Notice of Intervention for Purposes of Settlement — United States ex rel. GNGH2 Inc. v. MacDermid

Summary

A Notice of Intervention for Purposes of Settlement with an attached Settlement Agreement, Document 13, filed 02/19/25 in Case 3:24-cv-01480-JCH, United States of America ex rel. GNGH2 Inc. v. MacDermid, Incorporated as successor in interest to Coventya Inc., in the United States District Court, District of Connecticut. The United States alleges that Coventya applied on April 27, 2021 for a second-draw Paycheck Protection Program loan of $1,075,000 and falsely certified it had fewer than 300 employees, and that forgiveness of $1,081,061.81 was later paid. Under the February 18, 2025 agreement the defendant pays $2,226,623.62, of which $1,113,311.81 is restitution, the relator's share is $222,662.36, and the agreement is not an admission of liability.

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“Notice of Intervention for Purposes of Settlement — United States ex rel. GNGH2 Inc. v. MacDermid.” Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/court-filing-no-3-24-cv-01480-dkt-13-d-conn-fb523da473/, SHA-256 543a810306dca5897d206f1a7db75739e369d47ff665c6ef10072675b132e0a4.

Full text

Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 1 of 17

UNITED STATES DISTRICT COURT
DISTRICT OF CONNECTICUT

UNITED STATES OF AMERJCA, ex rel
GNGH2INC.,

Plaintiffs, No. 3:24-cv-01480 (JCH)

V. FILED UNDER SEAL

MACDERMID, INCORPORATED
as successor in interest to COVENTYA INC.,
February 19, 2025
Defendant.

NOTICE OF INTERVENTION
FOR PURPOSES OF SETTLEMENT

The United States and the Relator in the above captioned action have reached a

settlement agreement with Defendant MacDermid Incorporated, as successor in interest to

Coventya, Inc. (''Defendant") to resolve all claims pending against Defendant in this action. The

February 18, 2025 Settlement Agreement is attached hereto as Exhibit A.

In light of this agreement, and for the purpose of effectuating that resolution, pursuant to

the federal False Claims Act, 31 U.S.C. §§ 3730(b)(2) and (4), the United States respectfully

notifies the Court of its decision to intervene in part of this action for the purposes of settlement,

and to decline in part of this action.

Specifically, the United States intervenes for purposes of settlement with respect to the

claims defined as the Covered Conduct in the parties' February 18, 2025, Settlement Agreement.

See Exhibit A. The United States declines intervention with respect to all other claims in this

action.

In addition, under the terms and conditions of the Settlement Agreement among the
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 2 of 17

parties, the United States and the Relator have signed and will file a Stipulation of Dismissal

pursuant to Rule 4l(a)(I), as follows:

1. The stipulation of dismissal is with prejudice as to the United States' claims as to the

Covered Conduct, as defined in the Settlement Agreement; the stipulation of dismissal is

without prejudice as to the United States as to all other allegations set forth in this action.

2. The stipulation of dismissal is with prejudice as to the Relator's claims as to the Covered

Conduct as defined in the Settlement Agreement, and as to all of Relator's allegations

against Defendant set forth in this action.

The United States respectfully requests that the Court retain jurisdiction over the parties

to the extent necessary to enforce the terms and conditions of the Settlement Agreement.

Finally, the United States hereby requests that the Court lift the seal on this action and on

all filings in this action.

A proposed Order accompanies this Notice.

Respectfully submitted,

MARCH. SILVERMAN
ACTING UNITED STATES ATTORNEY
Attorney for the United States

By: Isl Sara G. Kaczmarek
SARA G. KACZMAREK
Assistant United States Attorney
Federal Bar No. ct30726
157 Church Street
New Haven, CT 06510
Telephone: (203) 821-3796
Email: Sara.Kaczmarek@usdoj.gov

2
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 3 of 17

EXHIBIT A
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 4 of 17

SETTLEJvIBNT AGREEMENT

This Settlement Agreement ("Agreement") is entered into among the United

States of America, acting through the United States Department of Justice and on behalf

of the Small Business Administration ("SBA") (collectively the "United States"),

MacDermid Incorporated, as successor in interest to Coventya Inc. ("Defendant"), and

GNGH2, Inc. ("Relator") (hereafter collectively referred to as "the Parties"), through

their authorized representatives.

