Strand bookstore to pay nearly $1.5 million over Covid loan tied to Sen. Wyden's wife

The Strand, the iconic New York City bookstore, agreed to pay nearly $1.5 million in a civil settlement for accepting a Covid government loan that was off-limits because the store is owned by the wife of Oregon Democratic Sen. Ron Wyden, according to the U.S. Attorney's Office in Washington, D.C.

The Strand applied for the $932,350 loan in February 2021 from the Paycheck Protection Program administered by the Small Business Administration, U.S. Attorney Jeanine Pirro's office said Tuesday.

Store owner Nancy Bass Wyden certified on the loan application that "the spouse of a Member of Congress does not directly or indirectly hold a controlling interest in the applicant," Pirro's office said.

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

The Strand will pay $1,482,560 to settle the case. There was no determination of liability by the store, Pirro's office said.

The Strand, in a statement, said the store made an "unintentional" mistake in applying for the loan, and said it was unaware at the time the funds were barred to businesses owned by the spouse of a member of Congress.

Bass Wyden's husband, who has served in the Senate for more than 30 years, is a staunch critic of President Donald Trump, who appointed Pirro to the post of top prosecutor in the District of Columbia.

Bass Wyden is the granddaughter of Ben Bass, founder of the Strand, whose flagship store is in Greenwich Village.

Congress authorized the forgivable PPP loans when it passed the Coronavirus Aid, Relief, and Economic Security Act in March 2020.

In December 2020, Congress provided additional funding for the PPP loan program with separate legislation, which "included a prohibition against 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," Pirro's office said.

In a statement Tuesday, Pirro 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. Senator."

Her office noted that the False Claims Act, which the Strand was alleged to have violated, "allows the government to establish liability based on reckless disregard and permits the government to recover more than its actual losses," which is what occurred in this case.

The civil settlement resolved claims brought under a so-called qui tam lawsuit, which allows private whistleblowers to sue on behalf of the U.S. government and receive a portion of any recovery.

The qui tam action in this case was filed by a corporate entity, Blockquote Inc., in U.S. District Court in Washington. Blockquote, whose owners were not disclosed by Pirro's office, will receive a total share of about $148,256 in connection with the settlement.

The docket for Blockquote's lawsuit is sealed from public view.

The Strand, in a statement after CNBC requested comment from the store and Bass Wyden, said the restriction that the store violated was passed by Congress between the first and second rounds of the PPP.

"Unfortunately, the bookstore's accountant and the bank administering the loan were not aware of this change when the second-draw application was processed," the Strand said.

"We stand by the facts: the circumstances arose during an unprecedented and rapidly changing public health emergency, the mistake was unintentional," the store 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 store said.

Sen. Wyden's office did not immediately respond to requests for comment.