Fremont Company to Pay Nearly $1M

A Fremont tech company is paying for a pandemic-era loan that federal prosecutors say it never should have received in the first place. Innodisk USA agreed this week to pay $950,000 to settle allegations that it improperly obtained and kept a second-draw Paycheck Protection Program loan. The case is about a very specific kind of PPP abuse — not made-up employees or fake paperwork, but claiming eligibility when the rules said the company was too big and hadn’t taken the required revenue hit. That matters because PPP enforcement never really ended; it just moved into this slower cleanup phase. (justice.gov) ### What actually happened? On May 4, the U.S. Attorney’s Office in Northern California said Fremont-based Innodisk USA had agreed to resolve False Claims Act allegations tied to a second-draw PPP loan. The government says the company applied for that loan on March 17, 2021, got the money, and then sought loan forgiveness even though it knew it did not qualify. The settlement is civil, not criminal, but the number is still big — $950,000. (justice.gov) ### Why was the company allegedly ineligible? Second-draw PPP loans came with tighter rules than the first round. A borrower had to certify that it and its affiliates had no more than 300 employees, and that it had suffered a gross-receipts decline of more than 25% versus an earlier comparison period. Federal pro(justice.gov)ding its parent company, and also had not experienced the required revenue reduction. (justice.gov) ### Why do affiliates matter so much? This is the part that trips companies up. PPP eligibility was not always about the headcount sitting in one U.S. office. For some applicants, the government looked at affiliated entities too — basically related companies under common control. Innodisk USA is a subsidiary of I(justice.gov)e Fremont unit too large for the loan program’s second-draw limits. (justice.gov) ### What was this loan supposed to be for? Congress created PPP in March 2020 as part of the CARES Act. The point was emergency support for businesses hit by the COVID shock, with forgivable loans meant to help cover payroll and certain operating costs. That design is why the eligibility rules mattered so much. T(justice.gov)m’s thresholds. (justice.gov) ### Who pushed this case forward? A whistleblower did. The settlement resolves claims brought under the False Claims Act’s qui tam provisions by Blockquote, Inc. That setup lets a private party sue on behalf of the government and share in the recovery if the case succeeds. In this settlement, Blockquote will receive $95,000. The case was filed in federal court in the Northern District of California. (justice.gov) ### Is this unusual in 2026? Not really — and that is the bigger signal here. DOJ offices around the country are still announcing PPP settlements involving companies that allegedly misread, ignored, or pushed past eligibility rules, especially around foreign ownership, affiliation, and size limits. The Fremont case fits that pattern almost exactly. (justice.gov) ### So what’s the takeaway? The easy version is that PPP may be old news politically, but it is not old news legally. If a company certified facts about headcount, affiliates, or revenue decline that do not hold up, the government is still willing to come back years later and collect. For Innodisk USA, that cleanup bill is $950,000. (justice.gov)