Settlement Agreement — No. 2:25-cv-01647 (Dkt. 9, D. Ariz.)

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A settlement agreement filed March 31, 2026 in United States ex rel. Verity Investigations, LLC v. Mutoh America, Inc., No. CV-25-01647-PHX-SPL, in the U.S. District Court for the District of Arizona, among the United States, Mutoh America, Inc. and relator Verity Investigations, LLC. The United States contends that Mutoh misrepresented how many employees it had in a PPP loan application approved on or about March 18, 2021, and that together with its foreign affiliates Mutoh had more than 300 employees at the time of its second PPP loan. Mutoh's admitted facts include a loan in the amount of $584,012. Mutoh agrees to pay the United States $900,000, and the United States will pay $90,000 of it to the relator as the Relator's Share. Signatories include Brian Phipps, President of Mutoh, and Gregory Lynam for Verity Investigations, LLC.

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Case 2:25-cv-01647-SPL Document9 _ Filed 03/31/26 Page 6 of 18

SETTLEMENT AGREEMENT

This Settlement Agreement (“Agreement’’) is entered into among the United States
of America, acting through the United States Attorney’s Office for the District of Arizona
and on behalf of the Small Business Administration (collectively, “the United States”),
Mutoh America, Inc. (“Mutoh”), and Verity Investigations, LLC (“Relator”) (hereafter
collectively referred to as “the Parties”), through their authorized representatives.

RECITALS

A. Mutoh, a Nevada corporation with its principal place of business in
Phoenix, Arizona, is a manufacturer in the large format printing industry and is a
technology distributor of drafting machines.

B. Verity Investigations, LLC is a whistleblower entity that has filed
multiple qui tam lawsuits under the False Claims Act regarding fraudulent Paycheck
Protection Program (“PPP”) loans.

CG Mutoh sought and obtained federal funding through the Paycheck
Protection Program (“PPP”), which Congress established in March 2020 under the
Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) to provide loans to
eligible small businesses.

D. On May 15, 2025, Relator filed a qui tam action in the United States District
Court for the District of Arizona captioned United States ex rel. Verity Investigations, LLC
v. Mutoh America, Inc., No. CV-25-01647-PHX-SPL, pursuant to the gui tam provisions
of the False Claims Act, 31 U.S.C. § 3730(b) (“the Civil Action”). The United States

anticipates intervening in the Civil Action to effectuate this Agreement.

Case 2:25-cv-01647-SPL Document9 _ Filed 03/31/26 Page 7 of 18

E, The United States contends that it has certain civil claims against Mutoh
arising from Mutoh’s knowing submission of an application containing misrepresentations
regarding how many employees it had, which application was approved on or about March
18, 2021, to obtain a PPP loan from the Small Business Administration (“SBA”) that the
SBA later forgave based on Mutoh’s application for forgiveness submitted on or about
September 29, 2021. Specifically, the United States alleges that Mutoh was not eligible to
apply to receive PPP loans or have PPP loans forgiven under the terms of the CARES Act
and SBA rules and regulations because, together with its foreign affiliates, Mutoh had more
than 300 employees at the time of its second PPP loan. That conduct is referred to below
as “the Covered Conduct.”

F, Mutoh admits, acknowledges, and accepts responsibility for the following
facts:

a. The CARES Act is a federal law enacted on March 29, 2020, to
provide emergency financial assistance to the millions of Americans who were suffering
the economic effects caused by the COVID-19 pandemic.

b. One source of relief under the CARES Act was the authorization of
hundreds of billions of dollars in forgivable loans to small businesses for job retention and
certain other expenses through the PPP.

c, The PPP was subsequently expanded and modified by the Economic
Aid Act (“EAA”) in December 2020 and the American Recovery Plan Act (“ARPA”) in

March 2021.

