On November 25, 2024, Lafayette Real Estate entered into a settlement agreement with the Department of Justice (DOJ) and Jesus Nunez-Unda (the Relator) regarding a complaint filed by the Relator against Lafayette RE Management, Brandywine Homes USA LLC, and their Founder and CEO, Thibault Adrien, pertaining to Paycheck Protection Program (PPP) loans the firm received early in the Covid-19 pandemic.

While Lafayette denies liability and disagrees that it was ineligible for the PPP loans received, the firm is pleased to reach this resolution and move forward from this issue.

The qui-tam complaint was filed by a disgruntled former employee, Jesus Nunez-Unda, who had led the application processes for both the loans and subsequent forgiveness, calculating loan amounts and preparing forms for the CEO’s signature, and reflects what the company believes to be a personal vendetta against Lafayette and the individual who terminated his employment.

Andy Peluso, Lafayette’s General Counsel, said, “When the PPP applications were filed in April 2020, there was still significant uncertainty about how our business and many others would fare in the pandemic, and these loans were intended to mitigate the need for layoffs — which Lafayette and Brandywine were both able to avoid. The fact of the matter was that more than 50% of Lafayette’s residents were facing unemployment and underemployment at the time, and uncertainty about their ability to meet their rent obligations, which created uncertainty for our operating businesses. This is the merit on which the applications were filed, and the funds were used as intended to cover payroll and rent.”

Importantly, Lafayette had at the time and continues to have strong conviction in the single-family rental asset class, and this long-term confidence was entirely disconnected from the immediate and medium-term risks presented at the start of the pandemic, when delinquency rates were expected to spike. At the time, the firm had no visibility regarding government subsidies for residents facing employment concerns, and its focus was to protect its employees from similar disruption.

The two loans at issue were among many across the U.S. that have faced scrutiny by the Department of Justice and Small Business Administration, due in large part to the vague meaning of ‘economic necessity,’ which was left up to the interpretation of applicants. In the interest of avoiding a protracted litigation over relatively low-dollar loans, Lafayette – like many others – opted to resolve the matter by settling with the Department of Justice without any admission of liability or wrongdoing.

Lafayette received a $335,000 loan, and Brandywine received a $340,882 loan. The qui-tam action from the disgruntled employee alleging that both loans were fraudulently obtained is being entirely dismissed with prejudice upon a settlement with the DOJ of $680,000.

Lafayette believes that Nunez-Unda has also engaged in defamation of the company and the individual who made the decision to terminate his employment, and they will fully enforce their rights in this regard.

It is important to note that the PPP loans received were solely designed to support payroll and rent payments for Lafayette’s asset management and property management companies, Lafayette RE Management and Brandywine Homes, and that capital partners and investors of Lafayette are totally unrelated to the situation.

Lafayette is committed to contributing solutions to the critical housing shortage by building high-quality, attainably priced housing options for families in under-supplied markets across the U.S. The company is also committed to supporting underserved individuals in reaching their career goals through its non-profit, Brandywine Cares.

About Lafayette Real Estate

Lafayette is a pioneer in the single-family rental (SFR) and Build-to-Rent (BTR) space. In 2023, industry peers voted Lafayette as the Best SFR company in the US as well as CEO of the year for Thibault Adrien, at the annual IMN Awards. Lafayette’s operations are vertically integrated, including asset management, property management (Brandywine Homes USA) and development & construction (Marquis Homes) professionals. Today, Lafayette has gross AUM in excess of $1bn, consisting of a portfolio of over 5,000 homes mainly in the US sunbelt. For more information, visit lafayette-re.com.

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