Amended Complaint — GNGH2 v. Koide Tennessee (E.D. Tenn.)

Summary

An amended qui tam Complaint Under the False Claims Act filed February 13, 2025 as Document 15 in United States ex rel. GNGH2 Inc. v. Koide Tennessee Inc., No. 3:24-cv-00336-KAC-DCP, in the U.S. District Court for the Eastern District of Tennessee. The relator alleges that the defendant received a second draw PPP loan of $1,155,937 on 3/17/2021 after a Form 2483-SD certification, while it was a subsidiary of Koide Kokan, described as having significant operations in China. The amended complaint alleges that the defendant's employee count combined with that of Koide Kokan was well in excess of 300, contrary to a certification of no more than 300 employees. It seeks $3,619,064.55, stating the United States paid some $1,171,676.74 in principal and interest and $34,678.11 in processing fees.

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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                                              FEB 1 a 2025
 Pro Hac Vice Application Pending
                                                                        Clerk, U. S. District Court
                                                                      Eastern District of Tennessee
 United States District Court                                                 At Knoxv/iile
 Eastern District of Tennessee


                                                 )       TO BE FILED UNDER
 United States of America ex rel.                )       SEAL
 GNGH2 Inc.,                                     )
                      Plaintiff-Relator,         )
                                                 )
               - against -                       )       No. 3:24-cv-335-KAC-DCP
                                                 )
 KOIDE TENNESSEE INC.,                           )       Complaint Under the False
                                                 )       Claims Act (Amended)
                      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

 by concerns with significant operations in the People's Republic of China and to
entities which exceed size standards.




Case 3:24-cv-00336-KAC-DCP         Document 15       Filed 02/13/25      Page 1 of 7          PageID
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 II.   Parties


 2.
       Defendant KOIDE TENNESSEE INC ("Defendant") is a Tennessee

 business corporation with a principal place of business in Blount County,
 Tennessee.


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

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

 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 Defendant's principal

office is located in Rockford, Tennessee.




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 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, when combined with its affiliates, it exceeds applicable size standards, i.e. if

combined with its affiliates it has more than 300 employees,

                              [continued on next page]




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 12.    The Defendant in this matter is firm which manufactures tubing for the

 automotive industry. It received second draw PPP disaster relief as follows:

 Date                Amount                 Loan #              Forgiven

 3/17/2021           $1,155,937             3488548605          8/1/2022

 13.
        Thus, on or about March 17, 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 Koide Kokan 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.

 15a.   More specifically, when the employee count of the Defendant is combined

with that of its parent, Koide Kokan, the total was well in excess of 300 at all

relevant times.




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 15b. This violated a certification on the application form which required that the

 applicant certify that, if combined with its affiliates, it had no more than 300

 employees.

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

 Defendant and/or its corporate parent.

 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.

 VL    (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.3d94, 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.")


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 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 United States paid some $1,171,676.74 in principal and interest in

 respect of the above loan.

 25.    Additionally, the United States paid $34,678.11 in processing fees in respect

 of the above loan.


                               [continued on next page]




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 26.      Accordingly, Relator seeks judgment in the amount of $3,619,064.55

 against the Defendant and in favor of the United States, together with costs,

 interest, civil penalties, an appropriate qui tarn award, and such other and further

 relief as the Court deems just.

                                   Respectfully submitted,



                                    17.-.        /KT


                                   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 11,2025




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