Sacramento-based Political Solutions, LLC, has agreed to pay the United States $556,924 in damages and penalties to resolve fraud allegations, Acting U.S. Attorney Kimberly A. Sanchez said on Thursday.

The payment is to resolve allegations that the political lobbying firm engaged in fraud by receiving a loan under the Paycheck Protection Program for which it wasn’t eligible, prosecutors said.

“The Paycheck Protection Program was a vital resource for struggling small businesses during the COVID-19 pandemic,” Sanchez said in a news release. “This office will continue to investigate businesses who took advantage of these funds at the expense of the public.”

Congress created the PPP in March 2020 to provide emergency relief to small businesses experiencing economic hardship caused by the COVID-19 pandemic. Many small businesses were eligible for these loans. However, those that primarily engaged in political or lobbying activities were excluded.

Settlement Includes $100K in Penalties

In April 2020, Political Solutions, a lobbying firm, applied for and received a PPP loan for $216,000. Political Solutions then applied for and received forgiveness of the loan from the U.S. Small Business Administration in January 2021, prosecutors said.

As part of the settlement, Political Solutions agreed to pay $456,924 in damages under the False Claims Act and $100,000 in civil penalties under the Financial Institutions Reform, Recovery, and Enforcement Act.

“The favorable settlement in this case is the product of enhanced efforts by federal agencies, such as the Small Business Administration working in conjunction with the U.S. Attorney’s Office, to pursue a fair recovery of pandemic relief funds,” said SBA General Counsel Wendell Davis.

Assistant U.S. Attorney Robert A. Fuentes handled the settlement, the Department of Justice said.