RECITALS

A. Coventya Inc. was a company involved in the manufacture and

international distribution of chemicals. In September 2021, Coventya Inc. was acquired

by MacDennid Incorporated, a company that provides chemical products and technical

services. Coventya Inc. is now known as MacDermid, Incorporated. MacDermid

Incorporated has its principal place of business in Waterbury, Connecticut.

B. On September 16, 2024, Relator filed a qui tam action in the United States

District Court for the District of Connecticut captioned United States ex rel. GNGH2 Inc.

v. MacDermid Inc., as successor in interest to Coventya Inc., Civil Action No. 3:24-cv-

1480 (JCH), pursuant to the qui tam provisions of the False Claims Act, 31 U.S.C. §

3730(b) (the "Civil Action").

C. The United States contends that it has certain civil claims against

Defendant arising from Coventya Inc. 's application for and receipt of Paycheck

Protection Program ("PPP") loan funds, and subsequent forgiveness of that loan.

Specifically, the United States alleges the following:

Settlement Agreement
between the U.S., GNGH2 Inc.,
and MacDermid/Coventya
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 5 of 17

a. In March 2020, Congress enacted the Coronavirus Aid, Relief, and

Economic Security ("CARES") Act, which was designed to provide emergency

financial assistance to Americans suffering economic effects caused by the

COVID-19 pandemic. The CARES ACT amended Section 7(a) of the Small

Business Act, 15 U.S.C. § 631-657u, and authorized forgivable loans to eligible

small businesses for job retention and other expenses through the PPP.

b. In December 2020, Congress enacted the Economic Aid to Hard-Hit Small

Businesses, Nonprofits, and Venues Act, P.L. 116-260 ("Economic Aid Act") as a

continuation of the federal government's efforts to provide relief to individuals

and businesses suffering economic and public health effects of the pandemic. The

Economic Aid Act created a second-draw PPP loan that allowed eligible

businesses apply for a second loan.

c. One of the eligibility requirements for receiving a second-draw PPP loan

was that the entity could have no more than 300 employees, including employees

of affiliated entities. The second draw PPP loan application (fonn 2483-SD)

required the applicant to certify, among other things, that it had fewer than 300

employees. The applicant was required to include in its employee count the

employees of any foreign and domestic affiliate entities.

d. On April 27, 2021, Coventya applied for a second-draw PPP loan for

$1,075,000. When it applied for the second-draw loan, Coventya falsely certified

that it had fewer than 300 employees. Coventya knew, or should have lmown, that

2
Settlement Agreement
between the US., GNGH2 Inc.,
and MacDermid/Coventya
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 6 of 17

together with its foreign affiliate, it had more than 300 employees and was

therefore ineligible for the second-draw PPP loan.

e. Based on its application, Coventya received a second-draw PPP loan

totaling $1,075,000 (SBA Loan No. 1240438909). In connection with that PPP

loan, the SBA paid a $32,250 processing fee to the lender. On November 18,

2021, and upon attesting to the accuracy of its underlying application and

eligibility for the second-draw loan, Coventya applied for and received

forgiveness of the loan in the amount of $1,081,061.81, including $1,075,000 in

principal and $6,061.81 in interest, which the SBA paid to the lender. The SBA

would not have approved forgiveness had Coventya not falsely certified its

employee count.

The conduct described in this Paragraph C a.-e., above, is referred to below as the

"Covered Conduct."

D. This Settlement Agreement is neither an admission of liability by

Defendant nor a concession by the United States that its claims are not well founded.

E. Relator claims entitlement under 31 U.S.C. § 3730(d) to a share of the

proceeds of this Settlement Agreement and to Relater's reasonable expenses, attorney's

fees and costs.

