Semblex Corporation Agrees to Pay $3 Million to Resolve False Claims Act Allegations Relating to Paycheck Protection Program Loans

Wilmington, Del. – Semblex Corporation, a Delaware corporation, agreed to pay $3,052,250 to resolve allegations that it improperly obtained a Paycheck Protection Program (“PPP”) loan from the U.S. Small Business Administration (“SBA”) for which it was not eligible.

PPP was an emergency loan program established by Congress in March 2020 under the Coronavirus Aid, Relief, and Economic Security Act, and administered by the SBA.  It was created to support small businesses and ensure that they could continue to pay employees and meet other business expenses during the COVID-19 pandemic. To be eligible for a PPP loan, a business was required to certify that it had no more than 300 employees, including employees of any domestic and foreign affiliates.

Semblex engineers and manufactures advanced cold-formed fasteners and precision components for various applications across automotive, industrial, and consumer sectors.  Semblex is indirectly, wholly owned by Jinhap Co., Ltd., a South Korean manufacturer.

In February 2021, Semblex applied for and obtained a $2,000,000 PPP loan after falsely certifying that it, together with its affiliates, had under 300 employees. Semblex later sought and received forgiveness from SBA of the full amount of that loan.  Semblex, however, was ineligible for the loan because it, together with its affiliates including ultimate parent company Jinhap Co., had over 300 employees.

U.S. Attorney Benjamin L. Wallace made the announcement.  Assistant U.S. Attorney Claudia L. Pare handled the case, with assistance from Christopher J. McClintock of the SBA.

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act. Under those provisions, a private party—known as a relator—can file an action on behalf of the United States and receive a portion of any recovery.  In this case, the relator will receive a share of the settlement.

Individuals with information about allegations of fraud involving COVID-19 are encouraged to report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

A copy of this press release is located on the website of the U.S. Attorney’s Office for the District of Delaware.  The settlement agreement is attached to this press release. Related court documents and information are located on the website of the District Court for the District of Delaware or on PACER by searching for Case No. 25-264-CFC.

The claims resolved by the settlement are merely allegations.  There has been no determination of liability.

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