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Press Release

Manufacturing Company To Pay Over $4.1 Million To Resolve Allegations It Received Paycheck Protection Program Loan In Violation Of Employee Size Rules

For Immediate Release
U.S. Attorney's Office, Western District of Michigan

          GRAND RAPIDS – U.S. Attorney for the Western District of Michigan Mark Totten announced today that Horn USA, Inc., a precision tool manufacturing company, has agreed to pay $4,153,111.12 to resolve allegations that it violated the False Claims Act by falsely obtaining a second-draw Paycheck Protection Program (PPP) loan for which it was ineligible.

          “The Paycheck Protection Program provided important relief that was limited to entities that met the eligibility criteria,” said U.S. Attorney Mark Totten. “My office remains committed to working with the Small Business Administration to investigate fraud on its programs and protect taxpayer dollars.”

          When Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act in 2020 it enacted a program to provide emergency financial assistance to individuals and businesses suffering economic and public health effects caused by the COVID-19 pandemic. In 2021, the American Rescue Plan Act (ARPA) continued the CARES Act’s loan program administered by the Small Business Administration (SBA) and created a second-draw PPP loan that allowed eligible businesses that had previously received a PPP loan to apply for a second loan. As one condition to second-draw loan eligibility, the applicant company and its affiliates must have had no more than 300 employees collectively.

          In January of 2021, Horn USA, Inc. applied for and received a $2,000,000 second-draw PPP loan, which SBA subsequently forgave. The United States alleges that Horn USA, Inc. was ineligible for this loan because the company and its affiliates had over 300 employees and thus exceeded the size standard.

          The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act against Horn USA, Inc. Under the qui tam provisions of the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of the settlement or judgment. Here, the United States elected to take over the case, investigated it, and negotiated the settlement. The qui tam case is captioned U.S. ex rel. GNGH2 Inc. v. Horn USA, Inc., No. 1:24-cv-196 (W.D. Mich.).

          The resolution obtained in this matter was the result of a coordinated effort between the U.S. Attorney’s Office for the Western District of Michigan and the SBA. Assistant United States Attorney Whitney M. Schnurr investigated this case.

          The claims resolved by the settlement are allegations only and there has been no determination of liability.

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Updated January 22, 2025