SMALL BUSINESS ADMINISTRATION AS CFR Part 121 {Docket Na, SBA-2020-2010) FIN S45-AHSS. Business Loan Program Temporary Changes; Paycheck Pratection Program ‘AGENCY: U.S, Small Dusiness ‘Administration, ‘ACTION: Interim final rule Suuuarf Elaewhoro in this issu of the Fotleral Reglster, the U.S. Small Business Adimizistation (SDA) ia pblisbing un ner final rl (tho Initial Ride) anpounelag tho Iinplemwalation of sections 1102 and 110s of tha Coronrvieus Aid, Rall, and ‘Eeomorole Socurity Act (CARES Act the Act, Settion 1102 of tao Ack temporary adde a new program, ted tie “Paycheck Protection Progr,” to the SRA's 7a) Loan Program, Section 1108 of th ACL proves fc forgiveness ofp tothe full pincipal araount of Tualfying loans guaranteed under the iycheck Protection "The aychock Program. Paychock Protection Program und Joan forgivoness are intendad to provide ‘ecamomnic relief to small businesees nationwide adversely tmpacted by the Coronavirus Disease 2018 (COVID-10). ‘hs {otorim nal rulo supplements the Initial Rulo with edditional yuidanco ‘ragarding the epalication of coriain affiliate rues applicable to SBA’s mplamentation of actions 1302 and 1108 of the Act and requests public ‘corament. ATES: jective dote: This interim finl rule wee April 8, 2070, Applicability dote: This interim final cule appli fo applications submitted under the Paycheck Protection Program through June 30, 2020, or until am ‘mode availublo for this purpose anv exhausted.Case 1:22-cv-00028-HYJ-PJG *SEALED* ECF No. 1-3 *SEALED*, PagelD.26 Filed 01/11/22 Page 1 of 5 EXHIBIT 2 EXHIBIT 2 EXHIBIT 2 EXHIBIT 2PaychedRaget@ctioh Program 8 oar 3245007 1:22-cv-00028-HYJ-PJG *SEALED* ECF No, 1-3*SEALED*, PagelD.27 Filed 01/11/22 @ eri soni Check One: Sole propricior UTarmentip UC-Com QSCop OLEC ‘DBA oF Tradename if Applicable ‘D Independent coutractor Q Bligible self-employed individual 5 sores) mmr © SO eKI9) vet crantation Tea tons oe S1CX2N) of Small Bosna Act) Orker Faia topiNe alae Are Beate TON GR, SN [ine Pane C) + ‘ima Conia Taal Adare Average Moaty Payiott- | $ arp of te oan a SE Gelect more than ove: Cleeyrot Chtease/ Mongpge inrrest Chutes Comer (eplin. Applicant Ownership List all owners of20% or more ofthe equity of the Applloun. Atach a separ shee Ifuecessay. SA en wll no be Geta E 5 Tas 1. Tvibe Applceaor may owazr of tbe Applica preeealy suspended, debare, proposed for dbaraea, declared Clie, ‘ole easaded om pripaon mis wanacton by any Feder deprimento agency, peso ivaledinacy — ] C] Sanity? 12. Has the Applicant any owner ofthe Applicant, or any business oped or conivalled by any ofthem, ever obtained diector CC [paris leas fom SBA or any ier Fda agety ete ued Sliguentohas deta the hot 7 Yer ad sed loss the povermen?? 2. ete Aplianr any ome ote Applian anwar ater buie, he coon ssgunt etary oder CO] sts yest ch busch an eee ceoasp oma epee es eed as abate A, 4A. tas th Apes eeived mA eoooa jury Disases Lous ete nar 31,2000 an pes azaratyes, CO ‘provide dels on a separate shot Lewd av addendum, Uoustons Shr (6) ane answered "Yes." the Ioan ill nat be enorove [ a Quettion Tea ee ee ee) ‘Sethe Applcant fan iedviua) or any individual omaing 20% roe of be equity of te Applcantsubjest Py ‘oan indctvet, criminal information, arraignment, or other means by which fom criminal charges are ‘brought it any juredieen, or presently incarcerated, or on probation or parole? Tal bere o confirm your response Yo quetion S~+ 6. Wilin de las $year, for ny felony, ha he Applicant ian evidual) or any owner of te Applicant 1) besa convicted; 2) pleaded guy 3) pleaded nolo contender: 4) been paced on previa diveron;ors)been = (] plarod on any form of parole a prabain (including probaton before judgment)? Inia bere wo artim your spre to ues > 7, Tete United Stats the principal pace of residence forall employees ofthe Applica inched inthe oa ‘Applicant's paycll calculation above? Is tue Applicant «ashi thts in tho SBA’s Freneise Directory? ag aCage 1:22-ev-00028-HYJ-PUG *SEALED* ECE No, 1-3 "SEALED", PagelD.28 Filed 01/11/22 PaychedRa¥etdcfibh Program Borrower Application Form th 3 RIZATIONS Teri that have teed he statements included in this orm, including the Statements Required by Law and Excctive