Settlement Agreement (PPP): United States, Chroma Systems Solutions, Inc. and Aidan Forsyth, Relator
Summary
A settlement agreement among the United States (acting through the Department of Justice on behalf of the SBA), Chroma Systems Solutions, Inc., and Aidan Forsyth as Relator. It addresses a qui tam action, No. 25-cv-10052-ADB, that the Relator filed on January 8, 2025, in the United States District Court for the District of Massachusetts. Chroma Systems admits that its Second Draw PPP loan application of January 30, 2021, identified that it employed 107 people together with its affiliates, and that an affiliate alone employed approximately 1,831 people. Chroma Systems agrees to pay $1,923,187.55, of which $1,672,337.07 is restitution, plus interest at 5% per annum from October 16, 2025, and $8,000 to the Relator for expenses, attorneys' fees and costs.
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“Settlement Agreement (PPP): United States, Chroma Systems Solutions, Inc. and Aidan Forsyth, Relator.”
Original at www.justice.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/settlement-agreement-united-states-and-chroma-systems-solutions-ppp-981b680524/
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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"),
Chroma Systems Solutions, Inc. ("Chroma Systems"), and Aidan Forsyth ("Relator")
(hereafter collectively referred to as "the Parties"), through their authorized
representatives.
RECITALS
A. Chroma Systems is a California corporation registered doing business in
Massachusetts, with an office located in Marlborough, Massachusetts.
B. On or about January 30, 2021, Chroma Systems applied for a Second
Draw PPP loan with Cathay Bank under the Paycheck Protection Program provisions of
the Coronavirus Aid, Relief, and Economic Security Act (the "Second Draw PPP Loan").
C. The United States Small Business Administration ("SBA") is an agency of
the United States government that provides aid, counsel, and assistance to small
businesses and entrepreneurs. The Coronavirus Aid, Relief, and Economic Security Act,
Section 1102, vested the SBA with the responsibility of managing the Paycheck
Protection Program ("PPP") under the SBA's 7(a) Loan Program. The PPP was a federal
program that provided emergency relief to small businesses affected by the Covid-19
pandemic. See 15 U.S.C. § 636(a)(36).
D. On January 8, 2025, Relator filed a qui tam action in the United States
District Court for the District of Massachusetts captioned United States ex rel. Aidan
Forsyth v. Chroma Systems Solutions, Inc. No. 25-cv-10052-ADB, pursuant to the qui
tam provisions of the False Claims Act, 31 U.S.C. § 3730(6) (the "Civil Action'').
Following the Effective Date of this Agreement, the United States will file a notice of
intervention in part for purposes of settlement.
E. The United States contends that it has certain civil claims against Chroma
Systems for submitting or causing the submission of false claims to the SBA arising from
Chroma Systems' application for a PPP loan in 2021 during the so-called "Second Draw"
period of the PPP funding, and Chroma Systems' receipt of funds from and forgiveness
for that loan.
F. To apply for a Second Draw loan, a business or entity had to certify that it
understood and met all the requirements of the PPP program, including the requirement
that the business or entity, together with its affiliates, did not employ more than 300
employees, or satisfied a "per-location" exception of employing no more than 300
employees at each location. See SBA Form 2483-SD (1/21).
G. Chroma Systems admits, acknowledges, and accepts the following facts:
1. On the first page of its SBA-F01m 2483-SD, Chroma Systems
identified that, together with its affiliates, it employed 107 people as of Januaiy 30, 2021.
2. On the second page, Chroma Systems answered "No" to the
question as to whether it "or any owner of [Chroma Systems] an owner of any other
business, or have common management (including a management agreement) with any
other business?"
3. On the third page of its SBA-Form 2483-SD, Chroma Systems
certified that it was "eligible to receive a loan under the rules in effect at the time this
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application is submitted" and that it, "together with its affiliates ... (2) employ[ ed] no
more than 300 employees ..."
4. Chroma Systems is 50% owned by Chroma ATE, Inc. USA
("Chroma USA"), a California-based corporation. ChromaUSA is 100% owned by a
Taiwanese-based corporation, Chroma ATE, Inc. Global ("Chroma ATEGlobal"). At the
time Chroma Systems submitted the Second Draw PPP loan application to Cathay Bank,
Chroma Systems was affiliated with ChromaUSA and Chroma ATEGlobal.
5. At the time Chroma Systems submitted the Second Draw PPP loan
to Cathay Bank, Chroma ATEGlobal alone employed approximately 1,831 people.
6. Accordingly, Chroma Systems incorrectly reported the number of
employees of it and its affiliates and improperly certified its eligibility for the Second
Draw PPP loan on the SBA-Form 2483-SD.
7. Based on its incon-ect submission and certification, Chroma
Systems received a Second Draw PPP loan, loan number 9066258304 on or around
February 5, 2021.
8. Around March 29, 2022, at Chroma System's request, SBA
forgave the full value of Chroma Systems' Second Draw PPP loan, including interest.
H. The conduct in Paragraph G is hereafter referred to as the "Covered
Conduct."
I. The United States contends that Chroma Systems was ineligible for the
Second Draw PPP loan it received because Chroma Systems, together with its affiliates
Chroma USA and Chroma ATEGlobal, employed more than 300 employees but falsely
certified to the SBA that they did not. Moreover, the United States contends that Chroma
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Systems and its affiliates did not satisfy the "per-location" exception because Chroma
ATEGlobal employed well over 300 employees.
J. Chroma Systems received credit under the Depaiiment of Justice's
guidelines for cooperating in a False Claims Act case, Justice Manual § 4-4.112.
