Kemper Systems America, Inc. and Thermacut, Inc., both subsidiaries of the German-based conglomerate Industrie-Beteilugungs-Gesellschaft mbH & Co. (IBG), have agreed to pay $2.1 million to settle allegations that they improperly obtained Paycheck Protection Program (PPP) loans intended for small businesses in the United States.
The settlement resolves claims under the False Claims Act related to PPP loans issued by the U.S. Small Business Administration during the COVID-19 pandemic. The program was created in March 2020 by Congress to provide financial support to American small businesses impacted by economic disruptions caused by the pandemic. Eligibility requirements included a limit on the number of employees, counting those associated with any foreign affiliates.
According to U.S. authorities, Kemper and Thermacut received forgiven PPP loans in 2021 despite not meeting these requirements because their parent company and its affiliates had over 300 employees worldwide at the time of application, exceeding eligibility limits.
“The Paycheck Protection Program was designed to support small business during the COVID-19 Pandemic, but too often large businesses took advantage of the program by having their subsidiaries obtain loans,” said U.S. Attorney DiGiacomo. “This settlement, and others like it, demonstrate that this office is committed to holding those who improperly took government aid accountable.”
The resolution includes claims brought under whistleblower provisions of the False Claims Act, which allow private individuals—referred to as relators—to file actions on behalf of the United States and receive a portion of any recovery. In this case, Verity Investigations, LLC acted as relator and will receive a share of the settlement.
Assistant U.S. Attorney David M. Coriell and USAO Investigator Margaret McFarland handled this matter with help from the SBA’s Office of General Counsel.
Anyone with information about potential fraud or abuse involving COVID-19 relief programs is encouraged to report it through channels such as the Department of Justice’s National Center for Disaster Fraud Hotline or online complaint form at https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.
The government notes that these resolved claims are allegations only; there has been no determination of liability.
