Settlement Agreement — United States of America; Azumi, LLC; Zuma NYC, LLC

Summary

A False Claims Act settlement among the United States, on behalf of the SBA, six restaurant companies owned in whole or part by Azumi Limited (Azumi, LLC, Zuma NYC, LLC, Zuma Las Vegas, LLC, Zuma Japanese Restaurant Miami, LLC, Inko Nito Garey St., LLC and Beach Chu Hallandale, LLC) and relator GNGH2, Inc. The relator filed the qui tam case, No. 22-cv-11822 in the District of Massachusetts, on October 24, 2022. The Azumi Entities admit they are a single corporate group and that between February 2021 and March 2021 they collectively received, and had forgiven, Second Draw PPP loans above the corporate group limit. Inko Nito Garey St. LLC repaid its loan. The entities agree to pay $3,602,423, of which $1,801,211.50 is restitution, and the relator receives $360,242.30.

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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 United States Small Business Administration (collectively the "United States");

Azumi, LLC; Zuma NYC, LLC; Zuma Las Vegas, LLC; Zuma Japanese Restaurant

Miami, LLC; Inko Nito Garey St., LLC; and Beach Chu Hallandale, LLC (collectively,

the "Azumi Entities"); and GNGH2, Inc. ("Relator") (hereafter collectively referred to as

"the Parties"), through their authorized representatives.

RECITALS

A. The Azumi Entities are limited liability companies, each of which operates

a restaurant in the United States ofAmerica and each ofwhich is either fully or partially

owned by Azumi Limited.

B. The United States Small Business Administration ("SBA") is an

independent 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 ("CARES 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).

C. The SBA administered the PPP and guaranteed loans that were made

according to PPP rules. To apply for PPP funding, a business or entity had to agree to

comply with the PPP rules.
D. On October 24, 2022, Relator filed an action in the United States District

Court for the District of Massachusetts captioned United States ex rel. GNGH2, Inc., v.

Azumi, LLC, et al., No. 22-cv-11822, pursuant to the qui tam provisions of the False

Claims Act, 31 U.S.C. § 3730(b) (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 it has civil claims against the Azumi Entities

for submitting or causing the submission of false claims to the SBA arising from the

Azumi Entities' applications for certain PPP loans disbursed in 2021 ("Second Draw") of

the PPP, and their receipt of funds from and forgiveness of those loans. In particular, the

SBA imposed a limit on the total amount offunding a single "corporate group" could

receive during the Second Draw of the PPP. See Business Loan Program Temporary

Changes; Paycheck Protection Program Requirements Corporate Groups and Non-Bank

and Non-Insured Depository Institution Lenders, 85 Fed. Reg. 26324 (May 4, 2020); 86

Fed. Reg. at 3720. The United States contends that the Azumi Entities received Second

Draw PPP loans in excess of the corporate group limit.

F. The Azumi Entities admit, acknowledge, and accept responsibility for the

following facts:

1. Under the PPP interim final rules promulgated by the SBA, the Azumi

Entities are members of a single "corporate group."

2. On various dates in or about February 2021 through March 2021, each of

the Azumi Entities applied for and received a Second Draw PPP loan for

which they were individually eligible.

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3. Except for Inko Nito Garey St. LLC, which repaid its Second Draw PPP

loan, each of the Azumi Entities applied for and received forgiveness for

its Second Draw PPP loan.

4. The Azumi Entities collectively received and were granted forgiveness

for Second Draw PPP loans in a total amount that exceeded the Second

Draw PPP corporate group limit.

The foregoing conduct described in paragraph F, including subparagraphs, is referred to

below as the Covered Conduct.

G. 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.

H. Except for the facts set forth above in paragraph F as the Covered

Conduct, the Azumi Entities expressly deny the allegations of the Civil Action.

In consideration ofthe mutual promises and obligations of this Agreement, the

Parties agree and covenant as follows:

TERMS AND CONDillONS

1. The Azumi Entities collectively shall pay to the United States $3,602,423

("Settlement Amount"), of which $1,801,211.50 is restitution, plus interest at a rate of

five percent (5%) from May 15, 2025, and continuing through the date of payment, no

later than ten (10) 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 ofMassachusetts. Each of the Azumi Entities is jointly and

severally liable for the full Settlement Amount.

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

as soon as feasible after receipt, the United States shall pay $360,242.30 to Relator by

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

3. Within ten (10) days of the Effective Date of this Agreement, the Azumi

Entities shall pay to Relator the sum of$2,205.00 for expenses and attorneys' fees and

costs pursuant to 31 U.S.C. § 3730(d). Immediately upon execution of this Agreement,

Relator shall provide wire instructions to the Azumi Entities 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 each of the Azumi Entities and their

respective current and former parent corporations or entities, subsidiaries, related entities,

affiliates, successors, and assigns, 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 itself and for its heirs, successors, attorneys, agents, and assigns, fully and finally

releases each of the Azumi Entities and their respective current and former parent

corporations or entities, subsidiaries, related entities, affiliates, successors, and assigns,

from any civil monetary claim the Relator has on behalf of itself or on behalf of the

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United States for the Covered Conduct or any other matters Relator asserted or that it

could have asserted in the Civil Action.

