Hemisphere GNSS (USA) Inc., a GPS manufacturer based in Arizona, has reached a $2.6 million settlement to resolve accusations of violating the False Claims Act. The allegations suggest that the company provided misleading information to obtain a Paycheck Protection Program (PPP) loan that it was not eligible to receive.
Established in March 2020 as part of the CARES Act, the PPP aimed to deliver urgent financial support to businesses impacted by the pandemic. This program allowed billions of dollars in forgivable loans to small businesses to help cover employee wages and other essential expenses. In 2021, Congress initiated a second round of PPP loans under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, requiring borrowers to certify the accuracy of their loan applications.
In February 2021, Hemisphere applied for a second-round PPP loan, asserting its eligibility by claiming that no entity from China owned a significant interest in the company and that no board members were residents of China. These assertions were allegedly false, rendering Hemisphere ineligible for the loan it had received and subsequently forgiven.
The U.S. Attorney for the District of Arizona stated, “Legitimate PPP loans saved small businesses across America. But not everyone used the program as intended. Our office will continue to hold accountable those businesses and individuals who misused the PPP program, as the settlement announced today reflects.”
This civil settlement resolves claims initiated under the qui tam provisions of the False Claims Act by a private entity. In this specific case, GNGH2 Inc. filed on behalf of the United States and is set to receive $260,000 from the settlement.
The resolution came through a coordinated effort involving the Justice Department’s Civil Division and the U.S. Attorney’s Office for the District of Arizona, with assistance from the Small Business Administration. The case underscores the government’s commitment to identifying and addressing instances of fraud or misconduct within the PPP.
The allegations resolved by this settlement remain allegations only, with no determination of liability made as of yet.
