Complaint — GNGH2 Inc. v. HORN USA, Inc. (No. 1:24-cv-00196, W.D. Mich.)

Summary

A qui tam complaint under the False Claims Act, marked to be filed under seal, by relator GNGH2 Inc. against HORN USA, Inc., Case 1:24-cv-00196-PLM-RSK in the United States District Court for the Western District of Michigan, filed February 26, 2024 as ECF No. 1. The relator alleges that the defendant, a subsidiary of Horn S.A., falsely certified on Form 2483-SD on or about January 25, 2021 that no entity with significant operations in the People's Republic of China owns or holds not less than 20 percent of its economic interest. It states that the defendant received a $2,000,000 second draw PPP loan on 1/20/2021 that was forgiven, and that the United States paid $60,000 in processing fees and approximately $16,500 in interest. The relator seeks judgment of $6,229,500; the last page is a Priority Mail envelope.

Summary drafted by a model from the text of the original file linked on this page and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

Text recognized from a scanned document; may contain errors. Page 7 of 7 is not shown because the text could not be recognized reliably.

Case 1:24-cv-00196-PLM-RSK ECF No.1, PagelD.1

David Abrams, Attorney at Law (NY 3051604)
PO Box 3353 Church Street Station

New York, NY 10008

212-897-5821 dnabrams@gmail.com

United States District Court
Western District of Michigan

Filed 02/26/24 Pagelof7

FILED - GR

February 26, 2024 42:56 PM
CLERK OF COURT
U.S. DISTRICT COURT
WESTERN DISTRICT OF MICHIGAN

BY: KB SCANNED BY: «| 12-2

1:24-cv-196

Paul L. Maloney- U.S. District Judge

) TO BE FILED UNDER
United States of America ex rel. ) SEAL
GNGH2 Inc., )
Plaintiff-Relator, )
)
- against - ) Case No.
)
HORN USA, Inc.., ) Complaint Under the False
) Claims Act
Defendant. )
)

Plaintiff-Relator, complaining of the Defendants by its attorney, David

Abrams, Attorney at Law, respectfully sets forth and alleges as follows:

1. Nature of the Case

1. This is a false claims act claim. The Qui Tam Plaintiff and Relator, GNGH2

Inc. ("Relator"), alleges that the Defendant fraudulently obtained CARES Act

disaster relief by means of fraudulent certifications of eligibility. As set forth in

more detail below, second-round PPP funding is barred to entities which are owned

or directed by concerns with significant operations in the People's Republic of

China and to entities which exceed size standards.
II. Parties

2. Defendant HORN USA, Inc. ("Defendant") is a Tennessee business
corporation which transacts business in Michigan. Defendant's registered office is
in Ingham County, Michigan.

3. The Relator, GNGH2 Inc. ("Relator" or "Plaintiff") is a New Jersey
corporation with a principal office in Bergen County, New Jersey.

Il Compliance with Requirements of Suit

4. This matter will be filed under seal pursuant to 31 U.S.C. Section 3730(b)
and at or about the same time, a copy of the Complaint, any Sealing Order, and
Relator's disclosure of evidence will be served on the Department of Justice and
the United States Attorney for the District in which this matter has been filed.

5. Relator will not serve the Complaint or any other papers in this matter until
and unless it becomes unsealed. Thus, if the Complaint is served on the
Defendant, it means that the matter has been duly unsealed.

IV. Jurisdiction and Venue

6. This Court has jurisdiction pursuant to 31 U.S.C. Section 3732(a) which
provides that this type of action may be brought in any district where any
Defendant resides or transacts business. In this case, the Defendant maintains a
sales force in Michigan and is duly authorized to transact business in Michigan.

Defendant's registered Michigan office is in Lansing, Michigan.
| Case 1:24-cv-00196-PLM-RSK ECF No.1, PagelD.3 Filed 02/26/24 Page3of7

V. Background

7. Throughout most of 2020 and continuing into 2021, the United States was
faced with a large scale outbreak of the virus commonly known as "Coronavirus"
and "COVID-19." (the "Coronavirus Epidemic").

8 In addition to the Coronavirus Epidemic itself, the United States was faced
with large scale outbreaks of panic and hysteria as a result of the Coronavirus
Epidemic.

