Feast American Diners LLC and its corporate owner Dawood "David" Beshay, who operates multiple Denny's restaurants in Upstate New York and in Arizona, have agreed to pay $2 million to resolve allegations of fraudulent activity.

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The settlement comes after the United States Attorney's Office for the Northern District of New York accused Beshay of falsely certifying his company's eligibility for a Restaurant Revitalization Fund (RRF) grant, even though he knew, or should have known, that the company owned and operated too many locations to qualify for the funding.

The Restaurant Revitalization Fund, established by the American Rescue Plan Act in March 2021, aimed to provide financial assistance to struggling restaurants and eligible entities affected by the COVID-19 pandemic. With an allocation of $28.6 billion to be administered by the United States Small Business Administration (SBA), the fund aimed to grant monetary awards to qualifying establishments based on their pandemic-related revenue losses. However, the fund specified that restaurants owning or operating more than 20 locations as of March 13, 2020, were not eligible for the grants.

In April 2021, the SBA released guidelines for the RRF applications, reiterating that any entity owning or operating more than 20 locations as of March 13, 2020, would not be considered an "eligible entity." The agency clarified that a restaurant was considered "in operation" if it was actively making sales.

In the settlement agreement, Feast American Diners and Beshay admitted and accepted responsibility for the following facts: In May 2021, Beshay applied for an RRF grant on behalf of Feast American Diners, seeking an amount of $928,554. The application included a question about the number of locations owned or operated by Feast American Diners as of March 13, 2020, to which they falsely responded "no."

Responding "yes" to this question would have made them ineligible for the grant. Beshay not only responded "no" but affixed his initials to a statement claiming that the applicant, along with its affiliates, did not own or operate more than 20 locations. However, Feast American Diners owned 21 Denny's locations as of March 13, 2020, and each of those locations made sales on that day.

The investigation into this alleged fraud began in December 2022 when a whistleblower filed a qui tam complaint under seal in the United States District Court for the Northern District of New York. This prompted the United States to investigate the claims and determine whether to intervene in the litigation on behalf of the government. In this case, the relator, the whistleblower, will receive a share of the $2 million settlement, amounting to $200,000.

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