Settlement Agreement — Sidesolve v. Taiji Group USA (W.D.N.C.)

Summary

A settlement agreement among the United States, acting through the Department of Justice on behalf of the Small Business Administration, Taiji Group USA, Inc. and relator Sidesolve, LLC, filed February 7, 2025 as Document 14-1 in Case 5:24-cv-00098-KDB-SCR in the U.S. District Court for the Western District of North Carolina. The United States contends that Taiji falsely certified in its Second Draw PPP application that no entity created in the People’s Republic of China owns or holds not less than 20 percent of its economic interest, and that SBA approved a $271,165.00 loan on or about March 27, 2021. Taiji agrees to pay a Settlement Amount of $460,395.09, of which $287,746.93 is restitution, and $12,737.10 to Bracker & Marcus LLC for relator fees. The United States will pay the relator $46,039.51. The agreement is not an admission of liability by Taiji.

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Cite this document

“Settlement Agreement — Sidesolve v. Taiji Group USA (W.D.N.C.).” Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/court-filing-no-5-24-cv-00098-dkt-14-1-b6f8b1093b/, SHA-256 e0e02d538be39d16e910a50f294a487632dd0bda002c6e28944060952b33d253.

Full text

SETTLEMENT 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

United States Small Business Administration, Taiji Group USA, Inc. (“Taiji”), and

Sidesolve, LLC (“Relator”) (hereafter collectively referred to as “the Parties”), through their

authorized representatives.

RECITALS

A. Taiji Group USA, Inc. (“Taiji”) is a paper converter with a principal place

of business at 405 Wortha Herman Road SW, Conover, NC 28613.

B. On or about April 9, 2024, Sidesolve, LLC (“Relator”) filed a qui tam

action in the United States District Court for the Western District of North Carolina

captioned United States of America ex rel. Sidesolve, LLC, v. Taiji Group USA, Inc., Civil

Action No. 5:24-cv-98, 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 Taiji

arising from the facts and conduct described in this paragraph:

(i) On or about March 19, 2021, Taiji applied for a Second Draw PPP loan

pursuant to the Paycheck Protection Program (“PPP”) under the

Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”).

(ii) In submitting the Second Draw PPP loan application, Taiji certified that it “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 that has

significant operations in the People’s Republic of China . . . owns or holds,

directly or indirectly, not less than 20 percent of the economic interest of

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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.”

(iii) At the time Taiji submitted the application, it was, in fact, “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 that has significant operations

in the People’s Republic of China . . . 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.”

(iv) Taiji would not have qualified for the Second Draw PPP loan if it answered

the certification question accurately.

(v) On or about March 27, 2021, and based on Taiji’s application, SBA

approved a Second Draw PPP loan to Taiji totaling $271,165.00. In

connection with the Second Draw PPP loan, SBA also paid a loan

processing fee to the lender totaling approximately $13,558.25, and interest

on the Second Draw PPP loan of approximately $3,023.68.

That conduct is referred to below as the Covered Conduct.

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

proceeds of this Settlement Agreement and to Relator’s reasonable expenses, attorneys’

fees and costs.

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E. This Settlement Agreement is neither an admission of liability by Taiji, nor

a concession by the United States or the Relator that their claims are not well founded.

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:

TERMS AND CONDITIONS

1. Taiji shall pay to the United States four hundred sixty thousand, three hundred

ninety-five dollars and nine cents ($460,395.09) (“Settlement Amount”), of which two-

hundred and eighty-seven thousand, seven hundred forty-six dollars and ninety-three cents

($287,746.93) is restitution, by electronic funds transfer pursuant to written instructions to

be provided by the United States Attorney’s Office for the Western District of North

Carolina no later than 30 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 $46,039.51 to Relator by

electronic funds transfer (“Relator’s Share”).

3. Taiji shall pay $12,737.10 to Bracker & Marcus LLC in satisfaction of any

claims Relator may have for attorney’s fees and costs under 31 U.S.C. § 3730(d), no later

than thirty (30) days after the Effective Date of this Agreement

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 Taiji from any civil or administrative monetary claim the United States has for the

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

Civil Remedies Act, 31 U.S.C. §§ 3801-3812; the Financial Institutions Reform, Recovery,

and Enforcement Act (“FIRREA”), 12 U.S.C. § 1833a; or the common law theories of

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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 successors, attorneys, agents,

and assigns, forever and irrevocably, releases Taiji and their respective directors, officers,

employees and advisors 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;

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

f. Any liability of individuals.

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

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

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

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Conditioned upon Relator’s receipt of the Relator’s Share, Relator 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, forever and irrevocably, releases Taiji, and its respective directors, officers,

employees, and advisors, from any liability to Relator arising from the filing of the Civil

Action, or under 31 U.S.C. § 3730(d) for expenses or attorneys’ fees and costs.

9. Taiji waives and shall not assert any defenses it 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 Eighth

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

prosecution or administrative action.

10. Taiji fully and finally release 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 Taiji 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. Taiji fully and finally release the Relator from any claims (including

attorneys’ fees, costs, and expenses of every kind and however denominated) that Taiji

have asserted, could have asserted, or may assert in the future against the Relator, related

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to the Covered Conduct and the Relator’s investigation and prosecution thereof.

12. 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 Taiji, and their

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

with:

(1) the matters covered by this Agreement;

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

matters covered by this Agreement;

(3) Taiji’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 performance of this Agreement;

(5) the payment Taiji makes to the United States pursuant to this

Agreement and any payments that Taiji 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 Taiji, and Taiji 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, Taiji shall identify and repay by

adjustment to future claims for payment or otherwise any Unallowable Costs included in

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payments previously sought by Taiji or any of its subsidiaries or affiliates from the United

States. Taiji agrees that the United States, at a minimum, shall be entitled to recoup from

Taiji 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 Taiji’s books and records and to disagree with any

calculations submitted by Taiji or any of its subsidiaries or affiliates regarding any

Unallowable Costs included in payments previously sought by Taiji, or the effect of any

such Unallowable Costs on the amount of such payments.

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

14. 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)(1).

15. Each Party shall bear its own legal and other costs incurred in connection

with this matter, including the preparation and performance of this Agreement, except as

described in Paragraph 3 above.

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

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

17. 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 Western District of North Carolina. 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.

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

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

19. The undersigned counsel represents and warrant that they are fully

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

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

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

21. This Agreement is binding on Taiji’s successors, transferees, heirs, and

assigns.

22. This Agreement is binding on Relator’s successors, transferees, heirs, and

assigns.

23. All parties consent to the United States’ disclosure of this Agreement, and

information about this Agreement, to the public.

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

the Agreement. Facsimiles of signatures shall constitute acceptable, binding signatures for

purposes of this Agreement.

***

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THE UNITED STATES OF AMERICA

DENA J. KING
UNITED STATES ATTORNEY
JOHN Digitally signed by
JOHN JOHNSON

Date ________ JOHNSON Date: 2025.02.06
16:10:09 -05'00'
By: _______________________
J. Seth Johnson
Assistant United States Attorney
Western District of North Carolina

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