9. All of the above has resulted in major economic disruption and as a result
Congress enacted the Coronavirus Aid, Relief, and Economic Security Act,
commonly known as the "CARES Act."

10. The CARES Act contains a provision which permitted qualifying business
which were affected by the foregoing disruption to obtain forgivable disaster loans.
11. The CARES Act was subsequently amended to provide for a second round
of disaster funding. Significantly, an applicant is ineligible for such funding if is
owned by a concern with significant operations in the People's Republic of China.
12. The Defendant in this matter is firm which manufactures tools. It received
second draw PPP disaster relief as follows:

Date Amount Loan # Forgiven

1/20/2021 $2,000,000 2165288306 11/23/2021
Case 1:24-cv-00196-PLM-RSK ECF No.1, PagelD.4 Filed 02/26/24 Page4of7

13. Thus, on or about January 25, 2021, Defendant completed Form 2483-SD

which required it to certify as follows:
The Applicant is not a business concern or entity (a) for which an entity
created in or organized under the laws of the People’s Republic of China or
the Special Administrative Region of Hong Kong, or that has significant
operations in the People’s Republic of China or the Special Administrative
Region of Hong Kong, owns or holds, directly or indirectly, not less than 20
percent of the economic interest of the business concern or entity, including
as equity shares or a capital or profit interest in a limited liability company
or partnership; or (b) that retains, as a member of the board of directors of
the business concern, a person who is a resident of the People’s Republic of
China

14. This certification was false when made as set forth below.

15. At all times relevant to this matter, the Defendant was a subsidiary of an

entity known Horn S.A. which has significant operations in China. Additionally,

the Defendant and its affiliates did not conform to the SBA's applicable size

standards in contradiction to another certification.

16. Moreover, the foregoing information is available on the websites of the

Defendant and/or its corporate parent.

17. Thus, Defendant's authorized representative must have been either aware of

this information or reckless in regards to same.

18. Thus, Defendant made a fraudulent representation when it completed form

2483-SD and certified eligibility in respect of the above matters.

19. Asaresult of these statements, the Defendant received (and the United

States paid) substantial funds to which it would not otherwise have been entitled.
. Case 1:24-cv-00196-PLM-RSK ECF No.1, PagelD.5 Filed 02/26/24 Page5of7

VI. (Count I) Violation of the False Claims Act

20. The False Claims Act imposes liability on a person or entity who
"knowingly makes, uses, or causes to be made or used, a false record or statement
material to a false or fraudulent claim" 31 U.S.C. Section 3729(a)(1)(B)

21. The Courts have held that this can include false statements regarding
eligibility to participate in a program. See United States ex rel. Kirk v. Schindler
Elevator Corp., 601 F.3d 94, 116 (2d Cir. 2010), rev'd on other grounds, 131 S.Ct.
1885 (2011) ("[C]laims may be false even though the services are provided as
claimed if, for example, the claimant is ineligible to participate in the program.")
22. Thus, the Defendant's certifications of eligibility violated the False Claims
Act because they were false and required for eligibility for disaster relief.

VII. Relief Sought

23. On behalf of the government, Relator is seeking judgment for triple damages
and civil penalties set forth in 31 U.S.C. Section 3729.

24. The Defendant received $2,000,000 (and the United States paid) in disaster
relief as a result of the certifications set forth above.

25. Additionally, the United States paid $60,000 in processing fees and

approximately $16,500 in interest in respect of the loan.
26. Accordingly, Relator seeks judgment in the amount of $6,229,500 against
the Defendant and in favor of the United States, together with costs, interest, civil
penalties, an appropriate qui tam award, and such other and further relief as the

Court deems just.

Respectfully submitted,

David Abrams, Attorney at Law
Attorney for Relator
GNGH2 Inc.

PO Box 3353 Church Street Station
New York, NY 10008
Tel. 212-897-5821
Fax 212-897-5811
Dated: Delhi, New York
February 24, 2024


File and source

File

1-complaint.pdf

Size

174,442 bytes

SHA-256

2b55a895822d021640c616b36d34239523f0a15e7c3f75f8f42c4a4439a9d498

Our copy

1-complaint.pdf

Original

archive.org