To avoid the delay, uncertainty, inconvenience, and expense of protracted

litigation of the above claims, and in consideration of the mutual promises and

obligations of this Settlement Agreement, the Parties agree and covenant as follows:

3
Settlement Agreement
between the US., GNGH2 Inc.,
and MacDermid/Coventya
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 7 of 17

TERMS AND CONDITIONS

I. Defendant shall pay to the United States TWO MILLION, TWO

HUNDRED TWENTY-SIX 11-IOUSAND, SIX HUNDRED TWENTY-THREE

DOLLARS AND SIXTY-TWO CENTS ($2,226,623.62) ("Settlement Amount"), of

which $1,113,311.81 is restitution, by electronic funds transfer pursuant to written

instructions to be provided by the U.S. Attorney's Office for the District of Connecticut

no later than five (5) business days after the Effective Date of this Agreement.

2. Conditioned upon the United States receiving the Settlement Amount and

as soon as feasible after receipt, the United States shall pay $222,662.36 to Relator by

electronic funds transfer ("Relator's Share").

3. Defendant shall separately pay to Relator $2,205 pursuant to 31 U.S.C. §

3730(d) in full and complete satisfaction of any claim Relator has or could have asserted

for attorney's fees, costs, or expenses arising out of, relating to, or in connection with the

Civil Action. Defendant shall make this payment no later than thirty (30) days after the

Effective Date of this Agreement by electronic funds transfer pursuant to written

instructions to be provided by counsel for Relator.

4. Subject to the exceptions in Paragraph 6 (concerning reserved claims)

below, and upon the United States' receipt of the Settlement Amount, the United States

releases Defendant, together with its current and former parent corporations, direct and

indirect subsidiaries, brother or sister corporations, divisions, current or former corporate

owners, and the corporate successors and assigns of any of them from any civil or

administrative monetary claim the United States has for the Covered Conduct under the

4
Settlement Agreement
between the US., GNGH2 Inc.,
and MacDermid/Coventya
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 8 of 17

False Claims Act, 31 U.S.C. §§ 3729-3733; the Program Fraud Civil Remedies Act, 31

U.S.C. §§ 3801-3812; or the common law theories of breach of contract, payment by

mistake, unjust enrichment, and fraud.

5. Subject to the exceptions in Paragraph 6 below, and upon the United

States' receipt of the Settlement Amount, Relator, for itself and for its heirs, successors,

attorneys, agents, and assigns, releases Defendant, together with its current and former

parent corporations, direct and indirect subsidiaries, brother or sister corporations,

divisions, current or former corporate owners, and the corporate successors and assigns of

any of them, from any civil monetary claim the Relator has on behalf of the United States

for the Covered Conduct under the False Claims Act, 31 U.S.C. §§ 3729-3733.

6. Notwithstanding the releases given in Paragraph 4 of this Agreement, or

any other term of this Agreement, the following claims and rights of the United States are

specifically reserved and are not released:

a. Any liability arising under Title 26, U.S. Code (Internal Revenue

Code);

b. Any criminal liability;

c. Except as explicitly stated in the Agreement, any administrative

liability or enforcement right, or any administrative remedy,

including the suspension and debarment rights of any federal

agency;

d. Any liability to the United States (or its agencies) for any conduct

other than the Covered Conduct;

5
Settlement Agreement
between the US, GNGH2 Inc.,
and MacDermid/Coventya
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 9 of 17

e. Any liability based upon obligations created by this Agreement;

and

f. Any liability of individuals.

7. Relator and its heirs, successors, attorneys, agents, and assigns shall not

object to this Agreement but agree and confinn that this Agreement is fair, adequate, and

reasonable under all the circumstances, pursuant to 31 U.S.C. § 3730(c)(2)(B).

Conditioned upon Relator's receipt of the Re lator's Share, Rel ator and its heirs,

successors, attorneys, agents, and assigns fully and finally release, waive, and forever

discharge the United States, its agencies, officers, agents, employees, and servants, from

any claims arising from the filing of the Civil Action or under 31 U.S.C. § 3730, and

from any claims to a share of the proceeds of this Agreement and/or the Civil Action.

