American Furniture Rentals of Pennsauken pays to settle PPP loan allegations

A Pennsauken-based business has agreed to pay $2.9 million to settle allegations that it inappropriately accepted COVID-era federal relief funds.

But American Furniture Rentals, aka AFR, didn't run into trouble because of a sharp-eyed government auditor.

Instead, private investigators from Florida alleged that AFR, with locations across the country, had too many employees to qualify for a small-business loan under the federal Paycheck Protection Program, aka PPP. AFR obtained the $2-million loan in 2021, then saw it forgiven by the government.

The sleuths, Verity Investigations LLC, filed a qui tam suit to recover the funds for the U.S. Small Business Administration — and to share in the payback.

Under a settlement announced Thursday, AFR will pay $2.9 million, with $2 million to be considered restitution for the government. The settlement doesn't specifically identify the $900,000 balance as Verity Investigations' share of the recovery, but it notes that AFR will pay about $7,700 for the investigators' legal expenses and other costs.

According to its July 2024 lawsuit, Verity Investigations "connected the dots" to identify a misstatement on AFR's loan application.

It said the furniture rental firm, facing a 300-worker limit for loan eligibility, reported employing 295 people.

But public records for AFR's 401(k) plan show 377 active participants, or employees, when the Hylton Road business applied for the loan, the lawsuit said.

That number had fallen to 322 at year-end, according to U.S. Department of Labor records.

The suit was filed in Camden federal court under the whistleblower provision of the False Claims Act.

Lawyers for AFR and Verity Investigations could not be reached for immediate comment.

The lawsuit's settlement notes AFR admits no liability, while the government does not concede its claims "are not well-founded."

It said the settlement was reached to avoid the expense and uncertainty of continuing litigation.

"AFR fully cooperated in the investigation and resolution of this matter," the U.S. Attorney's Office for New Jersey said in a statement Tuesday.

The settlement noted that AFR obtained a $10-million PPP loan in 2020, when applicants had to employ fewer than 500 workers. That loan was also forgiven.

The qui tam lawsuit said an FAQ list with the 2021 loan application made clear the employment level had been lowered to 300.

Jim Walsh is a senior reporter with the Courier-Post, Burlington County Times and The Daily Journal. Email: Jwalsh@cpsj.com.