Fremont Company Facing Nearly $1M Settlement

A Fremont tech company just agreed to pay $950,000 over a pandemic relief loan it allegedly should never have received in the first place. The company is Innodisk USA, a local subsidiary of Taiwan-based Innodisk Corporation, which sells industrial flash memory and DRAM products. The core issue is simple — the Paycheck Protection Program was built for smaller businesses hit hard by COVID, and federal lawyers say Innodisk USA did not actually qualify for the second round of money. Even so, the company got the loan and then got it forgiven. ### What was the company accused of doing? The settlement says Innodisk USA knowingly violated the False Claims Act by receiving and retaining a second-draw PPP loan despite failing the program’s eligibility rules. This was not a criminal conviction, and the settlement resolves allegations rather than a court finding of liability. But the dollar figure tells you the government thought the case was serious enough to pursue. ### Why wasn’t Innodisk USA eligible? Second-draw PPP loans came with tighter rules than the first wave. A borrower had to certify that it and its affiliates had no more than 300 employees, and that gross receipts had fallen by more than 25% versus an earlier comparison period. Federal lawyers say Innodisk USA failed to show the required revenue decline. ### Why do affiliates matter so much? Because PPP eligibility was not just about the headcount inside one U.S. office. The rules looked through corporate structures to affiliated entities, which was meant to stop bigger groups from slicing themselves into smaller pieces on paper and claiming small-business aid anyway ### When did this happen? The government says Innodisk USA applied for and obtained the second-draw loan on March 17, 2021. Prosecutors also say the company later sought and obtained forgiveness, which turned the loan into something much more valuable than temporary relief — basically free federal money, if the certifications were false. The settlement was announced on May 4, 2026. ### Who brought the case? This did not start only inside the government. The case was brought under the whistleblower provisions of the False Claims Act by Blockquote, Inc., in a lawsuit filed on behalf of the United States. That matters because the False Claims Act gives private parties a financial incentive to surface fraud involving federal funds. In this settlement, Blockquote will receive $95,000. ### Why is this still happening now? Because PPP enforcement has a long tail. The CARES Act poured billions into forgivable loans in 2020 and 2021, and investigators are still working through applications, certifications, and forgiveness records years later. DOJ has kept pandemic-fraud enforcement active across the country. ### So what does this mean locally? For Bay Area companies, the message is pretty direct — pandemic-era paperwork is still fair game. If a business certified headcount, affiliate status, or revenue losses incorrectly, that can still turn into a federal case in 2026. And because whistleblowers can share in recoveries, the pressure does not just come from audits. It can come from insiders too. ### Bottom line? This is a small-business relief story that turned into a corporate-eligibility fight. Innodisk USA did not admit liability in court, but it did agree to pay nearly $1 million to end allegations that it took taxpayer-backed PPP money it was not entitled to keep. That is the part that matters — the government is still unwinding pandemic aid, and the bill can arrive years later.