Company accused of violating federal loan standards settles with the government for over $1.5 million

Dallas, Texas – A Texas-based machining and automation supplier has agreed to pay more than $1.5 million to settle allegations that it improperly received and had forgiven a federal COVID-19 relief loan it was not eligible for, according to a statement from Acting United States Attorney Chad E. Meacham.

Company Allegedly Exceeded Size Standards for Small Business Loan

SW North America, Inc., located in the Northern District of Texas, will pay $1,520,958.14 to resolve civil claims under the False Claims Act related to its 2021 application for a Paycheck Protection Program (PPP) loan. The loan, totaling $1,204,400, was fully forgiven after disbursement.

The PPP was created by Congress in March 2020 under the CARES Act to help small businesses struggling financially due to the COVID-19 pandemic. Loans were available only to businesses that met specific eligibility requirements, including employee-count limits.

Prosecutors alleged that SW North America, together with its affiliates, surpassed the employee size standards that determine whether a company qualifies as a “small business” for PPP loan purposes. Because of this, the company was not eligible for the loan it received.

“PPP loans were intended, first and foremost, to help eligible small businesses during the COVID-19 pandemic,” said Acting United States Attorney Chad E. Meacham. “This office will continue to aggressively pursue loan recipients who were not eligible to obtain taxpayer funds, whether due to their size or for any other reason.”

Whistleblower Lawsuit Prompted Government Action

The settlement stems from a lawsuit filed under the False Claims Act’s qui tam provision, which allows private individuals or entities to sue on behalf of the federal government and share in any recovery. The whistleblower in this case, GNGH2 Inc., will receive $187,003.05 from the total settlement.

The legal action is listed under case number 3:24-CV-1123-N in the U.S. District Court for the Northern District of Texas. The case was prosecuted by Assistant United States Attorney Andrea Hyatt with support from Amber Perez of the Small Business Administration.

Officials emphasized that the claims settled by the agreement are civil in nature and there has been no formal finding of liability in court.