Whistleblowers said this company was a fake small business. It has received a PPP loan.

While this was an example of ADS working as a subcontractor, it has directly received many other federal contracts, some of which were solely for small businesses. For companies operating in the Atlantic Diving Supply industry, the relevant SBA size standard is the number of employees. To be considered a small business, it must have 500 employees or fewer.

But as the company grew, it reportedly found ways to get around this. The crux of the Whistleblower lawsuit against Atlantic Diving Supply, brought in by one anonymous former employee and an anonymous advisor, alleged the company circumvented this licensing restriction by obscuring its affiliation with a number of other companies that it actually controlled.

Had the government known that the other companies were actually controlled by Atlantic Diving Supply and had counted the workforce of the combined company accordingly, it would be Atlantic Diving Supply Supply deemed ineligible the whistleblower lawsuit is alleged for contracts that the federal government reserves specifically for small businesses.

The complaint lists seven other companies that were involved in the alleged settlement.

For example, the lawsuit says of a company called MJL Enterprises: “MJL simply has ADS as arun through‘Establishment to Illegally Win’ Disabled Veterans Small Business Closure Contracts. It should be noted that MJL was once stationed at Atlantic Diving Supply former address. MJL done Claims in whistleblower lawsuit for $ 400,000.

The lawsuit goes on to say, through another company called Iron Brick Enterprises, that “Iron Brick shares” common management with ADS ”and its address is the same as another company founded by Hillier.

This spring, both MJL and Iron Brick received loans from the Paycheck Protection Program. According to Small Business Administration data, MJL has taken out a loan valued between $ 150,000 and $ 350,000 and Iron Brick received one Value between $ 350,000 and $ 1 million.

MJL and Iron Brick did not respond to requests for comment.

The whistleblower lawsuit extensively cites the Small Business Administration’s membership rule, which states that separate companies controlled by essentially the same management can be viewed as connected – in other words, just different parts of a common entity.

The rule was recently the focus of various interest lobbying when Congress launched the Paycheck Protection Program. The coronavirus aid law for the creation of the PPP was worked out Loopholes some companies would not have to adhere to the membership rule, and exterminate a more restrictive version of the rule. The law has also “suspended the customary requirement that borrowers not be able to obtain credit elsewhere,” although “borrowers must continue to confirm in good faith that their PPP loan application is required,” it said the tax office. This change opened the door for companies that are owned or who already have larger companies wealthy investors to get loans from the paycheck protection program.

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