Particularly, Chroma Systems timely and proactively produced materials not requested by
the government pursuant to process; timely and proactively initiated settlement
discussions with the United States; and timely and proactively admitted and
acknowledged the Covered Conduct.
K. 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.
In consideration of the mutual promises and obligations of this Agreement, the
Parties agree and covenant as follows:
TERMS AND CONDITIONS
1. Chroma Systems shall pay to the United States $1,923,187.55, of which
$1,672,337.07 is restitution, plus interest at a rate of 5% per annum from October 16,
2025 and continuing through the date of payment ("Settlement Amount"), no later than
ninety (90) days after the Effective Date of this Agreement, by electronic funds transfer
pursuant to written instructions to be provided by the Office of the United States Attorney
for the District of Massachusetts.
2. Conditioned upon the United States receiving the Settlement Amount and
as soon as feasible after receipt, the United States shall pay $192,318.76 plus interest to
Relator by electronic funds transfer ("Relator's Share").
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3. Within 30 days of the Effective Date of this Agreement, Chroma Systems
shall pay to Relator the sum of $8,000 for expenses and attorneys' fees and costs pursuant
to 31 U.S.C. § 3730(d). With a reasonable time upon execution of this Agreement,
Relator shall provide wire instructions to Chroma Systems in order to effectuate this
payment.
4. Subject to the exceptions in Paragraph 6 (concerning reserved claims)
below, and upon the United States' receipt of the Settlement Amount plus interest due
under Paragraph 1, the United States releases Chroma Systems 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 Administrative False Claims Act
(formerly known as 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, plus interest due under Paragraph 1, Relator,
for himself and for his heirs, successors, attorneys, agents, and assigns, releases Chroma
Systems and its current and former officers, directors, employees, agents, representatives,
shareholders, affiliates, successors, and assigns 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 or any other cause of action.
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:
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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
debaiment 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
f. Any liability of individuals.
7. Relator and his 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).
Conditioned upon Relator's receipt of the Relator's Share, Relator and his 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 himself, and for his heirs, successors, attorneys, agents, and
assigns, releases Chroma Systems, and its current and former officers, directors,
employees, agents, representatives, shareholders, affiliates, successors, and assigns
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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. Chroma Systems waives and shall not assert any defenses Chroma
Systems 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. Chroma Systems 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 Chroma Systems has
asserted, could have asserted, or may asse1i 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. Chroma Systems fully and finally releases the Relator from any and all
claims related to Second Draw PPP Loan, including its forgiveness, Relator's
investigation thereof, and the Civil Action, whether civil, criminal, or otherwise from any
claims (including attorneys' fees, costs, and expenses of every kind and however
denominated) that Chroma Systems has asserted, could have asserted, or may assert in
the future against the Relator, related 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 Chroma
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Systems, and its 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) Chroma Systems' 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 makes to the United States pursuant to this Agreement
and any payments that Chroma Systems 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 Chroma Systems, and Chroma Systems
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, Chroma Systems shall
identify and repay by adjustment to future claims for payment or otherwise any
Unallowable Costs included in payments previously sought by Chroma Systems or any of
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its subsidiaries or affiliates from the United States. Chroma Systems agrees that the
United States, at a minimum, shall be entitled to recoup from Chroma Systems 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 Chroma Systems' books and records and to disagree with
any calculations submitted by Chroma Systems or any of its subsidiaries or affiliates
regarding any Unallowable Costs included in payments previously sought by Chroma
Systems, 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 Paiiies only.
14. Upon receipt of the payment described in Paragraph 1, above, the Parties
shall promptly sign and file in the Civil Action a Joint Stipulation of Dismissal of the
Civil Action pursuant to Rule 41(a)(l).
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.
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 District of Massachusetts. 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 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 Chroma Systems' successors, transferees,
heirs, and assigns.
22. This Agreement is binding on Relator's successors, transferees, heirs, and
assigns.
23. All Parties acknowledge that the United States may disclose this
Agreement, and information about this Agreement, to the public as required by law,
regulation, or DOI policy. Nothing herein shall require Chroma Systems to make an
independent public statement regarding this Agreement.
24. This Agreement is effective on the date of signature of the last signatory to
the Agreement ("Effective Date of this Agreement"). Facsimiles of signatures shall
constitute acceptable, binding signatures for purposes of this Agreement.
THE UNITED STATES OF AMERICA
DATED:
As istant United States Attorney
strict of Massachusetts
CHROMA SYSTEMS SOLUTIONS, INC.
DATED: 10/17/2025 BY:
FRED SABATINE
President, Chroma Systems Solutions, Inc.
DATED: 10/17/2025 BY:
MOHAMMAD KHAN
Counsel for Chroma Systems Solutions, Inc.
AIDAN FORSYTH - RELA TOR
DATED: _ _ __ BY:
AIDAN FORSYTH
DATED: _ _ __ BY:
ERICH. JASO
CHRISTINE M. KINGSTON
WILLIAM C. NYSTROM
Counsel for Aidan Forsyth
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THE UNITED STATES OF AMERICA
DATED: _ _ _ _ __ BY:
STEVEN T. SHAROBEM
Assistant United States Attorney
District ofMassachusetts
CHROMA SYSTEMS SOLUTIONS, INC.
DATED: _ _ __ BY:
FRED SABATINE
President, Chroma Systems Solutions, Inc.
DATED: _ _ __ BY:
MOHAMMAD KHAN
Counsel for Chroma Systems Solutions, Inc.
AIDANFORSYTH-RELATOR
DATED: 10/17/2025 BY:
AIDAN FORSYTH
DATED:/O • l1" ·25 BY:
E CH.JASO
CHRISTINE M. KINGSTON
WILLIAM C. NYSTROM
Counsel for Aidan Forsyth
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