The U.S. Attorney’s Office for the Eastern District of Tennessee announced that the Department of Justice (DOJ) had reached a settlement over alleged Paycheck Protection Program (PPP) fraud, marking the third settlement related to the pandemic-era loan program to be announced by prosecutors in East Tennessee since September 30.
With Tennessee offices located in Maryville, Spradling International, Inc. – South is the latest company named by the DOJ, which reported on Wednesday that the company agreed to pay more than $1.8 million in order to resolve claims it violated the False Claims Act, specifically by “applying for, receiving, and obtaining forgiveness,” for a PPP loan despite not being eligible.
According to the press release, the PPP program was limited to companies with 300 employees or fewer, and prosecutors alleged that “Spradling failed to include employees of its foreign parent and foreign affiliates when it applied for a second-draw PPP loan and forgiveness thereof.”
While the company is based in Alabama, it is owned by the multinational Spradling Group, which has its corporate headquarters located in Colombia. Spradling Group also has operations in Mexico, Costa Rica, Spain, Germany, and the United Kingdom.
Of the 2,027 workers the group reported worldwide in its 2024 sustainability report, just 125 were said to be located in the United States. By contrast, 915 were located in Colombia, and 507 in Costa Rica.
The DOJ noted that the settlement resolved a lawsuit filed under the False Claims Act, which contains provisions allowing private individuals to sue on behalf of the government for false claims and receive a share of the money recovered.
A similar settlement was announced on October 2, when the DOJ reported that America Plastics, a Chilean plastics company with operations in Tennessee, agreed to repay more than $2.2 million in order to resolve allegations that it failed to disclose its true employee count.
As with the allegations against Spradling, the settlement with America Plastics resulted from False Claims Act litigation.
That announcement came just three days after the DOJ announced that a Knoxville automotive supplier, ARC Automotive, Inc., agreed to pay $4.2 million in order to resolve claims it received a PPP loan, and sought forgiveness, in violation of the False Claims Act.
In addition to its Tennessee operations based in Knoxville, the DOJ said that ARC maintains presences in Kentucky, while “entities related to ARC” have operations in other countries, including China, where ARC allegedly concealed that its owners were going through a bankruptcy.
Like the settlements reached with Spradling and America Plastics, the DOJ reported on September 30 that its agreement with ARC came as a result of privately filed False Claims Act litigation.
Combined, the three East Tennessee settlements have resulted in about $8.3 million in repayments to the federal government. None of the companies admitted guilt through their settlements.
All three were also reached as part of the DOJ’s National Fraud Enforcement Division. The division was formed in April as part of President Donald Trump’s Task Force to Eliminate Fraud, which is led by Vice President JD Vance.
– – –
Tom Pappert is a 2025 recipient of the Dao Prize and the lead reporter for The Tennessee Star. He also reports for the Star News Network. Follow Tom on X. Email tips to [email protected].
Photo “Spradling Workers” by Spradling Inc.
