Complaint Under the False Claims Act — United States of America ex rel. GNGH2 Inc. v. Fukoku America Inc. (Dkt. 1, D.S.C.)
Summary
GNGH2 Inc., a New Jersey corporation, filed this qui tam complaint under the False Claims Act on September 9, 2024 against Fukoku America Inc., a rubber products maker in Laurens County, South Carolina (No. 6:24-cv-04917-DCC, D.S.C., Greenville Division). The complaint alleges that Fukoku America received a second draw PPP loan of $1,212,950 on 4/3/2021, forgiven 6/8/2022, after certifying on Form 2483-SD that no entity with significant operations in the People's Republic of China owned 20 percent or more of it. It alleges the certification was false because Fukoku America was a subsidiary of Fukoku Co., Ltd., which has significant operations in China, and because it and its affiliates exceeded SBA size standards. The relator says the United States paid $1,227,040.16 in principal and interest and $36,388.50 in processing fees, and seeks judgment of $3,790,285.98.
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6:24-cv-04917-DCC Date Filed 09/09/24 Entry Number 1 Page 1 of 6
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
GREENVILLE DIVISION
) TO BE FILED UNDER
United States of America ex rel. ) SEAL PURSUANT TO
GNGH2 Inc., ) 31 USC § 3730(b)(2)
Plaintiff-Relator, )
)
- against - ) Case No.
)
FUKOKU AMERICA INC., )
)
Defendant. )
)
Complaint Under the False Claims Act, 31 U.S.C. §§ 3729 et seq.
1. Qui tam Relator GNGH2 Inc., by and through counsel, individually and on
behalf of the United States of America files this Complaint against FUKOKU
AMERICA INC. ("DEFENDANT" or "FUKOKU AMERICA") to recover
damages, penalties, and attorney's fees for violation of the False Claims Act, 31
U.S.C. §§ 3729 et seq.
I. Nature of the Case
2. 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
6:24-cv-04917-DCC Date Filed 09/09/24 Entry Number 1 Page 2 of 6
by concerns with significant operations in the People's Republic of China and to
entities which exceed size standards.
II. Parties
3. FUKOKU AMERICA is a South Carolina business corporation with a
principal place of business in Laurens County, South Carolina.
4. 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
5. 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.
6. 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
7. 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's principal
office is located in Laurens, South Carolina.
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6:24-cv-04917-DCC Date Filed 09/09/24 Entry Number 1 Page 3 of 6
V. Background
8. 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").
9. 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.
10. 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."
11. The CARES Act contains a provision which permitted qualifying business
which were affected by the foregoing disruption to obtain forgivable disaster loans.
12. 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, when combined with its affiliates, it exceeds applicable size standards.
[continued on next page]
3
6:24-cv-04917-DCC Date Filed 09/09/24 Entry Number 1 Page 4 of 6
13. The Defendant in this matter is firm which manufactures rubber products. It
received second draw PPP disaster relief as follows:
Date Amount Loan # Forgiven
4/3/2021 $1,212,950 6369918708 6/8/2022
14. Thus, on or about April 3, 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
15. This certification was 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 Fukoku Co., Ltd. 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.
17. Moreover, the foregoing information is available on the websites of the
Defendant and/or its corporate parent.
18. Thus, Defendant's authorized representative must have been either aware of
this information or reckless in regards to same.
4
6:24-cv-04917-DCC Date Filed 09/09/24 Entry Number 1 Page 5 of 6
19. Thus, Defendant made a fraudulent representation when it completed form
2483-SD and certified eligibility in respect of the above matters.
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. (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)(1)(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.
VII. 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 United States paid some $1,227,040.16 in principal and interest in
respect of the above loan.
5
6:24-cv-04917-DCC Date Filed 09/09/24 Entry Number 1 Page 6 of 6
26. Additionally, the United States paid $36,388.50 in processing fees in respect
of the above loan.
27. Accordingly, Relator seeks judgment in the amount of $3,790,285.98
against the Defendant and in favor of the United States, together with costs,
attorney's fees, interest, civil penalties, an appropriate qui tam award, and such
other and further relief as the Court deems just.
Respectfully submitted,
s/ John C. Moylan
John C. Moylan (Federal Bar # 5431)
Lucy Dinkins (Federal Bar #11961)
Wyche, P.A.
807 Gervais Street, Suite 301
Columbia, SC 29201
(803) 254-6542
(803) 254-6544 (facsimile)
jmoylan@wyche.com; ldinkins@wyche.com
Counsel for Plaintiff-Relator
Dated: September 9, 2024
6
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