Complaint Under the False Claims Act — United States ex rel. GNGH2 Inc., No. 2:22-cv-05514-SB-PVC (Dkt. 1, C.D. Cal.)

Summary

Relator GNGH2 Inc., a New Jersey corporation, filed this qui tam complaint under the False Claims Act on 08/04/22 in the Central District of California against XLD Century LLC, which operates the LAX Marriott hotel, and XLD Group LLC, which operates the Torrance Marriott hotel. The complaint alleges that both companies were wholly owned subsidiaries of Sichuan Xinglida Group Enterprises, a PRC real estate investment company based in Sichuan, and so falsely certified on Form 2483-SD that they were eligible for second-round disaster relief. Its table lists a $2,000,000 loan to XLD Century dated 3/30/2021 and forgiven 12/15/2021, and a $2,000,000 loan to XLD Group dated 5/18/2021 and forgiven 1/6/2022. Citing $4,000,000 received, the relator seeks judgment of $12,000,000 plus costs, interest, civil penalties and a qui tam award. Attorney Yael Lerman signed the complaint.

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Case 2:22-cv-05514-SB-PVC Document 1 Filed 08/04/22 Page 1 of 7 Page ID #:1

Yael Lerman,Esq.(California Bar # 281311)
ylmazar@gmail.com
6505 Wilshire Boulevard
FEE PAID
FILED
Los Angeles CA 90048 U.S. DISTRICTCOURT
Tel. 310-836-6140
~ ~ I +r

8 UNITED STATES DISTRICT COURT FOR

~~ THE CENTRAL DISTRICT OF CALIFORNIA

~~ 2•. 22~C~ oSsi~5~(~c~oc~~
Case No.:.
~~ United States ex rel. GNGH2 Inc. ~
COMPLAINT UNDER THE FALSE
i~ Plaintiff, ) CLAIMS ACT

~3 vs.
XLD CENTURY LLC and XLD
i~ GROUP LLC,
i Defendants)

i~
Plaintiff-Relator, complaining ofthe Defendants by its attorney respectfully sets forth
17

18 alleges as follows:

19 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
22
means offraudulent certifications of eligibility. As set forth in more detail below, second-round
23
FPP funding is barred to entities which are owned or directed by companies out of
24
the People's Republic of China including the Special Administrative Region of Hong Kong.
25

Complaint - 1
Case 2:22-cv-05514-SB-PVC Document 1 Filed 08/04/22 Page 2 of 7 Page ID #:2

II. Parties
1

2
2. Defendant XLD CENTURY LLC("XLD CENTURY")is a California limited liability

3 company with primary place of business in Los Angeles, California. XLD CENTURY operates

4 the LAX Marriott hotel.

5 3. Defendant XLD GROUP LLC("XLD GROUP")is a California limited liability comp
6
with a primary place of business in Torrance, California. XLD GROUP operates the Torrance
7
Marriott hotel.
s
4. The Relator, GNGH2 Inc.("Relator" or "Plaintiff') is a New Jersey corporation with a
9
principle office in the State of New Jersey, County of Bergen.
to

11 III Compliance with Requirements of Suit

12 5. This matter will be filed under seal pursuant to 31 U.S.C. Section 3730(b)and at or about ~

13 the same time, a copy of the Complaint, any Sealing Order, and Relator's disclosure of evidence
14
will be served on the Department of Justice and the United States Attorney for the District in
15
which this matter has been filed.
16
6. Relator will not serve the Complaint or any other papers in this matter until and unless it
17
becomes unsealed. Thus, if the Complaint is served on the Defendant, it means that the matter
t8
~ has been duly unsealed.
19

20 IV. Jurisdiction and Venue

21 7. This Court has jurisdiction pursuant to 31 U.S.C. Section 3732(a) which provides that

22 this type of action may be brought in any district where any Defendant resides or transacts
23
~ business. In this case, the Defendants operate hotels in this district.
24

Complaint - 2
Case 2:22-cv-05514-SB-PVC Document 1 Filed 08/04/22 Page 3 of 7 Page ID #:3

V. Background
1

2
8. Throughout most of 2020 and continuing into 2021, the United States was faced with a

3 large scale outbreak of the virus commonly known as "Coronavirus" and "COVID-19." (the

4 "Coronavirus Epidemic").

