Complaint — United States ex rel. GNGH2 Inc. v. Zund America, Inc. (No. 2:24-cv-00661)

Summary

A qui tam complaint under the False Claims Act by relator GNGH2 Inc. in United States ex rel. GNGH2 Inc. v. Zund America, Inc., Case 2:24-cv-00661-JPS, in the United States District Court for the Eastern District of Wisconsin, dated May 24, 2024 and filed May 29, 2024 as Document 1. It alleges that Zund America, a Wisconsin corporation that is part of a Swiss concern making cutting equipment, received a second draw PPP loan of $1,270,280 on 2/6/2021, forgiven 8/13/2021. The complaint alleges the Form 2483-SD eligibility certification was false because the company was a subsidiary of Zund Holding AG, which had operations in Hong Kong, and did not conform to SBA size standards. Count I, under 31 U.S.C. Section 3729(a)(1)(B), seeks judgment of $3,944,325.60 plus penalties; the signature block names relator's counsel David Abrams.

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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
Eastern District of Wisconsin
____________________________________
                                       )              TO BE FILED UNDER
United States of America ex rel.       )              SEAL
GNGH2 Inc.,                            )
                    Plaintiff-Relator, )
                                       )
             - against -               )              Case No.
                                       )
Zund America, 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:

I.    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.




       Case 2:24-cv-00661-JPS       Filed 05/29/24   Page 1 of 6    Document 1
II.   Parties

2.    Defendant Zund America Inc. ("Defendant") is a Wisconsin business

corporation with a principal place of business in Milwaukee County, Wisconsin.

3.    The Relator, GNGH2 Inc. ("Relator" or "Plaintiff") is a New Jersey

corporation with a principal office in Bergen County, New Jersey.

III   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 is located in

Oak Creek, Wisconsin.




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       Case 2:24-cv-00661-JPS      Filed 05/29/24   Page 2 of 6   Document 1
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

or if it exceeds certain strict size standards.

12.    The Defendant in this matter is part of a Swiss concern which manufactures

cutting equipment. It received second draw PPP disaster relief as follows:

Date                 Amount               Loan #             Forgiven

2/6/2021             $1,270,280           4702878410         8/13/2021


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        Case 2:24-cv-00661-JPS       Filed 05/29/24   Page 3 of 6   Document 1
13.   Thus, on or about February 6, 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 as Zund Holding AG which had operations in Hong Kong.

Additionally, the Defendant and its affiliates did not conform to the SBA's

applicable size standards.

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

the Defendant and/or its affiliates.

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.   As a result of these statements, the Defendant received (and the United

States paid) substantial funds to which it would not otherwise have been entitled.

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       Case 2:24-cv-00661-JPS          Filed 05/29/24   Page 4 of 6   Document 1
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 $1,270,280 (and the United States paid) in disaster

relief as a result of the certifications set forth above.

25.    Additionally, the United States paid $38,108.40 in processing fees and

approximately $6386.80 in interest in respect of the loan.




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        Case 2:24-cv-00661-JPS       Filed 05/29/24    Page 5 of 6   Document 1
26.   Accordingly, Relator seeks judgment in the amount of $3,944,325.60

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
              May 24, 2024




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         Case 2:24-cv-00661-JPS     Filed 05/29/24   Page 6 of 6   Document 1


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