Acting United States Attorney Richard G. Frohling of the Eastern District of Wisconsin, alongside Deputy Assistant Attorney General Michael D. Granston of the Justice Department’s Civil Division, announced that YAPP USA Automotive Systems, Inc., based in Michigan, has agreed to pay $14,208,496. This settlement resolves allegations of False Claims Act violations related to a Paycheck Protection Program (PPP) loan.
The PPP was established by Congress in March 2020 to assist Americans facing economic challenges due to the COVID-19 pandemic. It provided forgivable loans guaranteed by the Small Business Administration (SBA), with eligibility requirements including employee limits and exclusions for government-owned businesses. Borrowers were required to certify their eligibility and provide accurate information.
YAPP USA's parent company is State Development and Investment Corp., Ltd, owned by China’s government. The U.S. alleged that YAPP USA was ineligible for a PPP loan due to its number of employees exceeding SBA's industry size standards and its ownership by a government entity. Despite this, YAPP USA received and had forgiven a first-draw PPP loan amounting to $9,598,462.
The company cooperated with the investigation by identifying responsible individuals and disclosing facts from its own inquiry. This cooperation earned them credit under department guidelines for disclosure, cooperation, and remediation in False Claims Act cases.
“PPP loans were intended to help small businesses in the United States,” stated Deputy Assistant Attorney General Granston. “The Department remains committed to pursuing those who violated the requirements of this taxpayer-funded program.”
Acting United States Attorney Frohling emphasized that “Congress and the SBA designed the PPP to help small businesses and their employees during the pandemic, not large companies owned by foreign governments.” He added that this settlement highlights their commitment to holding accountable those who misused this program.
SBA General Counsel Wendell Davis remarked on the favorable settlement as a result of collaboration among federal agencies like the Small Business Administration working with the Department of Justice and other law enforcement agencies.
This civil settlement also resolves claims under the qui tam provisions of the False Claims Act allowing private parties to file on behalf of the U.S. GNGH2 Inc., which filed such an action, will receive $1,420,849 from this settlement.
This resolution was achieved through coordinated efforts involving various divisions within the Justice Department and assistance from SBA offices.
The resolved claims are allegations only; no liability determination has been made.