Valve Manufacturer Pays $774,812 To Settle SBA Loan Fraud Allegations

Carten-Fujikin Inc. has agreed to pay $774,812.51 to settle federal allegations that the company improperly obtained a $500,000 loan under the Paycheck Protection Program.

The settlement was announced by U.S. Attorney for Delaware Benjamin L. Wallace. Carten-Fujikin is a Delaware corporation with its principal place of business in Cheshire, Connecticut. The company manufactures valve products and integrated gas systems for the semiconductor industry.

Federal officials stated that Carten-Fujikin did not meet the eligibility requirements for the specific round of funding from which it borrowed. The company received the loan on or about January 28, 2021, during the second round of PPP funding.

Under the program rules established by the Coronavirus Aid, Relief and Economic Security Act, applicants for second-round loans had to certify that they employed no more than 300 people. This count included workers employed by both domestic and foreign affiliates. Officials alleged that Carten-Fujikin and its affiliated companies employed more than 300 people.

The company also failed a second eligibility test. Applicants had to certify that no entity holding at least a 20 percent ownership stake had significant operations in China or Hong Kong. Carten-Fujikin is wholly owned by Fujikin of America Inc., which is owned by Fujikin Incorporated, a Japanese company. Fujikin Japan operated multiple locations in China through its subsidiary, Fujikin of China Incorporated.

The $500,000 loan was subsequently forgiven by the U.S. Small Business Administration. The civil settlement resolves the allegations against the company but does not constitute a judicial finding of liability. The case originated from a whistleblower lawsuit filed under the False Claims Act. That law allows private individuals to bring claims on behalf of the federal government and receive a portion of any money recovered.

Federal officials noted that the whistleblower in this case will receive a share of the settlement, though the specific amount was not disclosed. The Department of Justice encourages individuals with information about suspected COVID-19 relief fraud to contact the National Center for Disaster Fraud at 866-720-5721 or submit a complaint through its online reporting form.