Orde and I understand them. ‘The Applicant is eligible to receive 2 loan under the rules in effec at Ue time his application is submited that have been issue by the Swall Business Adiinisradoa (SBA) implementing the Faychork Protection Program under Divison A, Title I ofthe Coronavirus [Aid Relief, and Eeonamic Security Act (CARES Act) (ihe Puysheck Protection Progra Rule). The Applicsnt (1 isan independent contrary, eligibe self-employed individual, or sole proprietor of (2) employs no more shan the greater of $00 or employees or, i wppicable, the size standard in number of employees etablished by the SBA in 13 CER, 121.201 for the Applicant's industry. Twill comply, whenever applicable, wih the civil ights and other limitations inthis form. All SBA loan proceeds will be wed only for businosclated purposes at specified in the loan application and consitent with the Paycheet Protection Program Rule. ‘To theextentfesible, [wil prebase only American-made equipment and produes. ‘The Applicant is not engaged in any activity that sega under federal, state or local aw. ‘Any loan received by the Applicant under Section 7) ofthe Small Busines Act between January 31,2020 and Apri 3, 2020 wat fora purpose other than paying payroll costs and other llawable uses loans usd the Paycheck Protection rogram Rule, For Applcanis who ae individuals: ¥ authorize the SBA to request criminal record information about me for criminal justice agencies forthe purpose of deeming my eligibility for programs authorized by the Small Business Act, os amended. TIONS The authorized representative f de Applicant must certify in goo fith tall of the below by initiaing nox to each one: ‘The Applicant was in operation oa February (5, 2020 and fd employees fr wom it paid slaves end parol taxes x psi independent ‘conuactos, a reported on Fata(s)1099-MISC. Current economic uncertainty makes this loan request necessary to support the ongoing operations of de Applicant The funds willbe used to retain workers and maintain peyrol or make morigage interes payments ease payments, and llity payments, 2 sported under the Paycheck Protection Progen Rule; understand tha ifthe fonds are knowingly used for woauthorized purposes, the federal government may hold re legally able, suchas for charges of fad. “The Applicant wil provide o the Lender dozumeattion verifying the munber of full-time equivalent explayees on the Appliatt’s payrolls well asthe dollar amounts of payroll costs, covered morige interest payments, covered rent payments and coveted ilies {or the eight-week period following tis loan 1 uderstiod that loan forgiveness will be provided forthe sum of documented payall cows, covered mortgage interst payments, covered rea payments, and covered ules, and not more than 25% of the forgiven amoual may bs for non-payrol cows. {llnot eosive nother Daring the peed beginning on February 15,2020 and ending oa December 31,2020, he Appliant has uot and {onn under te Paycheck Protection Program. 1 further certify thatthe iaformstion provides inthis applietion andthe information provided in ell supporting Gocuments aod forms i wue and accurate in all material respec, Understand tat knowingly making a false statement wo obtain a guaranteed lon ‘fom SBA is punishable under the lay, including under 18 USC 1001 and 3571 by imprisonment of rot more than five years andor fine of upto $250,000, ender 15 USC 645 by Impritonmen of nat more than two yen" and/or a ine of not rore thas $5,000; and, if submited to a federally insured instittion, wader 18 USC 1014 by imprisonment of not more dun thity years andlor a fine of ot ‘more than $1,000,000. T acknowledge that the lender will confirm the eligible Joon amount using required documents submitted. I undersand, knowledge and agresthit the [ender ean share any ax information that Ihave provided with SBA‘s authorized representatives, including authorized representatives of the SBA Office of Inspector Genera, forthe purpose of compliance with SBA Loan Progrem Requiremeats and all SBA reviews, Siguaure of Authorized Representative of Appliceat Dae Faint Same ieCage 1:22-cv-00028-HYJ-PIG *SEALED* ECF No, 1-3 *SEALED", PagelD.29 Filed 01/11/22 Ree PaycheBAR@t od Program ae