Chinese firms pay $21.6M over PPP fraud claims

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Three Chinese-based companies have agreed to pay $21,660,983 to solve allegations that they submitted false claims to obtain Paycheck Protection Program (PPP) loans for which they were not eligible.

BWI North America Inc., BWI Indiana Inc. and BWI Chassis Dynamics (NA) Inc. — also known as BWI Entities — reached the agreement in the Eastern District of Wisconsin.

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 individuals the borrower and its affiliated entities employed 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.

The BWI Entities are part of a large multinational corporation that supplies automotive brake and suspension systems worldwide. At the time they applied for and received their PPP loans, the BWI Entities were each majority-owned and controlled by government enterprises of the People’s Republic of China, including the State-Owned Assets Supervision and Administration Commission of Beijing.

In applying for their PPP loans, the BWI Entities certified that they were eligible for the loans. The United States alleges that the BWI Entities were not eligible for their PPP loans because they were affiliated with other companies in China, Europe and elsewhere, and together with their affiliates across the globe, the BWI Entities employed more individuals than permitted by SBA’s size standard for their industry. The United States also contends that the BWI Entities were not eligible because they were ultimately owned by a government entity.

The BWI Entities cooperated with the United States’ investigation by identifying individuals involved in or responsible for the conduct and disclosing facts and documents gathered during their own investigation. As a result, the BWI Entities received credit under the department’s guidelines for taking disclosure, cooperation and remediation into account in False Claims Act cases.

“The United States Attorney’s Office takes seriously its obligation to combat fraud and protect American taxpayers,” said Acting U.S. Attorney Richard G. Frohling for the Eastern District of Wisconsin. “This settlement demonstrates that businesses and individuals who abuse government programs like the Paycheck Protection Program will be held accountable.”

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to file an action on behalf of the United States and receive a portion of any recovery.  The lawsuit was filed by GNGH2 Inc., which will receive $2,166,098.30 in connection with this settlement.

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the United States Attorney’s Office for the Eastern District of Wisconsin, with assistance from the SBA’s Office of General Counsel and Office of the Inspector General.