Hemisphere GNSS (USA) Inc., a satellite global positioning system manufacturer based in Arizona and acquired by CNH Industrial in 2023, has agreed to pay $2.6 million to settle allegations of violating the False Claims Act. The company allegedly provided false information to secure forgiveness for a Paycheck Protection Program (PPP) loan it was not entitled to receive.
The PPP was established by Congress in March 2020 under the Coronavirus Aid, Relief, and Economic Security (CARES) Act to support small businesses affected by the pandemic. The program offered forgivable loans to help businesses cover employee wages and other expenses. In 2021, Congress introduced a second round of PPP loans through the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act. Applicants were required to certify the accuracy of all information submitted in their loan applications.
In February 2021, Hemisphere applied for a second-round PPP loan, certifying its eligibility. The company asserted that no entity created or organized under Chinese law owned or held at least 20% economic interest in Hemisphere and that no board member was a resident of China. However, these certifications were allegedly false at the time of application, rendering Hemisphere ineligible for the loan it received and subsequently had forgiven.
“PPP loans were an important but finite resource available to help eligible small businesses retain employees and keep their doors open,” stated Principal Deputy Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “When ineligible entities improperly sought PPP loans or forgiveness of those loans, they reduced the availability of this critical support for eligible businesses.”
U.S. Attorney Gary M. Restaino for the District of Arizona commented: “Legitimate PPP loans saved small businesses across America. But not everyone used the program as intended. Our office will continue to hold accountable those business and individuals who misused the PPP program, as the settlement announced today reflects.”
General Counsel Therese Meers from the Small Business Administration (SBA) added: “The settlement in this matter demonstrates the excellent results achieved through the combined efforts of SBA and the Department of Justice to uncover and forcefully respond to PPP misconduct.”
The civil settlement resolves claims brought under qui tam provisions by GNGH2 Inc., allowing private parties to file actions on behalf of the United States and receive part of any recovery. GNGH2 will receive $260,000 from this settlement.
This resolution resulted from coordinated efforts between several entities including Justice Department’s Civil Division’s Commercial Litigation Branch Fraud Section; U.S. Attorney’s Office for District of Arizona; SBA’s Office of General Counsel; Office of Inspector General; Trial Attorney John F. Schifalacqua; and Assistant U.S. Attorney Anne E. Nelson.
On May 17, 2021, a COVID-19 Fraud Enforcement Task Force was established by then-Attorney General to enhance efforts against pandemic-related frauds through coordination among various government agencies.
Tips regarding potential fraud affecting COVID-19 relief programs can be reported via multiple channels provided by Justice Department's National Center for Disaster Fraud (NCDF).
The claims resolved are allegations only with no determination made regarding liability.