Borrower Application Form ‘Purpose ofthis form: ‘This form i o be completed by the authorized representative of tke Applicant and submited to our SBA Participating Lender, Submission of the requed norman iru oak dtintonpig ell fr ancl ate. Fat sbm be raion would affect thatdeteranaton, ‘With spect to “purpose oft Joa," payroll costs consist of compensation o employees (whose principal placzof residence is ths United ‘States nthe form of salary, wages, commissions or similar compensation; cash tps ar the equivaler (based an employer records of past tps (fin the absence of sich records, a reasonable, good fits eaployer estimate of such ups); payeseot lor yacetion, parental, fly, meical, sick leave; ellowane for separation or dumise payment forthe proviso of employee benefits comsistng of group heal care coversge, including insurance premiuins, and retirement; payment of rete and Toe txes assessed on compensating of employees; an fora independent comacior or sole proprietor, wage, commissions, income, oF net earings thom slfemployment or similar compensation Tor purposts of calculating “Average Monthly Payroll" most Applicants will use tbe average moothly payrol for 2019, excluding coss over {$100,000 onan ennvalized bass for each erployes. For seasonal businesses, the Applicant may elect instead use average macihly payroll {or be time pried betwocn Febraary 1S, 2018 and Juse 30, 2019, excluding cots over $100,000 on an sramalized basis foreach employee. For new businesses, average monty payroll may be ealeulated using the ime period om January 1, 2020 1 February 29, 2020 excluding ‘coat over $100,000 on as anauelized basis foreach employe 1 Applicant is reftcancing an Econosnic Injury Disaster Loan (EIDL): Add the oustanding amovnt of an EIDL mede between Jacuary 31,2020 and April 3, 2020, lest he amount of any “advance” under an EIDL COVID-19 loan, to oan Request as indiated on de fom. ‘Al pars lita below are considered owner ofthe Aplinn as dfinod in 13 CFR § 120.1, a well es “prinsipals" «Fors sole proprio, te ole proper, «For paraecsip al genoral partes, and ul nied partes owning 20% or moe of he ety of be Cam; 4 Fora enportin all owners of20% or more of be capri, + Yori abit companies al merc ong 20% oF more of he companys and Any Trot (te Applicant owed by 4 uA Paperwork Reduction Act You are not require ro respond tothis collection of information unlss it daplays «curealy valid OMB Control Number. The estimated time For completing this aplcation, including gacering data needed, is 8 micules. Comments about this ime cor the information requested shouldbe seat: Small Busizess Administration, Director, Recorés Management Divisian, 409 3d St, SW, Washington DC 20416, andlor SAA Desk Officer, Office of Managemeet and Bucge, New Executive Office Building, Washington IC 20508. Privacy Act (6 U.S.C, 8520) -Uncer the provision of ie Privacy Act, you ae not required to provide your scial security number. Faire 19 provide your social security number may not affect any right, benefit or privilege to which you are ented. (But see Debt Colleton Notice fegarding taxpayer ieaiication nrnber below.) Disclosures ef name and olher personal Went irs ar reqized to provide SBA with suticient iformatioa to mak» churecter determination, When evalusting character, SBA consider the prson's integrity, candor, eid ‘isposion toward criminal aciions, AddiGonaly, SBA ls specifically authorized io verily your riminal history, or lack hereof, puruant 10 section MaXI}B), 1S USC Section 636(a\1XB) of the Saal Business Act the Act). Disslosnre of Inforeation Request for nforntion about another pany may be denied unless SBA has the writen persion o the individ to cea the information tothe equator o urls he informatio i subject io dslosce unre Teeedo of Information Ac ‘The Pvacy Ae asthorizes SBA to make corals "outne ve” of tformaionpoesedb tat Ast. One sch oun seis the dcanie of inforaiton maimtized in SBA's sytem of ocards wha this information indicates « vclation o potenti violation of law, wither ei, ‘iin, or adminsoaive in nate. Specially, SBA may refer the iaformaton i the apropriate agency. whether Fede), Sate, local or Fercign, charged with esponsibility fr, or olicevis