Chinese Manufacturing Subsidiary Settles Paycheck Protection Program Loan Fraud Allegations for Over $5 Million

NEWARK, N.J. - A South Carolina corporation entered into a settlement agreement with the United States resolving allegations that the company violated the False Claims Act by applying for and receiving a Paycheck Protection Program (PPP) loan for which the company was not eligible, U.S. Attorney Robert Frazer announced today.

According to the contentions of the United States in the settlement agreement:

China Jushi USA Corp. (China Jushi USA) is a South Carolina corporation with a place of business in Columbia, South Carolina. China Jushi USA is a subsidiary of China Jushi Corp., a Chinese company that manufactures and sells fiberglass products. During the period of July 27, 2020 to June 21, 2021, China Jushi USA applied for and received a PPP loan and loan forgiveness totaling $3,590,007 (including interest).

The United States contends that China Jushi USA falsely certified eligibility to receive this first-draw PPP loan and loan forgiveness totaling $3,590,007 (including interest). The United States contends that China Jushi USA knowingly made false statements, or caused false statements to be made, when it certified in its PPP loan application that it was eligible for a PPP loan. At the time of its loan application, China Jushi USA was not eligible to participate in the PPP because, inclusive of affiliates' employees, China Jushi USA exceeded applicable size standards. In addition, because of China Jushi USA's false statements on its loan application, the United States paid $35,581 in lender processing fees associated with the first-draw loan for which China Jushi USA was ineligible.

In accordance with the terms of the settlement agreement, China Jushi USA paid the United States $5,075,823. The settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties, called relators, to file suit on behalf of the United States for false claims and share in a portion of the government's recovery. In this matter, the relator is receiving $507,582 as the share in the recovery.

U.S. Attorney Frazer credited the Small Business Administration (SBA)'s Office of General Counsel for their assistance in this matter.

The government is represented by Assistant U.S. Attorney Susan J. Pappy of the Health Care Fraud and Opioids Enforcement Unit in Newark, with assistance from Trial Attorney Denise Grugan of the U.S. Small Business Administration.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice's National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-formLinks to other government and non-government sites will typically appear with the "external link" icon to indicate that you are leaving the Department of Justice website when you click the link..

The qui tam case is captioned US ex rel. Aidan Forsyth v. China Jushi USA Corp., 24-cv-09959 (D.N.J.).

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

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Counsel for China Jushi USA Corp.: John J. Pease III, Esq., Steven Strauss, Esq., Morgan, Lewis & Bockius LLP.

Relator's counsel: Eric H. Jaso, Esq., Spiro, Harrison & Nelson LLP.