Case 2:25-cv-01647-SPL Document9 _ Filed 03/31/26 Page 8 of 18

d. ARPA provided new restrictions on PPP loans, including limiting
loans to applicants who, together with their domestic and foreign affiliates, collectively
employed 300 or fewer persons.

e ARPA clarified that second draw PPP loans required applicants to
include employees working overseas at foreign affiliates in the computation of the total
number of employees.

f. Mutoh is a wholly owned subsidiary of Mutoh Holdings, Inc., a
publicly traded company in Japan.

g. Together with its foreign affiliates, Mutoh had more than 300
employees at the time of its second PPP loan.

h. Mutoh Holdings, Inc., collectively had approximately 684
employees in March 2019, approximately 693 employees in March 2020, and
approximately 674 employees in March 2021.

i, Mutoh applied for a second draw PPP loan, which Mutoh received
on or about March 18, 2021.

i. Mutoh did not disclose its affiliated entities’ employees in its
computation of the total number of employees on the application as otherwise required.

k. Before Mutoh’s application was submitted, a high-ranking Mutoh
official seriously doubted Mutoh’s eligibility for the loan but decided to proceed with the
application anyway and run the risk of a repayment obligation.

1, On or about September 29, 2021, Mutoh applied for forgiveness of

the loan, which the SBA later approved.

Case 2:25-cv-01647-SPL Document9 _ Filed 03/31/26 Page 9 of 18

m. The United States was unaware of the misrepresentations regarding
the number of employees in Mutoh’s applications to receive the loan and have it forgiven,
and these misrepresentations were material to the United States’ decision to pay and forgive
Mutoh’s PPP loan in the amount of $584,012.

G. Relator claims entitlement under 31 U.S.C. § 3730(d) to a share of the
proceeds of this Agreement and to Relator’s reasonable expenses, attorneys’ fees, and
costs.

To avoid the delay, uncertainty, inconvenience, and expense of protracted litigation
of the above claims, and in consideration of the mutual promises and obligations of this
Agreement, the Parties agree and covenant as follows:

TERMS AND CONDITIONS

L. No later than 20 days after the Effective Date of this Agreement, Mutoh
shall pay to the United States $900,000 (“the Settlement Amount’) by electronic funds
transfer pursuant to written instructions to be provided by the United States Attorney’s
Office for the District of Arizona.

Bs Conditioned upon the United States receiving the Settlement Amount and
as soon as feasible after receipt, the United States shall pay $90,000 to Relator by electronic
funds transfer (“Relator’s Share”).

Be Mutoh agrees to pay $5,312.95 to Relator pursuant to 31 U.S.C. § 3730(d)
in satisfaction of all attorneys’ fees, expenses, and costs incurred by Relator in connection
with the Civil Action, no later than 30 days after the Effective Date of this Agreement.
Payment under this paragraph shall be made by electronic funds transfer pursuant to written

instructions provided by Relator’s counsel.

Case 2:25-Cv-01647-SPL Document 9 _ Filed 03/31/26 Page 10 of 18

4. Subject to the exceptions in Paragraph 6 (concerning reserved claims)
below, and upon the United States’ receipt of the Settlement Amount, the United States
releases Mutoh from any civil or administrative monetary claim the United States has for
the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733; the
Administrative False Claims Act, 31 U.S.C. §§ 3801-3812; and the common law theories
of breach of contract, payment by mistake, unjust enrichment, and fraud.

5; Subject to the exceptions in Paragraph 6 below, and upon the United States’
receipt of the Settlement Amount, Relator, for itself and for its heirs, successors, attorneys,
agents, and assigns, releases Mutoh from any civil monetary claim Relator has on behalf
of the United States for the Covered Conduct under the False Claims Act, 31 U.S.C. §§
3729-3733.

