Whistleblower action led to Charlotte company paying over $1M in COVID fraud case
Okaya, a Charlotte steel tubing manufacturing company, agreed to pay nearly $1.2 million to resolve allegations that it provided false information about the size of its staff to obtain COVID relief funds, federal authorities announced Monday.
The business was not eligible to obtain a Paycheck Protection Program loan, according to the U.S. Attorney’s Office for the Western District of North Carolina. PPP loans were established by the government in 2020 to help small businesses keep workers and cover operating expenses during the pandemic.
Congress approved another round of PPP loans for small businesses, nonprofits and venues in 2021. Borrowers were required to provide truthful, accurate information on the loan paperwork.
The settlement resolves allegations that Okaya Shinnichi Corporation of America misrepresented that it was a small business with fewer than 300 employees across all affiliates on its 2021 application for a second-round PPP loan of more than $478,000.
Okaya claimed it had 30 employees, but the company had more than 300, according to court records.
Okaya is a jointly owned U.S. subsidiary of two Japanese corporations with multiple worldwide affiliates, Okaya & Co. and Shinnichi Co., Ltd.
This settlement agreement is not an admission of liability by the company, according to court records.
The issue was raised in a lawsuit filed under a federal whistleblower act, which allows private parties to file suit on behalf of the U.S. government over false claims and share in a portion of the government’s recovery. Verity Investigations, LLC, the whistleblower, is expected to receive more than $119,000 in the case, according to court records.
COVID fraud in the Charlotte region
The payment agreement arrives as federal prosecutors continue to pursue pandemic-related fraud across the Western District of North Carolina.
The total misuse of COVID funds in the district, which covers the Charlotte metro area, totals tens of millions of dollars, The Charlotte Observer previously reported. To date, more than 30 individuals have been prosecuted and convicted.
Among the cases is that of Charlotte City Councilwoman Tiawana Brown.
In May, a federal grand jury indicted Brown and her two daughters for allegedly orchestrating a $124,000 COVID fraud scheme. Prosecutors allege the trio used the funds for personal expenses, including $15,000 for a private birthday party for Brown. She pleaded guilty in February, followed by her daughter Tijema in April.
