Settlement Agreement among the United States, Carten-Fujikin, Inc., and Verity Investigations, LLC
Summary
Settlement agreement among the United States, acting for the Small Business Administration, Carten-Fujikin, Inc. of Cheshire, Connecticut, and relator Verity Investigations, LLC, which filed a False Claims Act qui tam case in the District of Delaware on September 29, 2025. The United States contends that the valve and gas systems maker falsely certified, on its January 28, 2021 Second Draw Paycheck Protection Program application and its forgiveness application, that it and its affiliates had fewer than 300 employees and that no entity with significant operations in China owned more than 20% of it. Carten-Fujikin agrees to pay $774,812.51, of which $516,541.67 is restitution, without admitting liability. The relator receives $77,481.25 from the settlement and $4,340.00 from the company for expenses and fees.
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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
(collectively the “United States”), Carten-Fujikin, Inc., and Verity
Investigations, LLC (all hereafter collectively referred to as “the Parties”),
through their authorized representatives.
RECITALS
A. Carten-Fujikin, Inc. (“CFI”) is a Delaware corporation with its
principal place of business in Cheshire, Connecticut. CFI manufactures high
integrity valve products and integrated gas systems for use in the
semiconductor industry.
B. In early 2020, as part of the Coronavirus Aid, Relief, and
Economic Security Act (“CARES Act”), Congress created the Paycheck
Protection Program (“PPP”), a loan program that was administered by the
United States Small Business Administration (“SBA”). In early 2021, SBA
authorized a second series of PPP loans, generally referred to as “Second Draw”
PPP loans.
C. On or about September 29, 2025, Verity Investigations, LLC
(“Relator”) filed a qui tam action in the United States District Court for the
District of Delaware captioned United States ex rel. Verity Investigations, LLC
v. Carten-Fujikin, Incorporated, Civil Action No. 25-1206-CFC, pursuant to the
qui tam provisions of the False Claims Act, 31 U.S.C. § 3730(b) (the “Civil
Action”).
D. The United States contends that it has certain civil claims
against CFI arising from CFI’s application for a Second Draw PPP loan (the
“Second Draw Loan”) on or about January 28, 2021, and SBA’s forgiveness of
that loan on or about June 15, 2021. That conduct is referred to below as the
Covered Conduct.
E. Specifically, the United States contends that, on its application
for the Second Draw Loan and its forgiveness application for the Second Draw
Loan, CFI falsely certified that it, together with its domestic and foreign
affiliates, had fewer than 300 employees and that no entity with significant
operations in the People’s Republic of China owned more than 20% of CFI, each
of which was a requirement to be eligible for the loan and for forgiveness of the
loan.
F. This Settlement Agreement is neither an admission of liability by
CFI nor a concession by the United States that its claims are not well founded.
G. CFI admits the undisputed facts set forth in the attached
Statement of Facts.
H. 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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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. CFI shall pay to the United States seven hundred seventy-four
thousand, eight hundred twelve dollars and fifty-one cents ($774,812.51) (the
“Settlement Amount”), of which $516,541.67 is restitution, by electronic funds
transfer, pursuant to written instructions to be provided by the Office of the
United States Attorney for the District of Delaware, no later than 30 days after
the Effective Date of this Agreement.
2. Conditioned upon the United States receiving the Settlement
Amount from CFI and as soon as feasible after receipt, the United States shall
pay $77,481.25 to Relator by electronic funds transfer (“Relator’s Share”).
3. No later than 30 days after the Effective Date of this Agreement,
CFI will pay to Relator $4,340.00 for expenses, attorneys’ fees, and costs
pursuant to 31 U.S.C. § 3730(d). CFI and Relator agree that this amount
represents reasonable expenses, attorney’s fees, and costs for the Civil Action
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 CFI from any civil or administrative monetary claim
the United States has for the Covered Conduct under the False Claims Act, 31
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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. Upon the United States’ receipt of the Settlement Amount,
Relator, for itself and for its members, successors, attorneys, agents, and
assigns, releases CFI 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 this 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; and
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f. Any liability of individuals.
7. Relator and its members, 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). Conditioned upon Relator’s receipt of
the Relator’s Share, Relator and its members, 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 members, successors, attorneys,
agents, and assigns, releases CFI, and its officers, agents, and employees, 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. CFI 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.