6. Notwithstanding the releases given in Paragraph 4 of this Agreement, or
any other term of this Agreement, the following claims and rights of the United States are
specifically reserved and are not released:

a. Any liability arising under Title 26, U.S. Code (Internal Revenue
Code);

b. Any criminal liability;

c. Except as explicitly stated in the Agreement, any administrative
liability or enforcement right, or any administrative remedy,
including the suspension and debarment rights of any federal
agency;

d. Any liability to the United States (or its agencies) for any conduct

other than the Covered Conduct;

Case 2:25-cv-01647-SPL Document9 Filed 03/31/26 Page 11of18

G. Any liability based upon obligations created by this Agreement;

f. Any liability of individuals;

g. Any liability for express or implied warranty claims or other claims
for defective or deficient products or services, including quality of
goods and services;

h. Any liability for failure to deliver goods or services due; and

i. Any liability for personal injury or property damage or for other
consequential damages arising from the Covered Conduct.

des Relator and its heirs, successors, attorneys, agents, and assigns shall not
object to this Agreement but agree and confirm that this Agreement is fair, adequate, and
reasonable under all the circumstances pursuant to 31 U.S.C. § 3730(c)(2)(B). Conditioned
upon Relator’s receipt of the Relator’s Share, Relator and its heirs, successors, attorneys,
agents, and assigns fully and finally release, waive, and forever discharge the United States
and its agencies, officers, agents, employees, and servants from any claims arising from
the filing of the Civil Action or under 31 U.S.C. § 3730 and from any claims to a share of
the proceeds of this Agreement and/or the Civil Action.

8. Relator, for itself and for its heirs, successors, attorneys, agents, and assigns,
releases Mutoh from any liability to Relator arising from the filing of the Civil Action or
under 31 U.S.C. § 3730(d) for expenses or attorneys’ fees and costs.

9, Mutoh waives and shall not assert any defenses it may have to any criminal
prosecution or administrative action relating to the Covered Conduct that may be based in
whole or in part on a contention that, under the Double Jeopardy Clause in the Fifth

Amendment of the Constitution, or under the Excessive Fines Clause in the Eighth

Case 2:25-cv-01647-SPL Document9 Filed 03/31/26 Page 12 of 18

Amendment of the Constitution, this Agreement bars a remedy sought in such criminal
prosecution or administrative action.

10. | Mutoh fully and finally releases the United States and its agencies, officers,
agents, employees, and servants from any claims (including attorneys’ fees, costs, and
expenses of every kind and however denominated) that Mutoh has asserted, could have
asserted, or may assert in the future against the United States and its agencies, officers,
agents, employees, and servants related to the Covered Conduct or the United States’
investigation or prosecution thereof.

Ls Mutoh fully and finally releases Relator from any claims (including
attorneys’ fees, costs, and expenses of every kind and however denominated) that Mutoh
has asserted, could have asserted, or may assert in the future against Relator related to the
Covered Conduct and Relator’s investigation and prosecution thereof.

12, a. Unallowable Costs Defined: All costs (as defined in the Federal
Acquisition Regulation, 48 C.F.R. § 31.205-47) incurred by or on behalf of Mutoh and its
present or former officers, directors, employees, shareholders, and agents in connection
with:

(1) the matters covered by this Agreement;

(2) the United States’ audit(s) and civil investigation(s) of the
matters covered by this Agreement;

(3) Mutoh’s investigation, defense, and corrective actions
undertaken in response to the United States’ audit(s) and
civil investigation(s) in connection with the matters covered

by this Agreement (including attorneys’ fees);

Case 2:25-cv-01647-SPL Document9 Filed 03/31/26 Page 13 o0f18

(4) the negotiation and performance of this Agreement;
(5) the payment Mutoh makes to the United. States pursuant to
this Agreement and any payments that Mutoh may make to
Relator, including costs and attorneys fees
are unallowable costs for government contracting purposes (“Unallowable Costs”).

b. Future Treatment of Unallowable Costs: Unallowable Costs will be
separately determined and accounted for by Mutoh, and Mutoh shall not charge such
Unallowable Costs directly or indirectly to any contract with the United States.

c, Treatment of Unallowable Costs Previously Submitted for Payment:
Within 90 days of the Effective Date of this Agreement, Mutoh shall identify and repay by
adjustment to future claims for payment or otherwise any Unallowable Costs included in
payments previously sought by Mutoh or any of its subsidiaries or affiliates from the
United States. Mutoh agrees that the United States, at a minimum, shall be entitled to
recoup from Mutoh any overpayment plus applicable interest and penalties as a result of

the inclusion of such Unallowable Costs on previously-submitted requests for payment.

