Leland Firm to Repay $1.5M in COVID Money

Campbell Sales Group, Inc., d/b/a LeatherItaliaUSA (CSG) has agreed to pay $1,499,164 in restitution and penalties and to undertake additional responsibilities to resolve its criminal liabilities in connection with a Paycheck Protection Program (PPP) loan scheme.
CSG is a leather furniture supplier headquartered in Leland, according to a press release from the U.S. Attorney’s Office.
Congress created the PPP in March 2020 to mitigate the economic impacts of the COVID-19 pandemic on small businesses. PPP loans were fully guaranteed by the United States and forgivable if the proceeds were used for payroll and other authorized expenses. To qualify for forgiveness of the full loan balance, the borrower was required to spend at least 60 percent of the loan proceeds on eligible payroll costs during the covered period.
In April 2020, CSG applied for and received a $257,700 PPP loan. As part of the criminal settlement, CSG admitted that after receiving the loan proceeds, it fraudulently increased its payroll in order to meet eligibility requirements for PPP loan forgiveness.
“CSG admitted that it added multiple individuals to the payroll and claimed to have paid them wages, when in fact none of the individuals worked for CSG nor did they receive any wages,” the release said. CSG further admitted that in addition to the payment of the “ghost wages,” it artificially inflated its payroll by increasing the wages of multiple CSG employees, but the wage payments did not go to the employees.
CSG also admitted in court that in October 2020, it submitted a PPP loan forgiveness application, in which it provided a payroll cost figure that included the “ghost wages” and the fraudulently inflated wages. CSG provided false supporting documentation to the lender and made additional false representations. The full balance of the $257,700 PPP loan was subsequently forgiven in May 2021.
In March 2021, CSG applied for an additional PPP loan totaling $213,006. CSG admitted that it incorporated the same false wage information in the second PPP loan request.
As part of the criminal settlement, CSG has agreed to pay $1,499,164 in restitution and penalties and be subject to a three-year prosecution deferral period in which it may not commit any further offenses, among other terms.

Daniel P. Bubar, Acting U.S. Attorney for the Eastern District of North Carolina, made the announcement after the settlement was accepted by U.S. District Judge Louise W. Flanagan. The United States Secret Service investigated the case and Assistant U.S. Attorney Adam F. Hulbig prosecuted the case.