YAPP USA Automotive Systems Inc., a corporation with its principal place of business in Michigan, has agreed to pay $14,208,496 to resolve allegations that it violated the False Claims Act by submitting false claims to obtain a Paycheck Protection Program (PPP) loan for which it was not eligible.
YAPP USA’s ultimate parent company is State Development and Investment Corp. Ltd, a company owned and controlled by China. Through common ownership and management, YAPP USA is affiliated with dozens of other companies worldwide.
In applying for a first-draw PPP loan, YAPP USA represented that it was eligible for the PPP, and it received a first-draw PPP loan of $9,598,462, which the SBA later forgave. The United States alleged that YAPP USA was not eligible under the SBA rules for a PPP loan because YAPP USA, singly and together with its affiliates, employed more individuals than permitted by SBA’s size standard for its industry.
The United States also contended that YAPP USA was not eligible because a government entity owns it. YAPP USA will pay $14,208,496 to the United States to resolve these allegations.
YAPP USA cooperated with the United States’ investigation by identifying individuals involved in or responsible for the conduct and disclosing facts and documents gathered during YAPP USA’s own investigation. As a result, YAPP USA received credit under the department’s guidelines for taking disclosure, cooperation and remediation into account in False Claims Act cases.
“PPP loans were intended to help small businesses in the United States,” said Deputy Assistant Attorney General Michael D. Granston of the Justice Department’s Civil Division. “The Department remains committed to pursuing those who violated the requirements of this taxpayer-funded program.”
“Congress and the SBA designed the PPP to help small businesses and their employees during the pandemic, not large companies owned by foreign governments,” said Acting U.S. Attorney Richard G. Frohling for the Eastern District of Wisconsin. “This settlement demonstrates that our office will continue to hold accountable those businesses and individuals who abused this vital program.”
Congress created the PPP in March 2020 to provide emergency financial assistance to Americans suffering from the economic effects of the COVID-19 pandemic. Under the PPP, eligible businesses could receive forgivable loans guaranteed by the Small Business Administration (SBA).
Regulations provide various eligibility requirements for the PPP, including limitations on the number of employees and exclusions for certain types of businesses, like those that are owned by government entities. In their loan applications, borrowers were required to certify that they were eligible for the PPP and that the information they provided was accurate.
