Fremont Firm Agrees to Pay $1M for False Claims for COVID Business Loans

"Fremont-based Innodisk USA has agreed to pay a total of $950,000 to settle allegations that it knowingly violated federal law when it received and retained a Covid-era Paycheck Protection Program loan, the U.S. Attorney's Office for the Northern District of California announced this week."

"The settlement resolves claims brought under the whistleblower provisions of the False Claims Act by Blockquote, Inc., prosecutors said. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. Blockquote, Inc. will receive $95,000 in connection with the settlement."

"Congress created the Paycheck Protection Program in March 2020 as part of the Coronavirus Aid, Relief, and Economic Security Act, to provide emergency financial support to the millions of Americans suffering the economic effects caused by the COVID-19 pandemic. The CARES Act authorized billions of dollars in forgivable loans to small businesses struggling to pay employees and other business expenses."

"Federal prosecutors alleged that Innodisk USA applied for and obtained a second-draw PPP loan inMarch 17, 2021, even though the company was not eligible because it exceeded the requisite size standards when including affiliated entities, including its parent company, and because it had not experienced the requisite revenue reduction."

Innodisk USA, based in Fremont, will pay $950,000 to resolve allegations that it knowingly violated federal law after receiving and keeping a Covid-era Paycheck Protection Program loan. The settlement addresses claims brought under whistleblower provisions of the False Claims Act. A whistleblower, Blockquote, Inc., will receive $95,000 from the recovery. The PPP was created in March 2020 under the CARES Act to provide emergency, forgivable loans to small businesses. Second-draw PPP loans required certifications about employee limits and a gross receipts decline of more than 25% compared with an earlier period. Prosecutors alleged Innodisk USA obtained a second-draw loan despite ineligibility due to size standards including affiliates and lack of required revenue reduction, and then sought loan forgiveness despite knowing it was not eligible.

Read at San Jose Inside