involved in investigation, pecscuton, enforcement or prevention of weh iluons, “Arner oun wef Unione o ober Feral agencies conducting background ech but oly othe extent the information i elevanka the equeriag agencies faction. See 74 FR. L490 (2008), and as ammeded om neo ime fr ational background and othe rouine es: In adtion, the CARES At cequies SBA to reser very Joa made under te Paycheck Protetion Act ug the Tonpayer Wenfenon Number (TTS) assigned to dhe borrower, Debt Colleton Act of 1942, Deft Redaction Act of 1984 (31 U.S.C. 3701 t seq and ether tls) SBA mms aban your sxpayer “Hanifienon rarer when you apply fer lon. you receive alan, and do nt make payment sey come due, SBA may: (1 eport he tux of your Tonga rel bureau, (2) ire collection agency 1 colet your fan, oe, your income ux refund or ter aounss {ue y00 from he Federal Goverumest (2) suspend ot dbet you or your company fr ding business wit te Federal Gveracal, ($) fetes you lon othe Deparment of Juste of (6) freloe on ello ke ote ection penne inthe oan incre Right to Financlal Privacy Act of 1978 (12 US.C. MO) ~The Right to Faunce Privacy Ac of 1978, gents SBA acess ight final eonds eld by Soa nsions th ar or have bee Going business wih You cr your buszess including ny financial 3wee PaychedRayetbeAbi Program er Borrower Application Form insuons participating i oan o ox guaran. SBA soa required provide cetieate ofits compliance wih te Act toa franciel {nstiution i coonection with ts frat request for aszes o your financial records SBA's access rights continue forthe tem of any approvee lor gusrntyagresacat. SBA is also authorized to tynser to another Government suonty any financial records conceraing aa approved loan orion guarantee, as necesary to proces, service or foreclose on loan guaraly of cllect ona defaulted len gurany. Freedom of Information Act (5 U.C. 552) —Subjec to cera exceptions SBA rous supply information refected in agency les and records wo a peron requewing i Information sbout approved Jons that wil be avtomcrly released inelodcs, among ofc: things, tafsics ‘on ou oan programs (ndividul borowers ave nc ideatiied in the tttics and ocr iaformatin suc a the names of toe boron (end their ofier, directors, stocRhaers x partacr) the collateral pledged to secure the loon, the amount ofthe oe, purpose in general ers and th matuty, Propticary data ona borowcr would not routinely Us made availabe to Cid partis. AM request ude this Act are o be ‘dressed othe nates SBA office and be identified as a Preedom of faformatin request ‘Ocenpadional Safety and Huth Act (15 U.S.C. 651 ef seq) ~The Occupational Saety and Health Adminstration (OSHA) an equi ‘busineses 1 modi) facies and procadurs to protect eaoyees. Businesses tat do vot comply zty be fined, forced to cease operation, ‘or prevented froma sarng operations. Signing his orm i cxtication that the applicant, thebestof knowledge is in compliance with the apliceble OSHA requizeneats, aod wil remsin in compliance during he Life of helo, (Civt Rights (13 CER. 112, 113, 117) ~All buninessce ecsving SBA financial astsanes ust agree nto drimiaae in aay busisss practice inching erploymeon proces und service othe public on the basso eategaris ced in 13 CPR, Pars (42,113, and L17 of SBA Regulaions. All bowers sus display the "Equal Employment Opportnity Poste” preserbed by SBA. Equal Credit Opporruniey Act (15 U.S.C. 1694) ~ Creditors are prohibited ftom discriminating agains credit applicants on the basis of ace, cor, religion, oaticeal rig, sot, arta satus or age (provided the appicet has she capaci to ater int a binding contrat); because all for partof the applicant's income derives fom any public asistance progam or because the applicant has in good fh exesiaed any right under the Consumer Croit Protection Act Debarment and Suspension Exceutive Order 12549; (2 CFR Pact 180 snd Fart 2700) By submitting tis naa application, you cry that ritber the Applicant or any owner ofthe Applicat have withia the past thre years been: (2) debarred, suspended, declaced ineligible cx ‘olustarly excluded ftom participation ina transaction by any Federal Apecy;(b) formally proposed for dcbarme, wit cal

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