Complaint Under the False Claims Act — United States ex rel. GNGH2 Inc. v. MacDermid (Document 1)
Summary
Complaint Under the False Claims Act in United States of America ex rel. GNGH2 Inc. v. MacDermid, Incorporated as successor in interest to Coventya Inc., Case 3:24-cv-01480-JCH, in the U.S. District Court for the District of Connecticut, Document 1 filed 09/16/24, to be filed under seal pursuant to 31 USC § 3730(b)(2). Relator GNGH2 Inc. alleges that Defendant's predecessor fraudulently obtained a second draw PPP loan of $1,075,000 on 4/24/2021, forgiven 11/18/2021, by certifying on Form 2483-SD that it had no ownership or operations tied to the People's Republic of China and met size standards. It alleges that the predecessor was a subsidiary of Coventya SAS, which has significant operations in China. The complaint states that the United States paid $1,081,061.81 in principal and interest and $32,250 in processing fees, and seeks judgment of $3,339,935.43.
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“Complaint Under the False Claims Act — United States ex rel. GNGH2 Inc. v. MacDermid (Document 1).”
Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/court-filing-no-3-24-cv-01480-dkt-1-d-conn-bc2547423e/
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Case 3:24-cv-01480-JCH Document 1 Filed 09/16/24 Page 1 of 6
David Abrams, Attorney at Law (NY 3 051604)
PO Box 3353 Church Street Station
New York, NY 10008
212-897-5821 dnabrams@gmail.com
United States District Court
District of Connecticut
) 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.
)
MACDERMID, INCORPORATED as ) Complaint Under the False
successor in interest to ) Claims Act
COVENTY A INC., )
)
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's predecessor 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-01480-JCH Document 1 Filed 09/16/24 Page 2 of 6
II. Parties
2. Defendant MACDERMID, IN CORPORATED ("Defendant") is a
Connecticut business corporation with a principal place of business in New Haven
County, Connecticut. Defendant is the successor entity to COVENTY A INC.
3. The Relater, GNGH2 Inc. ("Relater" or "Plaintiff') is a New Jersey
corporation with a principal office in Bergen County, New Jersey.
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. Relater 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 Waterbury, Connecticut.
2
Case 3:24-cv-01480-JCH Document 1 Filed 09/16/24 Page 3 of 6
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.
[continued on next page]
3
Case 3:24-cv-01480-JCH Document 1 Filed 09/16/24 Page 4 of 6
12. The Defendant in this matter is firm which manufactures chemicals.
Defendant's predecessor entity received second draw PPP disaster relief as follows:
Date Amount Loan# Forgiven
4/24/2021 $1,075,000 1240438909 11/18/2021
13. Thus, on or about April 24, 2021, Defendant's authorized representative
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's predecessor was a
subsidiary of an entity known as Coventya SAS 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.
16. Moreover, the foregoing information is available on the websites and/or
reports 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.
4
Case 3:24-cv-01480-JCH Document 1 Filed 09/16/24 Page 5 of 6
18. Thus, Defendant's authorized representative 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.
VI. (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)(l )(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.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.")
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.
5
Case 3:24-cv-01480-JCH Document 1 Filed 09/16/24 Page 6 of 6
24. The United States paid some $1,081,061.81 in principal and interest in
respect of the above loan.
25. Additionally, the United States paid $32,250 in processing fees in respect of
the above loan.
26. Accordingly, Relator seeks judgment in the amount of $3,339,935.43
against the Defendant and in favor of the United States, together with costs,
attorneys fees, 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
GNGH2 Inc.
PO Box 3353 Church Street Station
New York, NY 10008
Tel. 212-897-5821
Fax 212-897-5811
Dated: Delhi, New York
September 13, 2024
6
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