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10. CFI 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 it 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. CFI fully and finally releases the Relator from any claims
(including attorneys’ fees, costs, and expenses of every kind and however
denominated) that CFI has asserted, could have asserted, or may assert in the
future against the Relator, related to the Civil Action 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 CFI, and its present or former partners, officers, directors, employees,
shareholders, and agents in connection with:
(1) the matters covered by this Agreement;
(2) the United States’ civil investigation of the matters
covered by this Agreement;
(3) CFI’s investigation, defense, and corrective actions
undertaken in response to the United States’ civil
investigation in connection with the matters covered
by this Agreement (including attorneys’ fees);
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(4) the negotiation and performance of this Agreement;
(5) the payment CFI makes to the United States
pursuant to this Agreement and any payments that
it 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 CFI, and CFI 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, CFI shall
identify and repay by adjustment to future claims for payment or otherwise
any Unallowable Costs included in payments previously sought by CFI or any
of its subsidiaries or affiliates from the United States. CFI agrees that the
United States, at a minimum, shall be entitled to recoup from CFI 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 SBA, reserves
its rights to audit, examine, or re-examine CFI’s books and records and to
disagree with any calculations submitted by CFI or any of its subsidiaries or
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affiliates regarding any Unallowable Costs included in payments previously
sought by CFI, 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
United States and Relator 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. Except as provided in Paragraph 3, above, each Party shall bear
its own legal and other costs incurred in connection with this matter, including
the preparation and performance of this Agreement.
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 venue for any dispute relating to this Agreement is the United States
District Court for the District of Delaware. 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.
18. This Agreement constitutes the complete agreement between the
Parties. This Agreement may not be amended except by written consent of the
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Parties. Forbearance by the United States from pursuing any remedy or relief
available to it under this Agreement shall not constitute a waiver of rights
under this Agreement.
19. The undersigned counsel represent 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 CFI’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 (the “Effective Date”). Facsimiles of signatures
shall constitute acceptable, binding signatures for purposes of this Agreement.
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THE UNITED STATES OF AMERICA
Digitally signed by DYLAN
STEINBERG
DATED: 10/13/2026
Date: 2026.10.13 11:21:33
BY: ______________________________
-04'00'
Dylan J. Steinberg
Civil Chief
Assistant United States Attorney
District of Delaware
CARTEN-FUJIKIN, INCORPORATED
DATED: BY: _____________________________
Paul Hoynack
President, Carten-Fujikin, Inc.
DATED: BY: _____________________________
David T. Grudberg
Counsel for Carten-Fujikin, Inc.
VERITY INVESTIGATIONS, LLC
DATED: BY: _____________________________
Gregory Lynam
Member, Verity Investigations, LLC
DATED: BY: _____________________________
Steven Shepard
Counsel for Verity Investigations, LLC
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THE UNITED STATES OF AMERICA
DATED: BY: ______________________________
Dylan J. Steinberg
Civil Chief
Assistant United States Attorney
District of Delaware
CARTEN-FUJIKIN, INCORPORATED
DATED: BY: _____________________________
Paul Hoynack
President, Carten-Fujikin, Inc.
DATED: BY: _____________________________
David T. Grudberg
Counsel for Carten-Fujikin, Inc.
VERITY INVESTIGATIONS, LLC
DATED: BY: _____________________________
Gregory Lynam
Member, Verity Investigations, LLC
Oct. 8, 2026
DATED: BY: _____________________________
Steven Shepard
Counsel for Verity Investigations, LLC
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STATEMENT OF FACTS
1. Carten-Fujikin, Inc. (“CFI”) is a Delaware corporation with its principal place
of business in Cheshire, Connecticut. CFI is 100% owned by Fujikin of
America, Inc. (“FoA”), which is in turn 100% owned by Fujikin, Incorporated
(“Fujikin Japan”), a Japanese company.
2. In early 2020, as part of the Coronavirus Aid, Relief, and Economic Security
Act (“CARES Act”), Congress created the Paycheck Protection Program
(“PPP”), a loan program that was administered by the United States Small
Business Administration (“SBA”).
3. In early 2021, SBA authorized a second series of PPP loans, generally referred
to as “Second Draw” PPP loans. To be eligible for a Second Draw loan,
applicants were required to meet and certify to certain requirements, including
that they, together with any of their domestic and foreign affiliates, had fewer
than 300 employees.
4. CFI applied for and obtained a Second Draw PPP loan in the amount of
$500,000. On the Second Draw loan application, CFI certified that it, together
with its affiliates, had fewer than 300 employees. On the Second Draw loan
application, CFI also certified that no entity that owned, directly or indirectly,
at least 20 percent of the economic interest of CFI had significant operations
in the People’s Republic of China or the Special Administrative Region of Hong
Kong.
5. CFI subsequently applied for (and ultimately received) forgiveness of the
Second Draw loan.
6. At all relevant times, CFI, together with its affiliates, including FoA and
Fujikin Japan, had more than 300 employees.
7. At all relevant times, Fujikin Japan, through its subsidiary Fujikin of China
Incorporated, operated multiple locations in the People’s Republic of China.
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