MacDermid Inc., a well-known Waterbury company, has paid a more than $2.2 million settlement over allegations that a company it acquired made false claims to receive federal relief during the COVID-19 pandemic.
Coventya Inc., which MacDermid bought in 2021, was facing a federal lawsuit brought under the False Claims Act, alleging it falsely certified its eligibility to receive a Paycheck Protection Program loan.
The PPP program, put in place in March 2020, was administered by the Small Business Administration, and was intended to support small businesses struggling to pay employees and other expenses during the pandemic lockdowns.
In April 2021, Coventya applied for a PPP loan for $1,075,000, claiming that it had fewer than 300 employees. The government contends that, together with its foreign affiliate, Coventya had more than 300 employees and was therefore ineligible for the program
Based on its false certification, the company received the loan, and later sought and received forgiveness of the total loan amount including interest.
“PPP loans were intended to help small businesses and their employees suffering the economic effects caused by the pandemic,” said Acting U.S. Attorney for the District of Connecticut, Marc H. Silverman, announcing the settlement. “This office is committed to pursuing those who violated the requirements of pandemic assistance programs and holding them accountable.”
The False Claims Act allegations were originally brought in a lawsuit filed in the U.S. District Court in Connecticut by GNGH2 Inc., a relator or whistleblower associated with New York attorney David Abrams.
GNGH2 is one of several so-called “serial relators,” bodies or individuals who have combed through publicly available data on PPP loans, looking for evidence of fraud. Provisions in the law allow for private parties to bring suit on behalf of the government, and entitle them to share in any funds recovered.
For its effort, GNGH2 will receive $222,662.36 as its share of the recovery from MacDermid.
Coventya was acquired by MacDermid Incorporated in September 2021.
