DOJ: Michigan nonprofit organizations fraudulently filed for PPP loans
(CBS DETROIT) - "The MEA was never qualified for the money," said James David Dickson with the Mackinac Center for Public Policy.
Dickson, who is also the managing editor of Michigan Capitol Confidential, a daily news site of the Mackinac Center for Public Policy, said the group filed a federal lawsuit against the Michigan Education Association accusing them of fraudulently obtaining a Paycheck Protection Plan loan in 2020.
PPP is a program created during the COVID-19 pandemic to help businesses stay afloat during lockdowns.
According to the Department of Justice, nonprofit organizations like the MEA and the Michigan Education Special Services Association (MESSA) either knew or should've known they weren't eligible to apply.
"The MEA believed at the time of the loan we were eligible and our bank agreed," said Doug Pratt, the director of Public Affairs for MEA.
"We did not do anything wrong, especially that we paid them back with interest," Pratt said.
In 2020, both the MEA and MESSA obtained PPP loans of more than $6 million each. The loans were both paid back within months of getting them.
However, Dickson believed the organizations fraudulently obtained the loans.
"There was no lack of clarity about who was qualified and who was not, they took advantage. They were able to get the funds, we filed our lawsuit because claims are very different from truth, so we had to do that to find out what had actually happened," Dickson said.
Pratt maintains the MEA followed the law and the lawsuit is frivolous, even though the MEA recently settled the case for more than $100 thousand.
"It was a full year later, that a right-wing think tank, bent on attacking public education and unions filed this frivolous lawsuit that prompted the settlement," Pratt said.
Dickson believed the act of settling presumed the MEA was aware they acted unlawfully.
"They call it frivolous but then they settle, and then when you look at what the federal government said they called it fraudulent," Dickson said.
Pratt said settling does not indicate any wrongdoing, the organization agreed to repay the processing fee the government paid to the bank that helped secure the funds.
"We settled to save on costly litigation and to make the federal government whole for the loan processing fee that they paid to our lender," Pratt said.
However, Dickson and the Mackinac Center for Public Policy argued that being in possession of the funds took away from those in need.
"And every time someone is not qualified takes it, it's not available for those who need it. So this thing is not necessarily over nor have we determined what the federal settlement for the Mackinac Center will be," Dickson said.
Since the Mackinac Center for Public Policy filed the federal lawsuit, it will be awarded a percentage of the monies recovered. The exact amount has not been determined, according to Dickson.