Milwaukee City Wire

On December 3, 2024, Zund America, Inc., based in Oak Creek, Wisconsin, agreed to pay $2,300,825 to resolve allegations of violating the False Claims Act. The allegations involve submitting false claims to obtain a Paycheck Protection Program (PPP) loan for which it was not eligible. This announcement was made by Gregory J. Haanstad, United States Attorney for the Eastern District of Wisconsin.

The PPP was established by Congress in March 2020 to provide financial aid to Americans affected by the COVID-19 pandemic. Under this program, eligible businesses could receive loans guaranteed by the Small Business Administration (SBA). If used for qualified expenses, the SBA would repay these loans and any accrued interest on behalf of the borrower. In December 2020, Congress allowed certain borrowers with an initial PPP loan to apply for a "second-draw" loan with additional eligibility requirements. To qualify as a small business under these rules, a company and its corporate affiliates must employ no more than 300 individuals.

Zund America is affiliated with Zund Holding AG from Switzerland and shares common ownership and management with 19 other entities globally. In February 2021, Zund America received a second-draw PPP loan repaid by the SBA. The United States claims that Zund America was ineligible due to exceeding the employee threshold.

U.S. Attorney Haanstad commented on the situation: “Congress created the PPP to help small businesses and their employees survive the COVID-19 pandemic... Unfortunately, Zund America did not fulfill its obligations." He emphasized that this settlement mandates repayment plus penalties.

Therese Meers, SBA General Counsel stated: “The favorable settlement in this case is the product of enhanced efforts by federal agencies... as well as private individuals who uncover fraudulent conduct."

The investigation stemmed from a whistleblower complaint filed under the qui tam provisions of the False Claims Act. As per standard procedure in such cases, the whistleblower will receive part of the settlement. The case is documented as United States ex rel. GNGH 2, Inc. v. Zund America, Inc., No. 24-cv-0661.

Assistant United States Attorney Michael Carter represented the government alongside SBA officials in this matter. It is noted that while there are allegations stated within the settlement agreement against Zund America Inc., there has been no admission of liability from their side.