YAPP USA Automotive Systems Inc., a Michigan-based company, has agreed to settle allegations that it falsely obtained a Paycheck Protection Program (PPP) loan by misrepresenting its eligibility.

The company will pay $14,208,496 to resolve these claims, as part of an effort to address violations under the False Claims Act.

What Led to the Settlement?

The Paycheck Protection Program, established in March 2020, was designed to provide financial relief to businesses affected by the COVID-19 pandemic.

The loans, guaranteed by the Small Business Administration (SBA), were meant to support eligible small businesses during the economic crisis.

However, businesses were required to meet strict eligibility criteria, including limitations on employee numbers and exclusions for certain businesses, like those owned by government entities.

YAPP USA, which is owned by the State Development and Investment Corp. Ltd, a company controlled by the People’s Republic of China, applied for and received a first-draw PPP loan worth $9,598,462.

The SBA later forgave the loan. However, the U.S. government argued that YAPP USA was ineligible for the loan because it, along with its affiliates, employed more individuals than allowed under the SBA’s size standard for its industry.

Additionally, since YAPP USA is owned by a government entity, it did not qualify under the PPP guidelines.

Cooperation and Resolution

In response to the investigation, YAPP USA cooperated fully by identifying key individuals involved and providing relevant documents related to the case.

The company’s cooperation and proactive steps helped it earn credit under the department’s guidelines for resolving False Claims Act cases.

Deputy Assistant Attorney General Michael D. Granston of the Justice Department emphasized the importance of holding businesses accountable for misusing taxpayer-funded programs like the PPP, which were intended to support small businesses and their employees during the pandemic.

Government Reaction and Continued Commitment

Acting U.S. Attorney Richard G. Frohling for the Eastern District of Wisconsin reiterated that the PPP was created to help small businesses, not large companies owned by foreign governments.

He emphasized the government’s commitment to prosecuting businesses that abused the program.

The settlement also reflects the collaborative efforts of several agencies, including the SBA, the Department of Justice, and other federal law enforcement entities, to recover funds and hold companies accountable for fraudulent activities.

Whistleblower Involvement and Financial Rewards

The settlement also addresses claims made under the qui tam provisions of the False Claims Act, which allow private individuals to file lawsuits on behalf of the U.S. government and receive a portion of the recovery.

In this case, the whistleblower, GNGH2 Inc., will receive $1,420,849 as part of the settlement.

Ongoing Efforts to Combat Fraud

The case highlights the continued efforts of the federal government to prevent fraud within taxpayer-funded programs, particularly during times of national crisis.

Trial Attorney Lindsey Roberts and Assistant U.S. Attorney Michael Carter led the case, with assistance from other key officials within the SBA and the U.S. Attorney’s Office for the Eastern District of Wisconsin.

Though the settlement resolves the allegations, it is important to note that no formal determination of liability has been made in the case.

The agreement simply addresses the claims without any admission of fault.

This article was published on TDPel Media. Thanks for reading!

Share on Facebook «||» Share on Twitter «||» Share on Reddit «||» Share on LinkedIn