The United States Attorney’s Office for the Eastern District of Missouri announced on Apr. 6 a civil settlement with VSM Abrasives Corp., resolving allegations that the company was not eligible for a $2 million Paycheck Protection Program loan received in 2021.
The case highlights ongoing efforts to ensure government relief funds distributed during the COVID-19 pandemic were used as intended and only by eligible recipients. The Paycheck Protection Program was designed to help small businesses retain employees and survive financial hardship caused by the pandemic.
As part of the agreement, VSM Abrasives Corp. will repay $2,022,250 to the United States. The allegations were brought under the False Claims Act’s whistleblower provisions by Blockquote Inc., which claimed that VSM falsely certified having fewer than 300 employees when its combined workforce with affiliates exceeded that number due to its German parent company, Vereinigte Schmirgel- und Maschinen-Fabriken AG. The settlement includes no admission of liability from VSM, which disputes these claims.
“We appreciate the efforts of Blockquote and other companies that are ferreting out problematic pandemic loans, as well as VSM’s cooperation,” said U.S. Attorney Thomas C. Albus. “This settlement shows our commitment to ensure that government funds are spent appropriately.”
The civil case was handled jointly by federal prosecutors and the U.S. Small Business Administration in St. Louis federal court (Case No. 4:24-cv-00805). Under qui tam provisions, private parties can bring fraud allegations on behalf of the government and share in any recovery; Blockquote will receive $224,694 from this settlement while its attorneys will be awarded $20,000.
Information about reporting suspected disaster or pandemic fraud is available at justice.gov/archives/disaster-fraud.