8. Relator, for itself, and for its heirs, successors, attorneys, agents, and

assigns, releases Defendant, Defendant's affiliates, and all of their current and former

shareholders, members, directors, officers, agents, employees, and the predecessors,

successors, and assigns of each of them, from any liability to Relater arising from the

filing of the Civil Action, the Covered Conduct, or under 31 U.S,C. § 3730(d) for

expenses or attorneys' fees and costs except as set forth in Paragraph 3.

9. Defendant waives and shall not assert any defenses Defendant may have

to any criminal prosecution or administrative action relating to the Covered Conduct that

may be based in whole or in part on a contention that, under the Double Jeopardy Clause

in the Fifth Amendment of the Constitution, or under the Excessive Fines Clause in the

6
Settlement Agreement
between the US., GNGH2 Inc. ,
and MacDermid/Coventya
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 10 of 17

Eighth Amendment of the Constitution, this Agreement bars a remedy sought in such

criminal prosecution or administrative action.

10. Defendant fully and finally releases the United States, its agencies,

officers, agents, employees, and servants, from any claims (including attorneys' fees,

costs, and expenses of every kind and however denominated) that Defendant has asserted,

could have asserted, or may assert in the future against the United States, its agencies,

officers, agents, employees, and servants, related to the Covered Conduct or the United

States' investigation or prosecution thereof.

11. Defendant agrees to the following, if applicable:

a. Unallowable Costs Defined: all costs (as defined in the Federal

Acquisition Regulation, 48 C.F .R. § 31.205-47) incurred by or on behalf of Defendant,

and its present or former officers, directors, employees, shareholders, and agents in

connection with:

(I) the matters covered by this Agreement;

(2) the United States' audit(s) and civil investigation(s) of the

matters covered by this Agreement;

(3) Defendant's investigation, defense, and corrective actions

undertaken in response to the United States' audit(s) and

civil investigation(s) in connection with the matters

covered by this Agreement (including attorneys' fees);

(4) the negotiation and perfonnance of this Agreement;

7
Settlement Agreement
between the US, GNGH2 Inc.,
and MacDermid/Coventya
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 11 of 17

(5) the payment Defendant makes to the United States pursuant

to this Agreement and any payments that Defendant may

make to Relator, including costs and attorneys' fees,

are unallowable costs for government contracting purposes (hereinafter referred to as

Unallowable Costs).

b. Future Treatment of Unallowable Costs: Unallowable Costs will be

separately determined and accounted for by Defendant, and Defendant shall not charge

such Unallowable Costs directly or indirectly to any contract with the United States.

c. Treatment of Unallowable Costs Previously Submitted for

Payment: Within 90 days of the Effective Date of this Agreement, Defendant shall

identify and repay by adjustment to future claims for payment or otherwise any

Unallowable Costs included in payments previously sought by Defendant or any of its

subsidiaries or affiliates from the United States. Defendant agrees that the United States,

at a minimum, shall be entitled to recoup from Defendant any overpayment plus

applicable interest and penalties as a result of the inclusion of such Unallowable Costs on

previously-submitted requests for payment. The United States, including the Department

of Justice and/or the affected agencies, reserves its rights to audit, examine, or re-examine

Defendant's books and records and to disagree with any calculations submitted by

Defendant or any of its subsidiaries or affiliates regarding any Unallowable Costs

included in payments previously sought by Defendant, or the effect of any such

Unallowable Costs on the amount of such payments.

12. This Agreement is intended to be for the benefit of the Parties only.

8
Settlement Agreement
between the U.S., GNGH2 Inc.,
and MacDermid/Coventya
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 12 of 17

13. Upon receipt of the payment described in Paragraph 1, above, the Relator

and the United States shall promptly sign and file in the Civil Action a Joint Stipulation

of Dismissal of the Civil Action pursuant to Rule 41 (a)(l ). The stipulation of dismissal

shall be subject to the terms and conditions of this Agreement. The stipulation of

dismissal shall be with prejudice as to the United States' and Relator's claims as to the

Covered Conduct, and as to any of Relator's claims against Defendant set forth in the

Civil Action. The stipulation of dismissal shall be without prejudice as to the United

States as to any other allegations set forth in the Civil Action.

