LANSING, Mich. (Michigan News Source) – A lawsuit by the organization Mackinac Center for Public Policy, a nonprofit research and educational institute, exposed the Michigan Education Association (MEA) and the Michigan Education Special Services Association (MESSA) for taking a combined $12.5 million in pandemic money from the government’s Paycheck Protection Program loans that they weren’t eligible for.

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The MEA is the Michigan teacher’s union and the MESSA is its insurance affiliate. The MEA had received $6.4 million and MESSA received $6.1 million from the federal government’s pandemic loan program. They have since paid back the loans with interest but were sued by the Mackinac Center under the “False Claims Act” which resulted in the two groups paying fines for their actions. MEA paid $115,265 and MESSA paid $110,622 to the federal government in addition to $77,000 to the Mackinac Center for legal fees. The Mackinac Center also got a $22,500 reward for exposing the issue.

MCPP President Joseph G. Lehman said in a statement, “The Michigan Education Association applied for money intended for struggling businesses during the height of the pandemic. The union and MESSA obtained some of the largest PPP loans in the country. They took these funds, for which they were clearly ineligible, while shuttered restaurants, stores, other businesses and their workers struggled to stay afloat.”

Because they took millions of dollars in loans, many small businesses across the state were unable to obtain the loans they applied for.

Paycheck Protection Program loan fraud has been prevalent all over the country. And even in the best of situations, the loans didn’t turn out to be “loans” after all. NPR did an analysis of data released by the Small Business Administration and found that 92% of the loans issued have been granted full or partial forgiveness, even those with “mega-rich” owners.

Samuel Kruger, an assistant professor of finance at the University of Texas at Austin says, “The PPP program seems to have resulted in billions of dollars of fraudulent loans that have ultimately turned into grants. He co-authored a paper where he estimated that $64 billion of the almost $800 billion in loans issued show “signs of fraud.”

Although the Small Business Administration disputes Kruger’s findings, their inspector general estimated that at least 70K loans are potentially fraudulent.

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