Justice Served: WNY Companies to Pay $2.3M for COVID Relief Fraud

In a significant crackdown on pandemic-era financial misconduct, two Western New York companies and their key personnel have been ordered to pay a staggering $2.3 million to resolve allegations of fraudulently obtaining vital COVID-19 relief funds. This decisive action underscores the Department of Justice's unwavering commitment to prosecuting those who exploited emergency aid programs meant to support struggling businesses and protect jobs during an unprecedented crisis.

The companies at the heart of this settlement are Western New York Human Resources Inc.

and Labor & Environmental Compliance Inc. According to the U.S. Attorney's Office for the Western District of New York, these entities, along with their owner Michael A. Hedderman and an employee William T. Hedderman, orchestrated a scheme to defraud the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL) program.

These critical initiatives were established under the CARES Act to provide a lifeline to businesses reeling from the economic fallout of the COVID-19 pandemic.

Investigators revealed that the defendants submitted numerous fraudulent applications, deliberately misrepresenting their eligibility and needs to illicitly secure approximately $2.3 million in federal funds.

Instead of serving as a genuine safety net, these funds were allegedly diverted and misused, betraying the trust placed in businesses by the government and the American public.

The resolution of this civil matter mandates the repayment of the full $2.3 million, covering both civil penalties and damages under the stringent False Claims Act.

This settlement sends a clear message: those who attempt to profit unlawfully from national emergencies will face severe consequences.

The repercussions extend beyond the financial settlement. Michael A. Hedderman, the owner of the implicated companies, has already pleaded guilty in a separate criminal case to serious charges of wire fraud and money laundering.

He now awaits sentencing, facing the prospect of up to 20 years in prison for wire fraud and an additional 10 years for money laundering – a stark reminder of the criminal gravity of his actions. Similarly, William T. Hedderman has also pleaded guilty to wire fraud and is awaiting his sentencing.

"These programs were designed to help legitimate businesses and their employees survive the pandemic," stated U.S.

Attorney Trini E. Ross. "Our office will continue to work tirelessly with our law enforcement partners to ensure that individuals and entities who abused these programs are held accountable, both civilly and criminally." This sentiment was echoed by officials from the Small Business Administration Office of Inspector General (SBA OIG) and the Federal Bureau of Investigation (FBI), who spearheaded the collaborative investigation.

The joint efforts of the SBA OIG, FBI, and the U.S.

Attorney's Office for the Western District of New York were crucial in uncovering the fraudulent activities and bringing the perpetrators to justice. Their diligent work ensures that resources intended for the vulnerable are reclaimed and that the integrity of vital government aid programs is upheld.

This case serves as a powerful testament to the ongoing vigilance against fraud and the commitment to protecting taxpayer dollars.