Three Chinese-Funded Companies to Pay $7.3 Million Over Alleged Fraudulent Claims of Pandemic Relief Loans

On July 29, 2024, the U.S. Department of Justice (DOJ) building in Washington, D.C. (Madalina Vasiliu / The Dajiyuan)

[People News] On Tuesday (December 16), the U.S. Department of Justice announced that three U.S. subsidiaries owned by Chinese capital have agreed to pay a total of more than $7.31 million to settle allegations that they improperly obtained “Paycheck Protection Program” (PPP) loans by making false certifications.

According to a report by Voice of America, the three companies are Greenland LA Metropolis Hotel Development LLC, Greenland US Management LLC, and Greenland LA Metropolis Development III. Their parent company is China’s Greenland Holding Group Company Limited. The Department of Justice noted that the Greenland Group employs tens of thousands of people worldwide.

During the COVID-19 pandemic in 2022, the U.S. Congress established the PPP program to provide emergency economic assistance to Americans affected by the pandemic. Under the program, eligible companies could receive forgivable loans guaranteed by the Small Business Administration (SBA). Companies applying for the loans were required to certify that they met eligibility requirements and to provide accurate information, including the number of employees of the company and related entities.

The U.S. Department of Justice alleged that when these three U.S. entities of the Greenland Group applied for two rounds of PPP loans, they certified that they were eligible. In reality, however, they were part of the Greenland Group’s global operations and were affiliated with other companies in the United States and China, employing more people than allowed under SBA standards for their industry. In addition, the DOJ said that more than 20% of the ownership interests in these three entities were held by entities established and organized in China, meaning they did not meet the eligibility requirements for the second round of PPP loans.

In the DOJ statement, Brad D. Schimel, U.S. Attorney for the Eastern District of Wisconsin, said: “Congress established the PPP to help American small businesses during the pandemic, not to subsidize large Chinese-funded enterprises. However, in this case, the defendants are alleged to have provided false information to the U.S. Small Business Administration in order to obtain government funds to which they were not entitled.”

The DOJ statement also noted that the civil settlement resolves claims brought under the whistleblower provisions of the False Claims Act, which allow private parties to bring lawsuits on behalf of the United States and receive a portion of the recovery. The related whistleblowers in this case are GNGH2 Inc. and whistleblower Aidan Forsyth. The former will receive nearly $700,000, and the latter will receive more than $33,000.

In August of this year, three U.S. subsidiaries controlled by a Chinese state-owned enterprise (collectively known as the “BWI entities”) agreed to pay more than $21.6 million to settle allegations of fraudulently obtaining PPP loans. In February of this year, YAPP USA Automotive Systems Inc., a subsidiary of the Chinese state-owned State Development and Investment Corp. Ltd., agreed to pay more than $14 million to resolve allegations that it improperly obtained PPP loans. In both of those cases, GNGH2 Inc. was a related whistleblower and received compensation.

△