The United States, including the Department of Justice and/or the affected agencies,

reserves its rights to audit, examine, or re-examine Mutoh’s books and records and to
disagree with any calculations submitted by Mutoh or any of its subsidiaries or affiliates
regarding any Unallowable Costs included in payments previously sought by Mutoh or the
effect of any such Unallowable Costs on the amount of such payments.

13. This Agreement is intended to be for the benefit of the Parties only.

Case 2:25-cv-01647-SPL Document9 Filed 03/31/26 Page 14 of 18

14. Upon receipt of the payment described in Paragraph 1, above, and after the
case is unsealed, the Parties shall promptly sign and file in the Civil Action a Stipulation
of Dismissal of the Civil Action pursuant to Federal Rule of Civil Procedure 41(a)(1).

15. Except as provided in Paragraph 3, the Parties shall bear their own legal and
other costs incurred in connection with this matter, including the preparation and
performance of this Agreement.

16. The Parties to this Agreement represent that they freely and voluntarily
enter this Agreement without any degree of duress or compulsion. The signatories to this
Agreement represent that they freely and voluntarily sign this Agreement without any
degree of duress or compulsion.

17. This Agreement is governed by the laws of the United States. The exclusive
jurisdiction and venue for any dispute relating to this Agreement is the United States
District Court for the District of Arizona. For purposes of construing this Agreement, this
Agreement shall be deemed to have been drafted by all Parties to this Agreement and shall
not, therefore, be construed against any Party for that reason in any subsequent dispute.

18. | This Agreement constitutes the complete agreement between the Parties.
This Agreement may not be amended except by written consent of the Parties.

19. The undersigned counsel represent and warrant that they are fully
authorized to execute this Agreement on behalf of the persons and entities indicated below.

20. This Agreement may be executed in counterparts, each of which constitutes
an original and all of which constitute one and the same Agreement.

21. This Agreement is binding on Mutoh’s successors, transferees, heirs, and

assigns.

Case 2:25-cv-01647-SPL Document9 Filed 03/31/26 Page 15of18

22. This Agreement is binding on Relator’s successors, transferees, heirs, and
assigns.

23. The Parties consent to the United States’ disclosure of this Agreement, and
information about this Agreement, to the public.

24. This Agreement is effective on the date of signature of the last signatory to
the Agreement (“the Effective Date of this Agreement”). Facsimiles of signatures shall

constitute acceptable, binding signatures for purposes of this Agreement.

[THIS SECTION IS INTENTIONALLY LEFT BLANK. SIGNATURES FOLLOW. ]

10

Case 2:25-cv-01647-SPL Document9 Filed 03/31/26 Page 16 of 18

DATED: 2/31 [Ab

THE UNITED STATES OF AMERICA

TIMOTHY COURCHAINE
United States Attorney

we oR ae

LON R. LEAVITT

Assistant United States Attorney

United States Attorney’s Office

District of Arizona

Counsel for the United States of America

11

Case 2:25-cv-01647-SPL

Document 9 Filed 03/31/26 Page 17 of 18

MUTOH AMERICA, INC. - DEFENDANT

DATED: 2 4 7 Ib BY:

DATED: 3124 we BY:

.
a 2 —

Brian Phipps
President

Ashley Adams __
Adams & Associates, PLC
Counsel for Mutoh America, Inc.

12


Case 2:25-cv-01647-SPL Document9 Filed 03/31/26 Page 18 of 18

VERITY INVESTIGATIONS, LLC - RELATOR

DATED: 3M Wel BY:

Gregory Lynam
Verity Investigations, LLC

DATED: Mar. 24,2026 py: OLE,

Steven Shepard
Susman Godfrey, LLP
Counsel for Verity Investigations, LLC

13

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