Acting as private attorneys general for the United States, Froshin Barger forced Continental Aerospace Technologies Inc. to pay $11,772,680.14 to resolve allegations of submitting false claims to obtain an ineligible Paycheck Protection Program (PPP) loan. Continental’s PPP loan application certified that it met all of the requirements for receiving PPP funds, but the Frohsin Barger lawsuit alleged that Continental was ineligible because it was owned by a government entity, the People’s Republic of China, in violation of SBA rules. The lawsuit further that Continental was affiliated with other companies in the United States and China, and together with its affiliates across the globe, had more employees than permitted by SBA’s size standard for its industry.

Under the federal False Claims Act, private qui tam firms such as Frohsin Barger prosecute cases on behalf of the United States and in the name of the United States in collaboration with the Department of Justice. “[This Settlement] reflects the effectiveness of our collaborative False Claims Act investigations in holding companies and individuals accountable for fraudulent conduct and returning unlawfully obtained taxpayer funds to the United States, together with significant financial penalties.” said U.S. Attorney Sean P. Costello for the Southern District of Alabama.

Because the lawsuit affected PPP loans, which were designed to assist U.S.-owned small businesses affected by the global Coronavirus pandemic, Frohsin Barger & Walthall also worked in collaboration with the Small Business Administration (SBA), the federal agency tasked with overseeing and administering all PPP loans.  “PPP loans were intended to help small businesses in the United States,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “The Department remains committed to pursuing those who violated the requirements of this taxpayer funded program.”

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 businesses could receive forgivable loans guaranteed by the SBA. Regulations provide various eligibility requirements for the PPP, including limitations on the number of individuals the borrower and its affiliated entities employed and whether it was affiliated with or owned by a foreign government. In their loan applications, borrowers were required to certify that they were eligible for the PPP and that the information they provided was accurate.

At the time it applied for its PPP loan, Continental was part of a large multinational corporation partially owned by Aviation Industry Corporation of China (AVIC). AVIC is wholly owned by the State-Owned Assets Supervision and Administration Commission of the State Council (SASAC), an arm of the People’s Republic of China. Continental designs and manufactures aircraft engines and parts at its facility in Mobile, Alabama, but according to the allegations in the lawsuit did not meet either the specified criteria for receiving a PPP loan nor the spirit of the program, which was intended to give relief to small American businesses.