Foreign-Owned Industrial Manufacturing Company to Pay $1.5 Million to Settle False Claims Act Allegations Related to Paycheck Protection Program Loan

DETROIT - United States Attorney Jerome F. Gorgon Jr. announced today that 3CON Corporation, a company located in Wixom, Michigan that designs and manufactures automated production systems for the automotive and life sciences industries, has agreed to pay $1,500,439.50 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 3CON 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, 3CON obtained a second draw PPP loan for $828,498. At the time of its loan application, 3CON shared common ownership with 3CON Anlagenbau GmbH, an Austrian Company. The United States alleged that 3CON falsely certified that it was eligible for the second draw loan and loan forgiveness, even though, together with its foreign affiliates, it had more than 300 employees, in violation of the PPP rules in effect at the time 3CON obtained the funds.

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. Verity Investigations, LLC v. 3CON Corporation, Case No. 2:25-cv-13896. The whistleblower will receive 10% of the settlement amount.

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

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.