San Mateo Company To Pay More Than $1,000,000 For Improperly Seeking And Obtaining Paycheck Protection Program Loans

SAN FRANCISCO – Fujisoft America, Inc., a San Mateo-based subsidiary of Fujisoft Inc., has agreed to pay $1,050,000 to resolve allegations that it knowingly violated the False Claims Act when it applied for, received, and retained two Paycheck Protection Program (PPP) loans totaling $400,000 in violation of PPP rules, announced United States Attorney Ismail J. Ramsey and Small Business Administration Office of Inspector General (SBA OIG) Western Region Acting Special Agent in Charge Keven Standley.

“PPP loans were intended as economic lifelines for small businesses during the pandemic,” said U.S. Attorney Ramsey. “It is unacceptable for large companies to claim a portion of this limited pool of PPP funds, which was meant for small businesses, in order to enrich themselves at the expense of the American taxpayer. This Office will continue to pursue businesses that misused the program by obtaining PPP loans for which they were not eligible.”

“Those who violate the False Claim Act by fraudulently receiving and retaining SBA program funds meant for eligible small businesses will be held accountable,” said SBA OIG’s Western Region Acting Special Agent in Charge Keven Standley. “This settlement sends a strong message that those responsible will be brought to justice. I want to thank the Department of Justice and our law enforcement partners for their dedication and pursuit of justice.”

Congress created the PPP in March 2020 as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide emergency financial support to the millions of Americans suffering the economic effects caused by the COVID-19 pandemic. The CARES Act authorized billions of dollars in forgivable loans to small businesses struggling to pay employees and other business expenses. PPP loan applicants were required to certify that they were in fact small businesses in order to be eligible for PPP loans. Among other things, PPP loan applicants generally were required to certify that they and their affiliates had no more than 500 employees to be eligible for a “first-draw” loan and had no more than 300 employees to be eligible for an additional “second-draw” loan. PPP loan applicants were also required to certify that they had a decrease in revenue of at least 25% from 2019 to 2020 to be eligible for a second-draw loan. Pursuant to the settlement announced today, Fujisoft America acknowledged that it sought and obtained PPP loans in violation of these rules.

Fujisoft America’s parent company, Fujisoft Inc, is a publicly-traded company listed on the Tokyo Stock Exchange; together with its various subsidiaries, Fujisoft Inc. has over 15,000 employees and its earnings have increased steadily between 2019 and 2021—its revenue in 2019 before the pandemic was over $1.6 billion and during the pandemic grew to over $1.7 billion in 2020 and then $1.8 billion in 2021. Fujisoft America nevertheless sought and obtained loans intended for small businesses.

As part of the settlement, Fujisoft America, Inc. admitted, among other things, that:

•    Fujisoft America, Inc. knew that it was not eligible for PPP loans because, with its affiliates, it had more than 500 employees. 
•    In 2020, Fujisoft America, Inc. applied for and received a $250,000 PPP first-draw loan, and subsequently obtained loan forgiveness and retained that $250,000, by falsely certifying that it met the company size restrictions necessary to be eligible for a PPP first-draw loan.
•    In 2021, Fujisoft America, Inc. applied for and received a $150,000 PPP second-draw loan, and subsequently obtained loan forgiveness and retained that $150,000, by falsely certifying that it met the company size restrictions necessary to be eligible for a PPP second-draw loan. Fujisoft America, Inc. also falsely certified that it had a decrease in revenue in excess of 25% from 2019 to 2020 when, with its affiliates, its revenue from 2019 to 2020 had increased.
•    As a result of its false claims and false statements, Fujisoft America, Inc. received and retained $400,000 in PPP funds to which it was not entitled.

Assistant U.S. Attorney Shiwon Choe handled this matter for the government. The investigation and settlement resulted from a coordinated effort by the U.S. Attorney’s Office for the Northern District of California and SBA OIG.