Manufacturing Firms: Settlements Over PPP Loans

The Small Business Administration established the Paycheck Protection Program in March 2020 to help businesses retain staff during the pandemic. A second round of funding began in early 2021 with stricter rules on company size and foreign operations. A Delaware corporation based in Cheshire, Connecticut, has agreed to a settlement regarding a loan from that second round.

Carten-Fujikin Inc. will pay $774,812.51 to resolve federal allegations. The company received a $500,000 loan on January 28, 2021. The loan was later forgiven. Federal officials state the payment resolves the case but is not a judicial finding of liability.

U.S. Attorney for Delaware Benjamin L. Wallace announced the settlement. He stated that Carten-Fujikin did not meet the program's eligibility requirements. The company and its affiliates employed more than 300 people. Applicants for the second round of loans had to certify that they had no more than 300 employees across all domestic and foreign affiliates. Carten-Fujikin failed to meet this threshold.

The company manufactures valve products and integrated gas systems for the semiconductor industry. It is wholly owned by Fujikin of America Inc., which is owned by Fujikin Incorporated, a Japanese company. Fujikin Japan operated multiple locations in China through its subsidiary Fujikin of China Incorporated. The allegations state that these operations made Carten-Fujikin ineligible because an entity holding at least a 20 percent ownership stake had significant operations in China.

The settlement stems from a whistleblower lawsuit filed under the False Claims Act. This act allows private individuals to bring claims on behalf of the federal government. The whistleblower in this case will receive a share of the settlement, though the specific amount was not disclosed. The Department of Justice encourages individuals with information about suspected fraud to contact the National Center for Disaster Fraud at 866-720-5721 or use its online reporting form.

The company's principal place of business is in Cheshire, Connecticut. The settlement covers the specific $500,000 loan obtained in January 2021. The funds were intended to cover operating expenses and retain employees. The civil settlement resolves the specific allegations against Carten-Fujikin regarding that single loan.