Shoe Importer Litigating Customs Duty Fraud Allegations Settles PPP Whistleblower Lawsuit for $1.47M

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Dec 11, 2024, 16:05 ET

NEW YORK, Dec. 11, 2024 /PRNewswire/ -- NYC whistleblower attorney Timothy J. McInnis announced a $1,470,085 settlement against Stefano Maroni, who is the owner and CEO of GMI USA Corp. and Belovefine, Ltd., shoe designers and importers located in NYC. The settlement resolves FaIse Claims Act allegations in a qui tam whistleblower complaint filed under seal on March 14, 2023, in the U.S. District Court for the Southern District of New York by former Maroni employee Devyn Taylor. Taylor alleged Maroni and his companies defrauded the SBA's Paycheck Protection Program ("PPP") during the COVID-19 pandemic by using the same employees to get forgivable loans for each of Maroni's two companies, when, in fact they were essentially one and the same business. The United States government, through the U.S. Attorneys' Office for the Southern District of New York, joined Taylor's lawsuit on December 6, 2024, and is also a party to the settlement. The case was unsealed December 9, 2024, by United States District Judge Jennifer H. Rearden.

According to the Settlement Agreement, the PPP program was established pursuant to the Coronavirus Aid, Relief, and Economic Security ("CARES") Act. The CARES Act was enacted in March 2020, and was designed to provide emergency financial assistance to millions of Americans suffering economic effects caused by the COVID-19 pandemic. This included authorizing forgivable loans to small businesses for employee payroll and other expenses. To obtain a PPP loan, a qualifying business was required to submit to a participating lender, among other things, the company's (a) average monthly payroll expenses and (b) number of employees. That information was used to determine the amount of the PPP loan.

As part of the Settlement Agreement, Maroni admitted that on paper he shifted employees from one company to the other but applied for PPP loans in both companies' names. He also admitted he incorrectly listed different suite numbers at the same NYC address for the two companies to falsely give the impression they were separate and distinct entities. And Maroni admitted he overstated his number of employees. As a result, Maroni obtained $1,023,322 in PPP funds.

The Settlement Agreement expressly notes it does not resolve Taylor's allegations against Maroni, GMI and Belovefine for U.S. Customs duty fraud in a separate False Claims Act qui tam action, captioned United States ex rel. Taylor v. GMI USA Corp. et al., 16 Civ. 7216 (RWL) (S.D.N.Y.). That case, which the government did not join as to Maroni or his companies, is currently being litigated by Taylor.

McInnis noted that PPP fraud was rampant during the pandemic, and many specific instances are now being exposed through False Claims Act qui tam lawsuits by private citizens who can receive up to 30% of any recovery. In this case, under the Settlement Agreement Taylor will receive $294,017.

On behalf of Taylor, McInnis expressed appreciation for the efforts of the U.S. Attorney's Office for the Southern District of New York and the SBA's Office of Inspector General in investigating and pursuing her allegations of PPP fraud.

The case is captioned United States ex rel. Devyn Taylor, v. Stefano Maroni., et al., 23 Civ. 2159 (JHR) (S.D.N.Y.).

For additional information, please contact Attorney Timothy J. McInnis, of McInnis Law, 521 Fifth Avenue, l7th FI., New York, NY lOl75, at (2l2) 292-4573 or [email protected].

SOURCE McInnis Law