Chinese-Owned Concrete Equipment Manufacturer to Pay Over $2.8 Million to Resolve Allegations That It Submitted False Claims to Receive a Paycheck Protection Program Loan

Richard G. Frohling, Acting United States Attorney for the Eastern District of Wisconsin, announced today that Schwing America, Inc., a Minnesota corporation, agreed to pay $2,894,739 to resolve allegations that it violated the False Claims Act by submitting false claims to obtain a Paycheck Protection Program (PPP) loan for which it was not eligible.

Congress created the PPP in March 2020 to provide emergency financial assistance to Americans suffering from the economic effects of the COVID-19 pandemic. Under the PPP, eligible small businesses could receive loans guaranteed by the Small Business Administration (SBA) and, if the business spent the loan proceeds on qualified expenses, SBA would repay the loan and any accrued interest on the borrower's behalf. Regulations provide various eligibility requirements for the PPP, including limitations on the number of individuals the borrower and its affiliated entities employed and exclusions for certain types of businesses, like those that are owned by government entities. In their loan applications, borrowers were required to certify that they were eligible for the PPP and that the information they provided was accurate.

Schwing America's ultimate corporate parent is the Jiangsu Xuzhou State-Owned Assets Supervision and Administration Commission, which is owned and controlled by the government of the People's Republic of China. Through common ownership, Schwing America is also affiliated with other companies in China, Europe, and elsewhere that employed thousands of individuals.

In applying for its PPP loan, however, Schwing America certified that it was eligible for its loan, and it received a loan in the amount of $1,932,800. SBA subsequently forgave $1,702,787.82 in principal and interest. The United States alleges that Schwing America was not a small business eligible for its PPP loan because Schwing America, together with its affiliates across the globe, employed more individuals than permitted by SBA's size standard for its industry. The United States also contends that Schwing America was not eligible because it is owned by a government entity. Schwing America will pay $2,894,739 to resolve these allegations.

"Congress intended for the PPP to help small businesses, not companies that are part of large multinational corporations owned by foreign governments," said Acting U.S. Attorney Frohling. "Schwing America submitted false information to avoid the rules, and it will now repay the SBA plus a substantial penalty. The United States Attorney's Office remains committed to pursuing companies that defraud government programs."

"The settlement in this matter reflects SBA's commitment to identifying and pursuing those who perpetrated fraud on Covid relief programs to the detriment of small businesses" said Wendell Davis, SBA General Counsel. "Working with the U.S. Attorney's Office in the Eastern District of Wisconsin and our other law enforcement partners, SBA continues its enhanced efforts to uncover fraud and pursue recoveries wrongfully taken by the perpetrators."

The settlement includes the resolution of claims brought under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to file an action on behalf of the United States and receive a portion of any recovery. The qui tam lawsuit was filed by GNGH2 Inc., which will receive $289,473.90 in connection with this settlement.

Together with the SBA, Assistant United States Attorney Michael Carter and Department of Justice Trial Attorney Lindsey Roberts represented the government in this matter. The settlement agreement states allegations only; Schwing America, Inc., does not admit liability for the allegations.

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For Additional Information Contact:
Public Affairs Officer
steven.caballero@usdoj.gov
414-297-1700

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