The CEO of a large Wendy’s franchisee diverted $1 million in Paycheck Protection Program loans meant to keep workers employed to buy a new house, according to a new lawsuit.
Andrew Levy, the CEO of the Starboard Group, which operates 101 Wendy’s locations, instructed former employee Sandi Adler to list some of his personal employees as corporate employees to pull off the scheme, Adler alleges in a new whistleblower suit filed in Florida, CNBC reported.
“The effect of this, in view of the PPP funding, was to defraud the United States and the Small Business Administration,” the complaint said.
Starboard in total received $9 million in total through the federal relief program created to aid ailing businesses during the coronavirus pandemic. The franchisee oversees 3,200 employees at locations in seven states.
But a million of that relief went to finance Levy’s new home in Montana, according to Adler, a former vice president at the company.
Levy also allegedly instructed Adler to lie to creditors, landlords, vendors, and suppliers, telling them the company had not received PPP funding and couldn’t meet its financial obligations, according to the suit.
Adler went on to allege she was fired on June 1 after she complained about the orders to her superior Kevin Holbrook, whom she has also accused of sexually harassing her while she was an employee.
She charged that Levy ignored her complaints about Holbrook’s behavior.
Adler is seeking restitution for her lost wages and compensatory damages for the “pain and suffering” caused by the company.
Starboard and Wendy’s did not immediately respond to requests for comment.
Several large, publicly traded companies came under fire for gobbling up massive portions of PPP funding that was intended for struggling smaller businesses with fewer than 500 employees.
Some large businesses found an end-around to tap the program by applying for loans through individual locations that each employed fewer than 500 people. Though the program did make an exception for restaurant companies, allowing them to apply as long as they had no more than 500 employees at any one location.
A few big chains, like Shake Shake and Sweetgreen, were guilted into returning their loans after the first round of PPP money quickly ran dry.