Takahata Precision Tennessee, Inc. Agrees to Pay $2.5M Following Improper Receipt of PPP Loan — False Claims Act Settlement, Knoxville, April 16, 2026

Summary

Federal press release datelined Knoxville, Tenn. announcing that Takahata Precision Tennessee, Inc. (Takahata TN) agreed to pay $2,582,576.10 to resolve allegations that it violated the False Claims Act by applying for, receiving and obtaining forgiveness of a Paycheck Protection Program (PPP) loan for which it was not eligible. The release explains that Congress created the PPP in March 2020 under the CARES Act, and that the Economic Aid Act, enacted on December 27, 2020, authorized the Small Business Administration to guarantee second-draw PPP loans subject to eligibility requirements. It then sets out why the government alleges the company did not qualify.

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Full text

KNOXVILLE, Tenn. – Takahata Precision Tennessee, Inc. (“Takahata TN”) has agreed to pay $2,582,576.10 to resolve allegations that it violated the False Claims Act by applying for, receiving, and obtaining forgiveness of a loan under the Paycheck Protection Program (“PPP”) for which it was not eligible.

Congress created the PPP in March 2020, as part of the Coronavirus Aid, Relief, and Economic Security Act, to provide relief to small businesses experiencing economic hardship during the COVID-19 pandemic. On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (“Economic Aid Act”), enacted on December 27, 2020, subsequently authorized the Small Business Administration (“SBA”) to guarantee second-draw PPP loans. To be eligible for second-draw PPP loans, borrowers were required to have no more than 300 employees, among other requirements. On May 21, 2020, the SBA published an Interim Final Rule clarifying that affiliated foreign employees were to be included when a borrower calculated their total number of employees for purposes of determining PPP loan eligibility.

The United States contends that Takahata TN failed to include employees of its foreign affiliates through common ownership when it applied for a second-draw PPP loan and forgiveness thereof. Had Takahata TN included the employees of its foreign affiliates, as required, it would have exceeded the 300-employee size limitation applicable to second-draw PPP loans and would not have been eligible to receive the loan.

This Settlement resolves a lawsuit filed under the qui tam , or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and receive a share of any recovery. The qui tam case is captioned United States ex rel. GNGH2, Inc. v. Takahata Precision Tennessee Inc. , No. 3:24-cv-391 (E.D. Tenn.).

Assistant U.S. Attorneys Alexa Ortiz Hadley and Ben Cunningham represented the United States, with assistance from the SBA’s Office of General Counsel.

“This settlement is another example of our office’s commitment to holding accountable those who disregard program requirements and obtain federal funds they are not entitled to,” said U.S. Attorney Francis M. Hamilton III. “Our office remains proud to work with the SBA and other federal partners in this effort.”

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

The claims resolved by this settlement are allegations only, and there has been no determination of liability.

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