In a recent development that underscores the seriousness with which the government is addressing fraud in pandemic relief efforts, a Minnesota-based corporation has agreed to a multi-million dollar settlement over false claim allegations. Schwing America, Inc., with its corporate ties stretching to China, has consented to pay over $2.8 million to resolve allegations of submitting false information to obtain a loan through the Paycheck Protection Program (PPP).
Established by Congress to aid small American enterprises during the economic turmoil caused by the COVID-19 pandemic, the PPP aimed to provide a financial lifeline to keep them afloat. To benefit from the program, businesses had to meet eligibility criteria, including limits on the employee count, affecting both the applying business and its affiliated entities. Despite these requirements, acting on information obtained by the Department of Justice, Schwing America asserted they were eligible and secured a loan of $1,932,800, much of which was later forgiven by the SBA.
However, with its ultimate parent company being Jiangsu Xuzhou State-Owned Assets Supervision and Administration Commission—a government-owned entity in China—Schwing America was, in effect, part of a multinational conglomerate with thousands of employees across the globe, thus surpassing the SBA's size standard and disqualifying itself from the PPP. An arrangement has now been put in place, agreed upon by Schwing America, to pay back the sum of $2,894,739 to settle these allegations, as per a statement obtained by the Justice Department.
"Congress intended for the PPP to help small businesses, not companies that are part of large multinational corporations owned by foreign governments," remarked Acting U.S. Attorney Richard G. Frohling. This sentiment was echoed by Wendell Davis, SBA General Counsel, who told the Department of Justice, "The settlement in this matter reflects SBA's commitment to identifying and pursuing those who perpetrated fraud on Covid relief programs to the detriment of small businesses." Additionally, GNGH2 Inc., the whistleblower who filed a qui tam lawsuit, will receive $289,473.90 as part of the settlement.
