Charles Smith, Jr., Mail Fraud, Massachusetts 2020

BOSTON (Grimy Times) – A convicted felon and his demolition company have agreed to pay $2.01 million to resolve allegations that they falsely certified their eligibility for two Paycheck Protection Program (PPP) loans and an Economic Injury Disaster Loan (EIDL).

Charles Smith, Jr. of Sharon, Mass. and SMI Demolition, Inc., of Norwood, Mass. submitted false loan applications to the United States Small Business Administration (SBA), claiming that no owner had pleaded guilty to a felony involving fraud. However, Smith had pleaded guilty in federal court in Massachusetts to two counts of mail fraud in January 2018.

According to the allegations, SMI Demolition applied for a PPP loan and certified that no owner had pleaded guilty to a felony involving fraud. Around the time of the application, Smith and others prepared an agreement that purported to transfer part of his ownership to another person. But that agreement was never finalized.

SMI Demolition nonetheless applied for and received two more loans from SBA – an EIDL and a second PPP loan. These loans totaled $1,448,402, of which all but $150,000 was forgiven by SBA. Smith and SMI Demolition admitted to the facts forming the basis of the settlement, including that the loan applications falsely stated that the companies did not have owners who had pleaded guilty to certain felonies, when in fact Mr. Smith had pleaded guilty to mail fraud charges in 2018.

Because SMI Demolition was not eligible for the PPP loans nor the EIDL due to Smith’s felony convictions and ownership interest, the United States contends that Smith and SMI Demolition thus caused false claims for payment to SBA.

The claims resolved by today’s settlement include claims that were brought under the qui tam or whistleblower provisions of the False Claims Act. Under the Act, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Forsyth v. SMI Demolition, Inc. and Charles Smith, Jr., No. 23-cv-10091-NMG (D. Mass.). As part of today’s resolution, the relator will receive approximately $200,000.

The United States Attorney Leah B. Foley and Kelly Loeffler, Administrator of the U.S. Small Business Administration made the announcement today. This matter was handled by Assistant U.S. Attorneys Andrew A. Caffrey, III and Brian Sullivan.

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