Chinese-owned companies are returning millions in pandemic relief funds they were never eligible for in the first place, according to federal authorities who have cracked down on misuse of the Paycheck Protection Program.
Three subsidiaries of Chinese real estate giant Greenland Holding Group Company Limited have agreed to pay more than $7.3 million to resolve allegations they fraudulently obtained PPP loans during the COVID-19 pandemic. The settlement comes amid a broader Justice Department effort to reclaim billions in pandemic relief that went to ineligible businesses.
“Congress created the PPP to help American small businesses during the pandemic, not to fund large Chinese-owned corporations,” said U.S. Attorney Brad D. Schimel for the Eastern District of Wisconsin. “Here, however, the defendants are alleged to have provided false information to the SBA to obtain government funds to which they were not entitled.”
Too Big to Qualify
The Greenland entities — which include Greenland LA Metropolis Hotel Development LLC, Greenland US Management LLC, and Greenland LA Metropolis Development III — were deemed ineligible for the small business relief program because they’re part of a massive international corporation that employs tens of thousands worldwide. PPP eligibility rules required counting all affiliated employees, both in the U.S. and abroad, when determining if a company met size requirements.
But that didn’t stop them from submitting applications anyway, investigators found.
The settlement resolves whistleblower lawsuits filed under the False Claims Act’s qui tam provisions. Two whistleblowers, GNGH2 Inc. and Aidan Forsyth, will receive portions of the recovery — $697,757.80 and $33,470.53, respectively.
Sound familiar? It’s not an isolated case. Several foreign-owned companies have recently settled similar allegations.
Pattern of Fraud
Just last week, two transportation companies — 3rd Avenue Transit Inc. and Y&M Transit Corp. — settled for $4.4 million over claims they improperly obtained $2.4 million in PPP loans. Authorities say they falsely certified they employed fewer than 300 workers, despite having affiliations that pushed them over eligibility limits.
“Paycheck Protection Program loans were intended to help small businesses during the COVID-19 pandemic,” said U.S. Attorney Trini DiGiacomo. “Our office continues to invest time and resources to hold accountable those who obtained PPP funds for which they were not eligible.”
Meanwhile, two manufacturers with German ties — Setterstix Inc. and MAE-EITEL Inc. — recently agreed to pay $1.75 million for similar violations. The companies, part of the German-based GESCO Group, allegedly failed to disclose their international affiliations when applying for relief funds.
Why would established international firms risk legal trouble for relatively modest loans? The pandemic’s initial economic shock sent companies of all sizes scrambling for lifelines, and the hastily deployed PPP program’s initial lack of verification made it an attractive target.
The Justice Department has made recovering fraudulently obtained pandemic relief a priority, with settlements like these representing just a fraction of ongoing investigations. For taxpayers watching these recoveries unfold, there’s a bitter irony: while many legitimate small businesses struggled to access PPP funds or closed permanently, some well-heeled international firms apparently had little trouble tapping into relief they weren’t entitled to.
