Former Solon-based Manufacturer to Pay $6M to Resolve False Claims Act Allegations (OIG, May 22, 2025)
Summary
This is an Office of Inspector General news release, published on May 22, 2025, that links to the original Department of Justice press release. It states that Cosmax USA, including Nu-World Corporation, has agreed to pay $6 million, of which $3 million is restitution, to resolve allegations under the False Claims Act (FCA) relating to Paycheck Protection Program (PPP) loans and loan forgiveness. The resolution addresses allegations about a First-Draw PPP loan application in April 2020 and allegations that Cosmax USA falsely certified that it was a small business with fewer than 300 employees on a Second-Draw application. The relator, Alexander Novik, served as Cosmax USA's controller. The release states that the claims are allegations only and that there has been no determination of liability.
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“Former Solon-based Manufacturer to Pay $6M to Resolve False Claims Act Allegations (OIG, May 22, 2025).”
Original at legacy.sba.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2025-05-22-former-solon-based-manufacturer-to-pay-6m-to-resolve-false-ded7324500/
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OIG news release Former Solon-based Manufacturer to Pay $6M to Resolve False Claims Act Allegations Relating to Paycheck Protection Program Published on May 22, 2025 by Office of Inspector General Click Here to View the Original U.S. Department of Justice (DOJ) Press Release The Justice Department has announced that Cosmax USA, a corporation having previously done business as two separate entities, Cosmax USA and Nu-World Corporation, has agreed to pay $6 million, of which $3 million is restitution, to resolve allegations under the False Claims Act (FCA) that they knowingly provided false information to obtain Paycheck Protection Program (PPP) loans and loan forgiveness. The companies are part of a global conglomerate that supplies cosmetics and nutritional supplements. Nu-World was merged into Cosmax USA in 2023. Cosmax USA operated a manufacturing facility in Solon, Ohio up until 2023. This settlement resolves a lawsuit filed by a former employee who worked at that location. Under the whistleblower provisions of the FCA, an individual, known in legal terms as the “relator,” may file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The relator in this case, Alexander Novik, served as Cosmax USA’s controller and also in its human resources department. The PPP was launched through the Small Business Administration (SBA), with the enactment of the Coronavirus Aid, Relief and Economic Security (CARES) Act in 2020. The program provided eligible companies with financial support as businesses faced unprecedented challenges brought on by the COVID-19 pandemic. This resolution addresses two alleged violations in which the United States contended that Cosmax USA and Nu-World submitted false information to be eligible to receive PPP funds. First, the resolution addresses allegations that Nu-World submitted an application in April 2020 for a First-Draw PPP loan, and an application for forgiveness of that loan in 2021, based on a calculated loan amount that was partially based on payments to temporary employees who were not employees of Nu-World. Second, the resolution addresses allegations that Cosmax USA falsely certified that it was a small business with fewer than 300 employees (including employees at affiliated companies) when it submitted its Second-Draw PPP loan application. In reality, the number of Cosmax USA’s employees, when combined with the number of employees working at its affiliate Nu-World, exceeded the PPP program’s 300-employee limit. The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Northern District of Ohio, with assistance from the SBA’s Office of General Counsel (SBA-OGC) and Office of Inspector General (SBA-OIG). Trial Attorney Graham D. Welch of the Justice Department’s Civil Division and Assistant U.S. Attorney J. Jackson Froliklong for the Northern District of Ohio handled the matter, with assistance from Thomas W. Rigby and Arlene P. Messinger Lerner of the SBA. Anyone with information about allegations of CARES Act fraud may submit a report with the Justice Department’s National Center for Disaster Fraud Hotline at 866-720-5721 or online at www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form . The claims resolved by the settlement are allegations only. There has been no determination of liability. executed_settlement_agreement-cosmax_0.pdf Related programs: Pandemic Oversight, PPP
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