Four labor unions and an employee benefit plan agreed to pay $3.85 million to settle federal civil claims that they improperly obtained Paycheck Protection Program loans, the U.S. Attorney's Office for the Southern District of New York announced.

The agreement covers the International Union of Journeymen and Allied Trades, United Service Workers Union, Home Healthcare Workers of America, Service Professionals Union Local 726 and the United Welfare Fund's welfare division.

According to the Justice Department, the five entities received a combined $3,316,966 in PPP loans after submitting applications between April 16 and April 20, 2020. Each later applied for and received full forgiveness.

Graphic compares $3,316,966 in forgiven PPP loans with a $3.85 million civil settlement.
The five entities received $3,316,966 in loans and agreed to pay $3.85 million to settle the civil claims.Boho News graphic from U.S. Attorney's Office, Southern District of New York dataView source

The entities were organized under section 501(c)(5) of the tax code. The government said organizations in that category were not eligible for PPP loans under the rules in effect when the applications were submitted.

The settlement resolves allegations under the False Claims Act. It is a civil resolution, not a criminal conviction, and some of the Justice Department's account describes allegations contained in the complaint.

As part of the agreement, however, the defendants admitted specified conduct. The Justice Department said each entity acknowledged certifying that it was eligible and acknowledged that, before applying, its bank contact had been advised by a Small Business Administration regional employee that only organizations under sections 501(c)(3) and 501(c)(19) were eligible.

Timeline shows April 2020 loan applications, later forgiveness and the July 2026 civil settlement.
The applications were submitted April 16–20, 2020; forgiveness and the civil settlement followed.Boho News graphic from U.S. Attorney's Office, Southern District of New York dataView source

The government joined a private whistleblower lawsuit that had initially been filed under seal. The False Claims Act permits private parties to bring certain cases on the government's behalf and allows the United States to intervene.

The settlement amount is larger than the original loan total, reflecting the resolution negotiated under the civil enforcement process. The public release does not provide a defendant-by-defendant allocation of the $3.85 million payment.

The case was handled by the U.S. Attorney's Office's Civil Frauds Unit. The settlement closes the claims covered by the agreement while preserving a public record of the admissions and the government's enforcement position.