U.S. Attorney Michael DiGiacomo announced today that Kemper Systems America, Inc. and Thermacut, Inc. agreed to pay $2.1 million to resolve False Claims Act allegations of improperly obtained Paycheck Protection Program loans from the U.S. Small Business Administration for which they were not eligible to receive.
In March 2020, Congress created the Paycheck Protection Program to provide emergency financial assistance to American small businesses suffering from the economic effects of the COVID-19 pandemic.
Under the program, eligible small businesses could receive forgivable loans guaranteed by the SBA, provided they met various eligibility requirements.
One such requirement limited the total number of employees an applicant company could employ, including those associated with the applicant company’s foreign affiliates.
The United States contends that in 2021, Kemper and Thermacut obtained forgiven PPP loans for which they were not eligible because they exceeded the PPP size requirement.
When Kemper and Thermacut obtained the loans, they were wholly owned subsidiaries of Industrie-Beteilugungs-Gesellschaft mbH & Co. (IBG), a German-based conglomerate that owned numerous subsidiaries worldwide.
IBG and its affiliates, including Kemper and Thermacut, had over 300 employees at the time the applications were submitted, thereby exceeding the total number of employees the companies could have.
“The Paycheck Protection Program was designed to support small business during the COVID-19 Pandemic, but too often large businesses took advantage of the program by having their subsidiaries obtain loans,” said U.S. Attorney DiGiacomo. “This settlement, and others like it, demonstrate that this office is committed to holding those who improperly took government aid accountable.”
