Mutoh America, Inc., a manufacturer and technology distributor in Arizona, agreed on Apr. 6 to pay $900,000 to settle allegations that it made material misrepresentations in its applications for a Paycheck Protection Program (PPP) loan under the False Claims Act.
The case is significant because it addresses concerns about misuse of federal COVID-19 relief funds intended to support job retention and economic stability during the pandemic.
According to the settlement agreement, Mutoh admitted that together with its foreign affiliates it had more than 300 employees at the time of applying for a second PPP loan. The company did not disclose all affiliated entities’ employees as required when calculating total employment numbers on its application. Despite internal doubts about eligibility from a high-ranking official, Mutoh proceeded with its application and later applied for forgiveness of the $584,012 loan. The U.S. government was unaware of these misrepresentations when approving both the payment and forgiveness of the loan.
Timothy Courchaine, United States Attorney for the District of Arizona, said: “The overarching purpose of the PPP was to help people keep their jobs, but some people abused the program and misused taxpayer money. This settlement underscores my office’s continued efforts to pursue recoveries from individuals and businesses that unlawfully took advantage of the federal government’s COVID-19 assistance at the expense of other Americans’ welfare.”
Wendell Davis, General Counsel for the Small Business Administration (SBA), said: “The favorable settlement in this case is the product of enhanced efforts by federal agencies such as the Small Business Administration working with the U.S. Attorney’s Office, other federal law enforcement agencies, as well as financial institutions or private individuals who uncover misconduct to recover the lending program’s damages.”
The civil settlement resolves claims brought under whistleblower provisions allowing private parties to file actions on behalf of the United States; Verity Investigations LLC will receive $90,000 as part of this resolution.
Officials encourage anyone with information about potential fraud involving COVID-19 relief programs or other fraud against federal programs to report tips through available hotlines or online forms.
