Mutoh America, Inc., a manufacturer in the large format printing industry and technology distributor based in Arizona, agreed on Apr. 6 to pay $900,000 to settle allegations that it made material misrepresentations in its applications for a Paycheck Protection Program (PPP) loan and forgiveness under the False Claims Act.
The case highlights efforts by federal authorities to address misuse of COVID-19 relief funds meant for job retention during the pandemic. The PPP was created under the Coronavirus Aid, Relief and Economic Security (CARES) Act in March 2020 to help small businesses retain employees. Later modifications through the Economic Aid Act and American Recovery Plan Act added restrictions, including limiting loans to applicants with no more than 300 employees across domestic and foreign affiliates.
According to the settlement agreement, Mutoh America is a wholly owned subsidiary of Japan-based Mutoh Holdings, Inc. The company admitted that together with its foreign affiliates it had more than 300 employees at the time it applied for a second draw PPP loan in March 2021 but did not disclose this information as required on its application. Despite internal doubts about eligibility from a high-ranking official, Mutoh proceeded with both applying for and receiving forgiveness of a $584,012 loan.
United States Attorney for the District of Arizona Timothy Courchaine said: "The overarching purpose of the PPP was to help people keep their jobs, but some people abused the program and misused taxpayer money. This settlement underscores my office’s continued efforts to pursue recoveries from individuals and businesses that unlawfully took advantage of the federal government’s COVID-19 assistance at the expense of other Americans’ welfare." SBA General Counsel Wendell Davis said: "The favorable settlement in this case is the product of enhanced efforts by federal agencies such as the Small Business Administration working with the U.S. Attorney’s Office, other federal law enforcement agencies, as well as financial institutions or private individuals who uncover misconduct to recover the lending program’s damages."
The civil settlement resolves claims brought under whistleblower provisions of the False Claims Act. Verity Investigations LLC will receive $90,000 as part of this resolution after filing suit on behalf of the United States.
Federal authorities encourage anyone with information about potential fraud involving COVID-19 relief programs or other alleged fraud against government programs to report tips via designated hotlines or web forms.
