Valve Maker Pays $774,812 To Settle Federal Loan Fraud Claims

$774,812.51 is the amount Carten-Fujikin Inc. agreed to pay to resolve federal allegations regarding its acquisition of a pandemic-era relief loan. The Cheshire, Connecticut-based company settled the claims announced by U.S. Attorney for Delaware Benjamin L. Wallace. The settlement addresses a $500,000 loan obtained through the U.S. Small Business Administration's Paycheck Protection Program in January 2021. The funds were fully forgiven by the government, according to a news release from federal officials.

Carten-Fujikin manufactures valve products and integrated gas systems for the semiconductor industry. The company is a Delaware corporation wholly owned by Fujikin of America Inc., which is itself owned by the Japanese firm Fujikin Incorporated. Federal officials stated that the company was ineligible for the specific loan because it and its affiliated companies employed more than 300 people. The parent company's operations in China also rendered the borrower ineligible under program rules.

The Paycheck Protection Program was created in March 2020 under the Coronavirus Aid, Relief and Economic Security Act. Congress authorized a second round of loans in early 2021 with stricter eligibility restrictions. Applicants for these second-round loans had to certify that they had no more than 300 employees, including workers at domestic and foreign affiliates. They also had to certify that no entity holding at least a 20 percent ownership stake had significant operations in China or Hong Kong. Fujikin Japan operated multiple locations in China through its subsidiary, Fujikin of China Incorporated.

Despite failing to meet those requirements, Carten-Fujikin applied for and received its $500,000 loan on or about Jan. 28, 2021. 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. This statute allows private individuals to bring claims on behalf of the federal government and receive a portion of the money recovered. Federal officials said the whistleblower will receive a share of the settlement, though the specific 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. Individuals may also submit a complaint through the center's online reporting form.