Complaint — United States ex rel. GNGH2 Inc. v. Topy America Inc. (No. 3:24-cv-00003, E.D. Ky.)

Summary

A False Claims Act qui tam complaint in United States of America ex rel. GNGH2 Inc. v. Topy America Inc., No. 3:24-cv-00003-GFVT, filed January 9, 2024 as Doc 1 in the U.S. District Court for the Eastern District of Kentucky. The relator alleges that Topy America Inc. received a second draw PPP loan of $2,000,000 on 1/23/21 after certifying on Form 2483-SD that it was not owned or directed from the People's Republic of China. The complaint states that the defendant was a subsidiary of TOPY INDUSTRIES LTD., which it says maintains 5 manufacturing facilities in China, and pleads Count I, violation of the False Claims Act, citing 31 U.S.C. Section 3729(a)(l)(B). It seeks judgment of $6,240,000 for the United States, with civil penalties and a qui tam award. The complaint is dated January 5, 2024 and submitted by David Abrams, Attorney at Law, for the relator.

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 Case: 3:24-cv-00003-GFVT             Doc #: 1   Filed: 01/09/24     Page: 1 of 5 - Page ID#: 1

                                                                            1::astern District of Kentucky
                                                                                       FILED

                               UNITED STATES DISTRICT COURT                       JAN O9 2024
                               EASTERN DISTRICT OF KENTUCKY
                                                                                   AT LEXINGTON
                                                                                    Aobiirt A. Carr
                                                                       cu:RK u.e. O!ll.TRIOTC::OURl'
                                                      )      TO BE FILED UNDER SEAL
 United States of America ex rel.                     )
 GNGH2 Inc.,                                          )
                      Plaintiff~Relator,              )
                                                      )
                 - against -                          )      Case No.
                                                      )
TOPY 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 fotth 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 companies out of the Peoples'

Republic of China, also known as Mainland China.

II.    Parties

2.     Defendant TOPY AMERICA INC. ("Defendant") is a Kentucky business corporation

with a principal place of business in Franklin County, Kentucky.

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

principal office in Bergen County, New Jersey.

                                      [continued on next page]
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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 Frankfort, Kentucky which is in the Central

Division of this District.

V.     Background

7.     Throughout most of2020 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."




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I 0.    The CARES Act contains a provision which pe1mitted 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 directed or owned out of

the Peoples' Republic of China.

12.     The Defendant in this matter is a steel industry firm. It received second draw PPP

disaster relief as follows:

Defendant                             Date           Amount          Loan#          Forgiven

TOPY AMERICA INC.                     1/23/21        $2,000,000      4498868300     2/16/22

13.     Thus, on or about January 23, 2021, Defendant completed Fotm 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

TOPY INDUSTRIES LTD. which maintains 5 manufacturing facilities in the People's Republic

of China.

16.    Moreover, the foregoing infotmation is available on the websites of the Defendant and its

corporate parent.

17.    Thus, Defendant made a fraudulent representation when it completed form 2483-SD.




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18.     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.

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

19.     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)(l)(B)

20.     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.")

21.     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

22.     On behalf of the government, Relator is seeking judgment for triple damages and civil

penalties set forth in 31 U.S.C. Section 3729.

23.     The Defendant received $2,000,000 in disaster relief as a result of the certifications set

forth above.

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

$20,000 in interest in respect of the loan.

                                      [continued on next page)




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25.    Accordingly, Relator seeks judgment in the amount of $6,240,000 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 (Pro Hae Vice Application Pending)
                                       GNGH2Inc.

                                       PO Box 3353 Church Street Station
                                       New York, NY 10008
                                       Tel. 212-897-5821
                                       Fax 212-897-581 l
Dated: New York, NY
       January 5, 2024




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