YAPP USA Automotive Systems, Inc., a Michigan-based corporation, has agreed to pay $14.2 million to settle allegations of violating the False Claims Act by submitting false claims for a Paycheck Protection Program (PPP) loan. The announcement was made by Acting United States Attorney Richard G. Frohling of the Eastern District of Wisconsin and Deputy Assistant Attorney General Michael D. Granston of the Justice Department’s Civil Division.
The PPP was established in March 2020 to aid Americans affected by the COVID-19 pandemic, offering forgivable loans guaranteed by the Small Business Administration (SBA). Eligibility requirements included employee limits and exclusions for government-owned businesses. YAPP USA's parent company is State Development and Investment Corp., Ltd, owned by China. Despite claiming eligibility, YAPP USA received a $9.6 million first-draw PPP loan that was later forgiven.
The U.S. alleged YAPP USA exceeded SBA's size standard due to its global affiliations and was ineligible as it is government-owned. YAPP USA will pay over $14 million to resolve these claims.
YAPP USA cooperated with investigators, identifying involved individuals and disclosing facts from its investigation, earning credit under department guidelines for cooperation 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 the settlement demonstrates accountability for those abusing vital programs designed for small businesses during the pandemic.
SBA General Counsel Wendell Davis noted that this settlement resulted from enhanced federal agency efforts alongside private individuals uncovering fraud.
Claims resolved include those brought under the False Claims Act’s whistleblower provisions, allowing private parties to file on behalf of the U.S. and receive part of any recovery. GNGH2 Inc., which filed a qui tam lawsuit, will receive $1.4 million from this settlement.
This resolution involved coordination between several Justice Department divisions and offices within SBA.
Trial Attorney Lindsey Roberts and Assistant U.S. Attorney Michael Carter handled this matter with assistance from Christopher J. McClintock of SBA.
It is important to note that these are allegations only; no liability determination has been made.
