Foreign-Owned Industrial Lubricant Company To Pay $1.8 Million To Settle False Claims Act Allegations Related To Paycheck Protection Program Loan

DETROIT - The Justice Department's National Fraud Enforcement Division continues to advance its mission to fight fraud and protect taxpayers. Today, United States Attorney Jerome F. Gorgon Jr. announced that Condat Corporation, a Michigan company that produces a range of industrial lubricants, has agreed to pay $1,811,034.24 to settle allegations that it violated the False Claims Act by making false statements to the U.S. Small Business Administration (SBA) to obtain a Paycheck Protection Program (PPP) loan for which Condat was ineligible.

Congress created the PPP in March 2020 to provide emergency financial assistance to American businesses suffering from the economic effects of the COVID-19 pandemic. Under the PPP, eligible small businesses could receive forgivable loans guaranteed by the SBA. Regulations provided various eligibility requirements for the PPP, including limitations on the number of employees and restrictions for foreign-owned companies. When applying for PPP loans, borrowers were required to certify the truthfulness and accuracy of all information provided in their loan applications.

In January 2021, Condat obtained a second draw PPP loan for $1,000,000. At the time of its loan application, Condat was a subsidiary of Condat SA, a privately held, family-owned French Company, and a member of Condat Groupe, comprised of at least 15 associated business entities worldwide. The United States alleged that Condat falsely certified that it was eligible for the second draw loan and loan forgiveness, even though, together with its affiliates, it had more than 300 employees, in violation of the PPP rules in effect at the time Condat obtained the funds.

"The Paycheck Protection Program supports American small businesses, not international conglomerates," said U.S. Attorney Jerome F. Gorgon, Jr. "We are coming for companies that lied to get COVID-19 relief loans."

This civil settlement resolved a sealed lawsuit originally filed under the qui tam or whistleblower provisions of the False Claims Act, which permit private parties to file suit on behalf of the United States for false claims and share in a portion of the government's recovery. The qui tam lawsuit has been unsealed and is captioned U.S. ex rel. GNGH2, Inc. v. Condat Corporation, Case No. 2:24-cv-12269. The whistleblower will receive 10% of the settlement amount.

This matter was handled by Assistant U.S. Attorney Greg Dickinson from the United States Attorney's Office for the Eastern District of Michigan, with assistance from the SBA's Office of General Counsel.

On April 7, the Department of Justice announced the creation of the National Fraud Enforcement Division (Fraud Division). The Fraud Division is laser-focused on investigating and prosecuting those who commit fraud against the American people. The Department's work to combat fraud supports President Trump's Task Force to Eliminate Fraud, a whole-of-government effort chaired by Vice President J.D. Vance to eliminate fraud, waste, and abuse within Federal benefit programs.

Individuals with information about allegations of fraud involving COVID-19 are encouraged to report it by calling the Department of Justice's National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form

The claims resolved by the settlement are allegations only; there has been no determination of liability.