Although the pandemic has ended, government enforcement against fraudsters who took advantage of emergency government assistance programs continues.

On February 25, in a case brought by a whistleblower, the government announced that the Waterbury, Connecticut company, MacDermid Incorporated paid $2,226,623.62 to settle False Claims Act allegations that its subsidiary, Coventya Inc., falsely certified its eligibility to receive a Paycheck Protection Program loan (PPP) during the pandemic.

MacDermid is known for providing chemical products and technical services. In 2021, MacDermid acquired Coventya Inc., a company that manufactures and internationally distributes chemicals.

In March 2020, Congress created the PPP under the Coronavirus Aid, Relief and Economic Security (CARES) Act, administered by the Small Business Administration (SBA), aimed to help keep small businesses and employees afloat during the global pandemic.

The PPP loan application included requirements for borrowers to certify their eligibility. The applying entity could not have more than 300 employees and was required to include all foreign and domestic affiliate entities in its employee count. Coventya was not eligible for the loan, yet falsely certified its eligibility by claiming it had less than 300 employees. Coventya received a $1,075,000 PPP loan in April 2021, which was later fully forgiven, including the interest.

Marc H. Silverman, Acting United States Attorney for the District of Connecticut, said the government is “committed to pursuing those who violated the requirements of pandemic assistance programs and holding them accountable.”

This case was brought by a whistleblower. Under the qui tam (or whistleblower provisions) of the False Claims Act, private parties (relators) can bring a lawsuit on behalf of the government and share up to 30% of the recovery. In this case, the relator, GNGH2 Inc., will receive $222,662.36 as its award. The case is captioned U.S. ex rel GNGH2 Inc. v. MacDermid Incorporated, as successor in interest to Coventya, Inc. (Docket No. 3:24-cv-1480).

Constantine Cannon whistleblower partner Marlene Koury commented, “Whistleblowers are essential to exposing fraud and ensuring companies are held accountable. Our team, specializing in False Claims Act cases, continues to see COVID-19 fraud and urges those with information to come forward.”

If you would like more information on what it means to be a whistleblower or think you may have information relating to False Claims Act violations, or COVID-19 fraud, please contact us so we can connect you with a member of the Constantine Cannon whistleblower lawyer team for a free and confidential consultation.

Read COVID-19 Con: Connecticut Company Pays $2M+ to Settle False Claims Act Allegations Related to PPP Loan at constantinecannon.com