Cheshire Company To Pay Nearly $775K In Settlement Over COVID-19 Relief Fraud Claims

CHESHIRE, CT — A Cheshire-based manufacturing company has agreed to pay nearly $775,000 to resolve allegations that it improperly obtained a federal COVID-19 relief loan for which it was not eligible, federal officials announced.

Carten-Fujikin Inc., a Delaware corporation with its principal place of business in Cheshire, agreed to pay $774,812.51 to settle allegations involving a $500,000 loan it received through the U.S. Small Business Administration's Paycheck Protection Program, according to U.S. Attorney for Delaware Benjamin L. Wallace.

The company, which manufactures valve products and integrated gas systems for the semiconductor industry, obtained the loan in January 2021 through the program's second round of funding. The loan was subsequently forgiven, according to a news release.

However, federal officials said that Carten-Fujikin did not meet the program's eligibility requirements because it and its affiliated companies employed more than 300 people. Its parent company's operations in China also made it ineligible, according to the allegations.

Carten-Fujikin is wholly owned by Fujikin of America Inc., which is owned by Fujikin Incorporated, a Japanese company.

Federal officials said Fujikin Japan operated multiple locations in China through its subsidiary, Fujikin of China Incorporated.

The Paycheck Protection Program was established in March 2020 under the federal Coronavirus Aid, Relief and Economic Security Act to help businesses retain employees and cover operating expenses during the COVID-19 pandemic.

Congress authorized a second round of loans in early 2021, with additional eligibility restrictions.

Businesses applying for those loans were required to certify that they had no more than 300 employees, including workers employed by domestic and foreign affiliates. Applicants also had to certify that no entity holding at least a 20 percent ownership stake had significant operations in China or Hong Kong.

Carten-Fujikin applied for and received its $500,000 loan on or about Jan. 28, 2021, despite failing to meet those requirements, according to officials.

The civil settlement resolves allegations against the company and does not, by itself, constitute a judicial finding of liability.

The case also involved a whistleblower lawsuit filed under the False Claims Act, which allows private individuals to bring claims on behalf of the federal government and receive a portion of any money recovered.

Federal officials said the whistleblower in this case will receive a share of the settlement. The amount was not specified.

The Department of Justice encourages anyone 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 here.