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

any other term ofthis Agreement, the following claims and rights ofthe 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

f. Any liability of individuals.

7. Relator, on behalf of itself and its heirs, executors, administrators,

affiliates, 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 heirs, successors, attorneys, agents, and

assigns fully and finally release, waive, and forever discharge the United States, its

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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, executors, administrators, affiliates,

successors, attorneys, agents, and assigns, fully and finally releases each of the Azumi

Entities, and each of their respective officers, directors, managers, members, agents,

attorneys 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. The Azumi Entities waive and shall not assert any defenses the Azumi

Entities 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. The Azumi Entities 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 the Azumi

Entities have 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, the Civil Action, or the United States' investigation or prosecution thereof.

11. The Azumi Entities fully and finally release Relator from any claims

(including attorneys' fees, costs, and expenses of every kind and however denominated)

that the Azumi Entities have asserted, could have asserted, or may assert in the future

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against the Relator, related to the Civil Action and Relator's investigation and

prosecution thereof.

12. The Azumi Entities agree to the following:

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 the

Azumi Entities, 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) the Azumi Entities' 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 the Azumi Entities makes to the United States

pursuant to this Agreement and any payments that the

Azumi Entities may make to Relator, including costs and

attorneys fees,

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

Unallowable Costs).

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b. Future Treatment ofUnallowable Costs: Unallowable Costs will

be separately determined and accounted for by the Azumi Entities, and the Azumi

Entities shall not charge such Unallowable Costs directly or indirectly to any contract

with the United States.

c. Treatment ofUnallowable Costs Previously Submitted for

Payment: Within 90 days of the Effective Date of this Agreement, the Azumi Entities

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

Unallowable Costs included in payments previously sought by the Azumi Entities or any

of its subsidiaries or affiliates from the United States. The Azumi Entities agrees that the

United States, at a minimum, shall be entitled to recoup from the Azumi Entities 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 the Azumi Entities' books and records and to disagree with

any calculations submitted by the Azumi Entities or any of its subsidiaries or affiliates

regarding any Unallowable Costs included in payments previously sought by the Azumi

Entities, or the effect of any such Unallowable Costs on the amount of such payments.

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

15. Within ten (10) business days of the receipt ofthe payments described in

Paragraphs 1 and 3, above, the Relator and the United States shall sign and file in the

Civil Action a Joint Notice of Dismissal of the Civil Action pursuant to Rule 41(a)(l).

The Joint Notice of Dismissal shall state that: (1) claims for the allegations described in

the Covered Conduct are dismissed with prejudice to the United States; (2) all other

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claims in the Civil Action, including claims under 31 U.S.C. §§ 3729-3733, shall be

dismissed without prejudice to the United States; and (3) all claims in the Civil Action

shall be dismissed with prejudice as to Relator.

16. Except as expressly provided for 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.

17. Each Party to this Agreement represents that the signatory below is

authorized to bind the Party on whose behalf it executes this Agreement, and that it freely

and voluntarily enters in to this Agreement without any degree of duress or compulsion.

18. 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.

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

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

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

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

below.

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

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

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22. This Agreement is binding on the Azumi Entities' successors, transferees,

heirs, and assigns.

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

assigns.

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

information about this Agreement, to the public.

25. 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

Digitally signed by Kimya

K •Jmya S 8)8
· d Saied
Date: 2025.06.30

DATED: _ _ _ _ _ _BY: _ _ _ _ _ _14:15:32
__ -04'00'
_ __
Kimya Saied
Trial Attorney
Benjamin Wei
Senior Trial Counsel
Commercial Litigation Branch
Civil Division
United States Department of Justice

Digitally signed by
JULIEN JULIEN MUNDELE

MUND E LE ~:,~~,;~~~·J.~;,
0
DATED: _ _ _ _ _ _.BY: _ _ _ _ _ _ _ _ _ __
Julien M. Mundele
Assistant United States Attorney
District of Massachusetts

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AZUMI ENTITIES - DEFENDANTS

DATED: crfi(;;i"/fr, ~/
Sven Koch
AzumiLLC

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Sven Koch
ZumaNYCLLC
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DATED: ¥1:tq/MBY: ---;:;-----:~~~~::___
_ _ __
Sven Koch
Zuma Las Vegas LLC

DATEDg,/2q,/Jc,u;BY:----;:;-~~~=~:.....:::....~------_
·7 Sven Koch
Zuma Japanese Restaurant Miami LLC

DATED: a,/q1,,()t.{BY: - - ; : : - - - - - : : : - " ' ¥ ~ - - - -
Sven Kocli
Inko Nito Garey St. LLC

DATED: af q~Y: ----;:;----==-~~~/,-
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Sven Koch
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Beach Chu Hallandale LLC

DATED: 6/20/2025 BY: ~ A . S~d-
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Counsel for Azumi Entities

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GNGH2. INC. - RELATOR

DATED: 6/24/25 BY: _ _ _ _ _ _ _ _ __
David Abrams
GNGH2,Inc.
Relator

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