Strand Bookstore in New York to pay nearly $1.5 million for violating Paycheck Protection Program rules

The New York-based Strand Bookstore will pay almost $1.5 million in settlement fees after an investigation found that its owner, the wife of a U.S. senator, illegally applied for the business’ second loan under the Paycheck Protection Program.

The Office of the United States Attorney for the District of Columbia announced Tuesday that the company agreed to pay $1,482,560 for violating the Economic Aid Act, which prohibits businesses from receiving a second PPP loan if a member of Congress or their spouse directly or indirectly held a controlling interest.

Nancy Bass Wyden, wife of Sen. Ron Wyden, (D-Ore.), is a controlling owner of the business, a news release said.

"The Paycheck Protection Program was created to save American jobs, not to enrich those who aren’t eligible for taxpayer-funded relief, especially the wife of a U.S. Sen.," U.S. Attorney Jeanine Pirro said in a statement.

In March 2020, Congress enacted the Coronavirus, Aid, Relief, and Economic Security (CARES) Act, authorizing forgivable PPP loans to eligible small businesses and nonprofit organizations.

The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act was enacted in December 2020, to provide additional funding for PPP loans, allowing eligible entities to apply for a "second draw."

The act prohibited businesses obtaining "second-draw" PPP funds if a member of Congress or their spouse directly or indirectly held a controlling interest in the PPP loan applicant.

In February 2021, the Strand applied for a second draw PPP loan of $932,350.

An investigation found that on behalf of the Strand, Nancy Bass Wyden made "a number of certifications" as part of the loan application, including that the spouse of a member of Congress does not directly or indirectly hold a controlling interest in the applicant, according to the U.S. Attorney's Office.

"Ms. Wyden’s certification was knowingly and materially false and Strand was not eligible for the second draw loan it received," the release said.

The company said the issue was caused by rapidly changing rules during the COVID era.

"We stand by the facts: the circumstances arose during an unprecedented and rapidly changing public health emergency, the mistake was unintentional, and the funds were returned as soon as the issue came to our attention, Carson Moss, chief operating officer for Strand, said in an email to Newsday.

"We regret the oversight and recognize the importance of complying with all applicable laws and regulations," Moss said. "We hope this matter will be viewed objectively and in its proper context, with the understanding that the application of justice should always be fair, impartial, and free from political considerations."

The investigation began after a corporate whistleblower entity, Corporate Relator Blockquote Inc., filed a complaint with the U.S. Attorney’s Office about the Strand’s ineligible second draw. Under the False Claims Act, Corporate Relator Blockquote will receive a share of the recovery, about $148,256, the release said.

According to its website, the Strand is the largest independent bookstore in New York City and carries more than 2.5 million used, new and rare books, ranging "from classic literature and current releases to out-of-print titles, art monographs, and signed first editions."

Including its Union Square flagship store, which has "18 miles of books," Strand has five New York City locations, its website said.