A Wixom manufacturer has agreed to pay just over $1.5 million after federal officials alleged it lied about the size of its workforce to qualify for a pandemic-era small business loan. 3Con Corporation, which designs and manufactures automated production systems for the automotive and life sciences industries, will pay $1,500,439.50 to resolve the allegations.
The settlement, reported by CBS News Detroit, stems from a second-draw Paycheck Protection Program loan that 3Con obtained in January 2021. The company received a loan reported as $828,498, though a separate loan database maintained by FederalPay lists the amount as $828,400. Wixom sits in Oakland County, roughly 34 miles northwest of Detroit.
Federal officials alleged that 3Con was ineligible for the loan because it had more than 300 employees once its U.S. operations were combined with those of an Austrian affiliate under common ownership, per the CBS Detroit report. The Small Business Administration generally required second-draw PPP borrowers to have no more than 300 employees, a limit confirmed on the agency's own second-draw loan guidance.
How the Affiliate Rule Became the Problem
That 300-employee cap wasn't applied in isolation. SBA guidance specified that the certification applied only after factoring in the program's affiliation rules, according to the agency's own PPP FAQ document. Treasury guidance went further, addressing how businesses were required to count employees of both foreign and domestic affiliates when determining whether they fell under the program's size standards.
Officials say 3Con falsely certified to the Small Business Administration that it met the eligibility threshold, a statement that federal officials allege violated the False Claims Act, per the same CBS Detroit account. That federal statute allows private parties to sue on the government's behalf over alleged fraud against federal programs, and those who bring successful cases may share in up to 30 percent of whatever the government recovers.
A Private Lawsuit Triggered the Case
The case against 3Con began with a lawsuit naming Verity Investigations LLC, filed in December 2025. Federal officials say Verity Investigations will receive roughly $150,000 of the settlement proceeds, the report notes.
The Paycheck Protection Program itself traces back to March 2020, when lawmakers created it to deliver emergency assistance to businesses struggling amid the onset of the COVID-19 pandemic. Eligible companies could apply for loans backed by the Small Business Administration and later seek forgiveness, a structure that made speed a priority over scrutiny in the program's early rollout.
Part of a Broader Pattern in Michigan
3Con's settlement is not an isolated case in the state. The U.S. Department of Justice announced in July 2025 that four Michigan businesses had collectively agreed to pay $1,933,448 to settle allegations they unlawfully obtained PPP loans, according to the U.S. Department of Justice. In April 2025, Sterling Heights-based Slifco Electric agreed to pay more than $1.4 million to resolve similar False Claims Act allegations tied to its PPP borrowing, the department reported.
The cases involve allegations that businesses obtained pandemic relief despite size limits. The Small Business Administration itself has flagged broader concerns about forgiven PPP loans that were later identified as potentially ineligible, according to an SBA report issued in May 2025.