5 9. In addition to the Coronavirus Epidemic itself, the United States was faced with large
6
scale outbreaks of panic and hysteria as a result of the Coronavirus Epidemic.
7
10. All of the above has resulted in major economic disruption and as a result Congress
s
enacted the Coronavirus Aid, Relief, and Economic Security Act, commonly known as the
9
"CARES Act."
10

11
1 1. The CARES Act contains a provision which permitted qualifying business which were

12 affected by the foregoing disruption to obtain forgivable disaster loans.

13 12. The CARES Act was subsequently amended to provide for a second round of disaster

14
funding. Significantly, an applicant is ineligible for such funding if is directed or owned out of
15
either the Peoples' Republic of China or the Special Administrative Region of Hong Kong.
16
13. The Defendants in this matter both operate hotels. They received second round disaster
l7
relief as follows:
~8
Name Date Loan Number Amount Forgiven
19

20 XLD Century 3/30/2021 2613428708 $2,000,000 12/15/2021

21 XLD Group 5/18/2021 2870209001 $2,000,000 1/6/2022

22 14. Thus, nn or about the above dates, Defendants completed Form 2483-SD which required
23
them to certify as follows:
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The Applicant is not a business concern or entity (a) for which an entity created in or
25
organized under the laws of the People's Republic of China or the Special Administrative
26

Complaint - 3
Case 2:22-cv-05514-SB-PVC Document 1 Filed 08/04/22 Page 4 of 7 Page ID #:4

1 Region of Hong Kong, or that has significant operations in the People's Republic of

2 China or the Special Administrative Region of Hong Kong, owns or holds, directly or

3 indirectly, not less than 20 percent of the economic interest of the business concern or

4 entity, including as equity shares or a capital or profit interest in a limited liability

5 company or partnership; or (b) that retains, as a member of the board of directors of the

6 business concern, a person who is a resident of the People's Republic of China

8 15. This certification was false when made as set forth below.

9 16. At all times relevant to this matter, the Defendants were wholly owned subsidiaries of

10 Sichuan Xinglida Group Enterprises which is a PRC real estate investment company based in I

11 Sichuan, People's Republic of China.
12
1 7. Thus, Defendants made a fraudulent representation when they completed form 2483-SD.
13
18. As a result of these statements, the Defendants received substantial funds to which they
14
would not otherwise have been entitled.
15
VI. (Count I) Violation of the False Claims Act
16

17 19. The False Claims Act imposes liability on a person or entity who "knowingly makes,

18 uses, or causes to be made or used, a false record or statement material to a false or fraudulent

19 claim" 31 U.S.C. Section 3729(a)(1)(B)

20 20. The Courts have held that this can include false statements regarding eligibility to
2t
participate in a program. See United Stoles ex rel. Kirk v. Schindler Elevator Corp., 601 F.3d
?2
94, 116(2d Cir. 2010), rev'd on other grounds, 131 S.Ct. 1885 (201 l)("[C]laims may be false
23
even though the services are provided as claimed if, for example, the claimant is ineligible to
24
participate in the program.")
25

Complaint - 4
Case 2:22-cv-05514-SB-PVC Document 1 Filed 08/04/22 Page 5 of 7 Page ID #:5

21. Thus, the Defendant's certifications of eligibility violated the False Claims Act because
1

2
they were false and required for eligibility for disaster relief.

3 VII. Relief Sought

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

5 penalties set forth in 31 U.S.C. Section 3729.
6
24. The Defendants received $4,000,000 in disaster relief as a result of the certifications set
7
forth above.
8
25. Accordingly, Relator seeks judgment in the amount of $12,000,000 against the
9
Defendant and in favor of the United States, together with costs, interest, civil penalties, an
to

appropriate c~ui tam award, and such other and further relief as the Court deems just.

13 Respectfully submitted,

14
~ ,~C~
15

16 Yael Lerman, Attorney for Relator
GNGH2 Inc.
17

18 6505 Wilshire Boulevard
Los Angeles CA 90048
19 Tel. 310-836-6140
Dated: Los Angeles, CA
20 August 3, 2022
?~

Complaint - 5
Case 2:22-cv-05514-SB-PVC Document 1 Filed 08/04/22 Page 6 of 7 Page ID #:6

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Case 2:22-cv-05514-SB-PVC Document 1 Filed 08/04/22 Page 7 of 7 Page ID #:7

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