GPS Manufacturer Pays $2.6M to Settle False Claims Act Allegations Over PPP Loan

Hemisphere GNSS (USA) Inc., a GPS manufacturer in Arizona, has agreed to pay $2.6 million to settle allegations that it violated the False Claims Act. The company allegedly provided false information to apply for and receive forgiveness of a Paycheck Protection Program (PPP) loan it was not entitled to receive.

The PPP was established in March 2020 under the CARES Act to provide emergency financial support to businesses affected by the pandemic. The program authorized billions of dollars in forgivable loans to small businesses to help cover employee wages and other expenses. In 2021, Congress offered a second round of PPP loans through the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act. Borrowers were required to certify the accuracy of all information in their loan applications.

In February 2021, Hemisphere applied for a second-round PPP loan and certified its eligibility. The company claimed that no entity from the People’s Republic of China owned 20% or more of an economic interest in Hemisphere and that no board member was a resident of China. These certifications were allegedly false, making Hemisphere ineligible for the loan it received and later forgiven.

“Legitimate PPP loans saved small businesses across America,” said U.S. Attorney Gary M. Restaino for the District of Arizona. “But not everyone used the program as intended. Our office will continue to hold accountable those business and individuals who misused the PPP program, as the settlement announced today reflects.”

The civil settlement resolves claims brought under the qui tam provisions of the False Claims Act by GNGH2 Inc. Under these provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is titled United States ex rel. GNGH2, Inc. v. Hemisphere GNSS (USA) Incorporated, 2:22-cv-00224 (D. Arizona). GNGH2 will receive $260,000 as its share of the settlement.

The resolution was achieved through the coordinated efforts of the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the District of Arizona, with assistance from the SBA’s Office of General Counsel and Office of the Inspector General. Trial Attorney John F. Schifalacqua and Assistant U.S. Attorney Anne E. Nelson handled the case.

“The settlement in this matter demonstrates the excellent results achieved through the combined efforts of SBA and the Department of Justice to uncover and forcefully respond to PPP misconduct,” said General Counsel Therese Meers of the Small Business Administration (SBA). “The federal government is strongly committed to identifying and aggressively pursuing any instances of fraud or misconduct within the Paycheck Protection Program.”

Potential fraud affecting COVID-19 relief programs can be reported through the Civil Division’s Fraud Section webpage or by calling the National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Image: Envato

This article, "GPS Manufacturer Pays $2.6M to Settle False Claims Act Allegations Over PPP Loan" was first published on Small Business Trends