14. Except as provided in Paragraph 3, each Party shall bear its own legal and

other costs incurred in connection with this matter, including the preparation and

performance of this Agreement.

15. Each Party and signatory to this Agreement represents that it freely and

voluntarily enters into this Agreement without any degree of duress or compulsion.

16. This Agreement is governed by the laws of the United States. The

exclusive jurisdiction and venue for any dispute relating to this Agreement is the United

States District Court for the District of Connecticut. For purposes of construing this

Agreement, this Agreement shall be deemed to have been drafted by all Parties to this

Agreement and shall not, therefore, be construed against any Party for that reason in any

subsequent dispute.

17. This Agreement constitutes the complete agreement between the Parties.

This Agreement may not be amended except by written consent of the Parties.

9
Settlement Agreement
between the US., GNGH2 Inc.,
and MacDermid/Coventya
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 13 of 17

18. The undersigned counsel represent and warrant that they are fully

authorized to execute this Agreement on behalf of the persons and entities indicated

below.

19. This Agreement may be executed in counterparts, each of which

constitutes an original and all of which constitute one and the same Agreement.

20. This Agreement is binding on Defendant's successors, transferees, heirs,

and assigns.

21. This Agreement is binding on Relator's successors, transferees, heirs, and

assigns.

22. All parties consent to the United States' disclosure of this Agreement, and

infonnation about this Agreement, to the public.

23. This Agreement is effective on the date of signature of the last signatory to

the Agreement (Effective Date of this Agreement). Facsimiles of signatures, scans of

signatures, and electronic signatures shall constitute acceptable, binding signatures for

purposes of this Agreement.

Settlement Agreement
between the US., GNGH2 Inc.,
and MacDermid/Coventya
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 14 of 17

THE UNJTED STATES OP AMERICA

Assistant United States Attorney
Chief, Civil Division
District of Connecticut

DATED: 2-\~-'2.o2~ BY:

£ ~ttomey
District of Connecticut
~

t1
Settlement Agreement
between the US., GNGH2 Inc. ,
and Mc1cDen11id/Coventya
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 15 of 17

MACDERMID. INCORPORATED, as successor in interest to COVENTYA. INC.

DATED: ii,,•I 1-01.S' BY: VICTOR J. MICHELS
Assistant Secretary
MacDermid, Incorporated, as successor in interest
to Coventya, Inc.

DATED: 02/l 7 /2025 BY:
LINDA M. RICCI
Greenberg Traurig LLP
Counsel for MacDermid, Incorporated, as successor
in interest to Coventya, Inc.

12
Settlement Agreement
between the U.S, GNGH2 Inc.,
and MacDennid/Coventya
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 16 of 17

GNGH2 Inc. - RELATOR

2/17/25
DATED: - - - - BY:
DA VlD ABRAMS
President
GNGH2lnc.

DATED: 2/17/25 BY:
DAvro ABRAMS
Counsel to Relater GNGH2 Inc.

13
Settlement Agreement
between the US, GNGH2 Inc.,
.and MacDermid/Coventya
Case 3:24-cv-01480-JCH Document 13 Filed 02/19/25 Page 17 of 17

CERTIFICATION OF SERVICE

I certify that a true and correct copy of the foregoing was served by electronic mail, this
February 19, 2025, on:

David Abrams
P .0. Box 3353 Church Street Station
New York, NY 10008
dnabrams@gmail.com
Counsel for Relator

Pursuant to 31 U.S.C. § 3730(b){2). no service was made upon the Defendant as this case is still
under seal.

Isl Sara G. Kaczmarek
Sara G. Kaczmarek (ct30726)
Assistant U.S. Attorney

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