Condat Corporation, a Michigan-based producer of industrial lubricants, has agreed to pay $1,811,034.24 to resolve allegations that it violated the False Claims Act by making false statements to the U.S. Small Business Administration in order to obtain a Paycheck Protection Program loan for which it was ineligible, according to an announcement by United States Attorney Jerome F. Gorgon Jr. on July 31.
The Paycheck Protection Program was created by Congress in March 2020 as emergency financial assistance for American businesses affected by the COVID-19 pandemic. Under the program, eligible small businesses could receive forgivable loans guaranteed by the SBA if they met requirements such as employee limits and restrictions on foreign ownership.
In January 2021, Condat obtained a second draw PPP loan of $1 million while operating as a subsidiary of Condat SA, a French company and part of Condat Groupe with at least 15 associated business entities worldwide. The United States alleged that Condat falsely certified its eligibility for both the loan and forgiveness despite having more than 300 employees across its affiliates at the time—exceeding PPP rules then in effect.
“The Paycheck Protection Program supports American small businesses, not international conglomerates,” said U.S. Attorney Jerome F. Gorgon Jr., “We are coming for companies that lied to get COVID-19 relief loans.”
The settlement resolves a lawsuit filed under whistleblower provisions of the False Claims Act; this allows private parties to file suit on behalf of the government and share in any recovery amount—in this case, with the whistleblower receiving 10% of the settlement sum.
The Department of Justice’s National Fraud Enforcement Division handled this matter alongside Assistant U.S. Attorney Greg Dickinson and support from SBA’s Office of General Counsel. The claims resolved are allegations only; there has been no determination of liability.