Zund America, Inc., a Corporation Located in Oak Creek, Wisconsin, Agreed to Pay $2,300,825 to Resolve Allegations

Summary

A DOJ release published December 13, 2024 states that Gregory J. Haanstad, United States Attorney for the Eastern District of Wisconsin, announced that on December 3, 2024, Zund America, Inc., a corporation located in Oak Creek, Wisconsin, agreed to pay $2,300,825 to resolve allegations that it violated the False Claims Act by submitting false claims to obtain a Paycheck Protection Program (PPP) loan. The United States alleges that Zund America was not eligible for the second-draw loan received in February 2021 because Zund America and its affiliates had more than 300 employees. The matter is pending as United States ex rel. GNGH 2, Inc. v. Zund America, Inc., No. 24-cv-0661, and the release says the settlement agreement states allegations only.

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Full text

Gregory J. Haanstad, United States Attorney for the Eastern District of Wisconsin, announced that on December 3, 2024, Zund America, Inc., a corporation located in Oak Creek, Wisconsin, agreed to pay $2,300,825 to resolve allegations that it violated the False Claims Act by submitting false claims to obtain a Paycheck Protection Program (PPP) loan for which it was not eligible.
Congress created the PPP in March 2020 to provide emergency financial assistance to Americans suffering from the economic effects of the COVID-19 pandemic. Under the PPP, eligible businesses could receive loans guaranteed by the SBA and, if the business spent the loan proceeds on qualified expenses, SBA would repay the loan and any accrued interest on the borrower’s behalf.  In December 2020, Congress authorized certain borrowers who received an earlier PPP loan to obtain an additional “second-draw” loan. The second-draw loan program included additional eligibility requirements.  Under the second-draw loan rules, for a company to be deemed a small business eligible for a second loan, the company, together with any corporate affiliates, had to employee 300 or few individuals.
Zund America is owned by a Swiss holding company, Zund Holding AG.  Through common ownership and management, Zund America is affiliated with 19 other Zund entities that operate across the globe.  In February 2021, Zund America received a second-draw PPP loan, which the SBA later repaid.  The United States alleges that Zund America was not eligible for this loan because Zund America and its affiliates had more than 300 employees.
“Congress created the PPP to help small businesses and their employees survive the COVID-19 pandemic,” said U.S. Attorney Haanstad.  “To make funds available as quickly as possible and save jobs, Congress and the SBA trusted companies to certify that they complied with the eligibility rules. Unfortunately, Zund America did not fulfill its obligations, and instead submitted false information to obtain its second-draw loan.  This settlement requires Zund America to repay the SBA plus a substantial penalty.”
“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, SBA’s Office of Inspector General and other Federal law enforcement agencies, as well as private individuals who uncover fraudulent conduct to recover the product of this fraud as well as penalties,” said SBA General Counsel Therese Meers.
The government’s investigation resulted from a whistleblower complaint filed under the qui tam provisions of the False Claims Act.  The whistleblower will receive a share of the settlement. This case is pending as
United States ex rel. GNGH 2, Inc. v. Zund America, Inc.
, No. 24-cv-0661.
Together with the SBA, Assistant United States Attorney Michael Carter represented the government in this matter. The settlement agreement states allegations only; Zund America, Inc., does not admit liability for the allegations.
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For Additional Information Contact:
Public Information Officer
Kenneth.Gales@usdoj.gov
414-297-1700
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