Complaint Under the False Claims Act (Amended) — United States ex rel. GNGH2 Inc. v. TOPY America Inc., No. 24cv0003 (Dkt. 14, E.D. Ky.)
Summary
GNGH2 Inc., as qui tam relator, alleges in this amended False Claims Act complaint in the Eastern District of Kentucky (Case No. 24cv0003) that TOPY America Inc., a Kentucky steel industry firm, falsely certified its eligibility for a $2,000,000 second draw PPP loan dated 1/23/21. The complaint alleges TOPY America is a subsidiary of TOPY Industries Ltd., which maintains manufacturing facilities in the People's Republic of China, and that the group's employee count was well in excess of 300, so its certifications on Form 2483-SD were false. It states the loan was processed by KeyBank National Association and lists it as forgiven 2/16/22, and that the United States also paid $60,000 in processing fees and $ 21,150.68 in interest. Through attorney David Abrams, the relator seeks judgment of $2,081,150.68 plus costs, interest, civil penalties and a qui tam award.
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UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
) TO BE FILED UNDER SEAL
United States of America ex rel. )
GNGH2 Inc., )
Plaintiff-Relator, )
)
- against - ) Case No.24cv0003
)
TOPY America Inc., ) Complaint Under the False
) Claims Act (Amended)
Defendant. )
J
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 (1) do not comply with the applicable size standards; or
(2) are owned by corporate parents with significant operations in the People's Republic of China.
II. Parties
2. Defendant TOPY America Inc. ("Defendant") is a Kentucky business corporation.
3. The Relator, GNGH2 Inc. ("Relator" or "Plaintiff) is a New Jersey business corporation.
Ill 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 loan transaction at issue was processed by KeyBank National
Association in Cuyahoga County, Ohio.
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 either (1) combined with its
affiliates it does not meet the applicable size standards, i.e. the total employee count exceeds
300; or (2) it is owned by a corporate parent with significant operations in the People's 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 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. Additionally, the Defendant certified that, if combined with its affiliates, it met the
applicable size standards, Le. that it had no more than 300 employees.
15. These certifications were false when made as set forth below.
16. At all times relevant to this matter, the Defendant was a subsidiary of an entity known as
TOPY Industries Ltd. which maintains various manufacturing facilities in the People's Republic
of China.
17. Additionally, the the total employee count ofTOPY Industries Ltd. and its subsidiaries
and other affiliates was well in excess of 300 at all relevant times.
18. Moreover, the foregoing information is available on the websltes of the Defendant and its
corporate parent.
19. Thus, Defendant must have been knowing or reckless when it completed form 2483-SD.
20. 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. Relation Back
20a. All of the foregoing allegations were disclosed in detail to the United States by way of
relator disclosure memo dated January 17,2024.
20b. Accordingly, the foregoing allegations relate back to the original complaint pursuant to
F.R.C.P. 15(c)(l)(B).
VII. (Count I) Violation of the False Claims Act
21. 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)
22. 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.")
23. Thus, the Defendant's certifications of eligibility violated the False Claims Act because
they were false and required for eligibility for disaster relief.
VIII. Relief Sought
24. On behalf of the government, Relator is seeking judgment for triple damages and civil
penalties set forth in 31 U.S.C. Section 3729.
25. The Defendant received (and the United States paid) $2,000,000 in disaster relief as a
result of the certifications set forth above.
26. Additionally, the United States paid $60,000 in processing fees and $ 21,150.68 in
interest in respect of the loan.
27. Accordingly^ReIator seeks judgment in the amount of $2,081,150.68 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,
17^ ^ /^v^
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: February 8, 2025
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