Lafayette RE Management LLC, a New York City-based asset manager focused on acquiring, developing, financing, and managing single-family homes, and company founder and majority owner Thibault Adrien have agreed to a $680,000 settlement to resolve allegations they violated the False Claims Act by fraudulently applying for and receiving forgiveness of a Paycheck Protection Program (PPP) loan.
The US Department of Justice (DOJ) alleged that Lafayette and Adrien applied for and received a $335,000 PPP loan by falsely certifying that the loan was economically necessary due to the uncertainty caused by the pandemic. The DOJ also stated Lafayette and Adrien’s application to Small Business Administration seeking forgiveness of the entire loan amount contained false statements.
The allegations in this case were initially brought by Jesus Nunez-Unda, a former partner, in a lawsuit filed under the whistleblower, provisions of the False Claims Act. In a statement to the Wall Street Journal, Lafayette claimed Nunez-Unda was a “disgruntled former employee” and claimed it was settling the charges to avoid lengthy and costly litigation.
“While Lafayette denies liability and does not agree that it was ineligible for the Paycheck Protection Program loans received, we are pleased to reach this resolution and put this issue behind us,” Lafayette said in the statement, adding the allegations were created by uncertainty regarding the term “economic necessity” in the PPP loan eligibility requirements
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