A Federal Line Is Drawn; Three Chinese-Owned Companies Agree to Pay Over $7.3 Million to Resolve PPP Loan Allegations

Washington, D.C.; December 16th, 2025

The matter did not end with an indictment or a courtroom trial, but with a settlement that federal officials say underscores the reach of U.S. law even in a program created under extraordinary circumstances. On December 16th, the Department of Justice announced that three Chinese-owned companies have agreed to pay more than $7.3 million to resolve allegations that they violated the False Claims Act in connection with loans issued under the Paycheck Protection Program.

According to the official release issued by THE UNITED STATES DEPARTMENT OF JUSTICE, the companies were accused of submitting false information in order to obtain PPP funds, a program created to provide emergency financial relief to small businesses during the COVID-19 pandemic. The DOJ stated that the allegations centered on misrepresentations related to eligibility requirements, including ownership and control disclosures that were material to whether the companies qualified for the loans.

The Paycheck Protection Program was established at a moment of national crisis, when Congress moved rapidly to inject liquidity into the economy and preserve jobs as businesses faced unprecedented disruption. In exchange for access to taxpayer-funded loans, applicants were required to certify that they met specific eligibility criteria. The Department of Justice emphasized that those certifications were not symbolic; they were legal attestations, and false statements could trigger liability under the False Claims Act.

In its announcement, the DOJ outlined that the three companies were majority-owned by Chinese nationals and failed to disclose information that would have rendered them ineligible for the loans they received. The Department stated that PPP rules restricted participation by certain foreign-owned entities, particularly when ownership and control structures conflicted with program requirements.

Federal officials described the settlement as part of broader efforts to protect the integrity of pandemic relief programs. The Department noted that while the speed of PPP deployment was necessary to stabilize the economy, it also created opportunities for abuse, making post-program enforcement essential to ensure accountability.

The DOJ’s release made clear that the settlement resolves allegations only, and that no determination of liability was made through a trial. As is standard in such agreements, the companies did not admit wrongdoing as part of the resolution. Nonetheless, the Department characterized the payment as a recovery of taxpayer funds and a signal that misrepresentations in federal relief programs will be pursued, regardless of the size of the company or the complexity of its ownership structure.

The False Claims Act, which forms the legal basis for the settlement, allows the federal government to seek damages from individuals or entities that knowingly submit false or fraudulent claims for payment. The Department highlighted that the statute remains one of the government’s most powerful tools for addressing fraud against federal programs, including emergency relief initiatives like the PPP.

In announcing the settlement, DOJ officials emphasized that foreign ownership does not, by itself, disqualify companies from participating in federal programs. The issue, the Department stated, arises when ownership and control details are concealed or misrepresented, depriving the government of the information necessary to assess eligibility. Transparency, the release underscored, is foundational to the administration of federal aid.

The Department also reiterated that enforcement efforts related to pandemic relief programs are ongoing. Investigations into potential fraud, false certifications, and misuse of funds continue across the country, with the DOJ coordinating alongside inspectors general, financial institutions, and other federal partners.

The settlement serves as a reminder that programs created during emergencies do not exist outside the law. Even when speed is paramount, the Department stated, accountability remains a core principle. Companies seeking access to federal funds are expected to comply fully with eligibility rules and disclosure requirements, and failures to do so may result in significant financial consequences.

As the government continues to wind down pandemic-era programs, the DOJ framed the case as illustrative of a larger enforcement posture: relief funds were intended to support legitimate businesses during a national crisis, and efforts to obtain them through false statements will be addressed through the legal mechanisms available.

The Department concluded its release by reaffirming its commitment to safeguarding taxpayer dollars and ensuring that federal programs operate as intended. The settlement, officials stated, reflects both the reach of the False Claims Act and the Department’s ongoing focus on accountability in the aftermath of the pandemic.

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Sources

Primary First-Hand Sources

• UNITED STATES DEPARTMENT OF JUSTICE, Office of Public Affairs release titled “Three Chinese-Owned Companies to Pay More Than $7.3M to Resolve False Claims Act Allegations Relating to Paycheck Protection Program Loans,” issued December 16th, 2025