SW North America, Inc., a machining and automation supplier, has agreed to a settlement amounting to $1,520,958.14 to address allegations of violating the False Claims Act. The company was accused of applying for and obtaining a loan under the Small Business Administration's Paycheck Protection Program (PPP) that it was not eligible for. This was announced by Acting United States Attorney for the Northern District of Texas, Chad E. Meacham.
The PPP, a part of the CARES Act introduced in March 2020, was designed to provide emergency financial assistance to small businesses impacted by the economic challenges of the COVID-19 pandemic. Eligibility for these loans was determined by a range of criteria, including specific employee-count size standards.
In 2021, SW North America applied for and received a PPP loan totaling $1,204,400, which was ultimately forgiven. However, allegations in a lawsuit suggested that SW North America, along with its affiliates, surpassed the size standards required, rendering it ineligible for the loan.
“PPP loans were intended, first and foremost, to help eligible small businesses during the COVID-19 pandemic,” said Acting United States Attorney Chad E. Meacham. “This office will continue to aggressively pursue loan recipients who were not eligible to obtain taxpayer funds, whether due to their size or for any other reason.”
The resolution of this matter was achieved through a lawsuit filed under the qui tam provision of the False Claims Act. This legal mechanism allows private individuals to file suits on behalf of the United States and potentially benefit from a portion of the government's recovery. The lawsuit, identified as case number 3:24-CV-1123-N, was filed in the U.S. District Court for the Northern District of Texas, and the plaintiff, GNGH2 Inc., will receive $187,003.05 as part of the settlement.
Assistant United States Attorney Andrea Hyatt, with support from Amber Perez of the SBA, represented the government in this lawsuit. It is important to note that the civil claims resolved by the settlement are only allegations, with no determination of civil liability established.