A former employee of a large Wendy's franchisee has filed a whistleblower complaint after alleging the owner was fraudulently misusing Paycheck Protection Program (PPP) loans for personal use. The lawsuit comes at a time where small businesses are upset about the types of businesses that received PPP loans when their local businesses were left without help.
The lawsuit was filed by Sandi Adler, vice president of legal affairs and human resources with Starboard Group, which operates 101 Wendy's franchises across 7 states. The lawsuit alleges Starboard received about $9 million in PPP loans.
Adler claims the CEO Andrew Levy told her to list some of his personal employees as corporate employees. Levy was reportedly having a home built in Montana and diverted $1 million of the PPP loans to finance the home. The lawsuit also alleges Levy ordered Adler to lie to creditors, vendors, suppliers, and landlords by saying the company did not receive PPP loans.
In addition to the claims of fraud, Adler also says her boss, Kevin Holbrook, sexually harassed her while she was an employee. Adler says Levy ignored her complaints. Adler alleges she was fired after she complained about Levy's actions. Adler is seeking restitution and compensatory damages.
PPP Loans for Businesses During COVID-19
The Paycheck Protection Program is a Small Business Administration (SBA) loan that is intended to help businesses keep their workforce employed during the coronavirus/COVID-19 crisis.
The loan is not like a traditional loan and has special privileges and protections. Under the PPP program, “the loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities,” where at least 60% of the forgiven amount must have been used for payroll.
Even if the funds do not qualify for full forgiveness, other benefits of PPP loans include:
- 1% interest rate
- Loan payments deferred for 6 months
- No collateral or personal guarantees are required
- There is no fee (from the government or lenders)
Many small businesses in Maryland could really use the assistance of a loan to keep the business afloat and retain employees. Unfortunately, some of those small businesses have found that their loan request has been denied without much information about why or what other options they have.
According to WBAL news, more than 12,000 loans were made to businesses in Maryland. However, some of those loans may have gone to business owners who did not need the money and did nothing to maintain or create new jobs.
- Billionaire Kanye West's clothing company Yeezy got between $2 million and $5 million in PPP funds.
- Expensive private schools, big chain restaurants, lobbying firms, and megachurches also got millions in PPP funds.
- Pennsylvania Congressman Mike Kelly got $1 million in loans for his car business.
A MarketWatch analysis of the SBA PPP data released by the Trump Administration found that just over 554,000 small businesses who got the PPP loans reported retaining zero jobs.
Whistleblower Lawsuits and Protections
Federal and state whistleblower laws protect employees from disclosing information to government or law enforcement agencies that an employee has reasonable cause to believe to be a violation of a state or federal rule, law, or regulation. An employer may not retaliate against an employee who refuses to participate in illegal activity.
Sexual Harassment and Unlawful Retaliation
Retaliation against an employee who speaks up about sexual harassment is forbidden under state and federal law. Employees should not have to feel afraid to speak out against sexual harassment or if they see a co-worker being sexually harassed in the workplace. If you believe you were the victim of sexual harassment in the workplace, contact your attorney or file a complaint with the Maryland Commission on Civil Rights or the Equal Employment Opportunity Commission (EEOC).
The trial attorneys at Gilman & Bedigian are committed to helping our clients who are brave enough to speak out about wrongdoing in the workplace. To discuss your case with a member of our legal team, fill out an online case evaluation form or call (800) 529-6162 today.