Fremont Company Settles Nearly $1M PPP Fraud
- Fremont-based Innodisk USA agreed on May 4 to pay $950,000 to settle claims it improperly took and kept a second-draw PPP loan. - The government says Innodisk applied in March 2021 despite failing two core tests — size limits and the required 25% revenue drop. - The case shows PPP enforcement is still active years later, with whistleblowers and SBA lawyers still chasing ineligible pandemic loans.
A Fremont tech company just learned that pandemic-relief money can come back to haunt you years later. Innodisk USA agreed to pay $950,000 after the federal government said it took a Paycheck Protection Program loan it was never entitled to receive. The basic claim is simple — the company got a second-draw PPP loan in 2021, then got that loan forgiven, even though it allegedly failed the program’s eligibility rules. The settlement landed on May 4, and it’s a reminder that PPP enforcement did not end when the pandemic did. (justice.gov) ### What was Innodisk USA accused of doing? The government says Innodisk USA applied for a second-draw PPP loan on March 17, 2021, even though it knew it did not qualify. This was not a criminal conviction, and the company did not admit liability in the usual settlement sense, but it agreed to resolve False Claims Act allegations tied to receiving and retaining the loan. The amount of the settlement is $950,000. (justice.gov) ### Why didn’t the company qualify? Second-draw PPP loans had two big gates. A business and its affiliates had to employ no more than 300 people, and the business had to show a drop in gross receipts of more than 25% compared with an earlier period. The government says Innodisk USA fail(justice.gov)red the required revenue decline. (justice.gov) ### Why do affiliates matter so much? This is where a lot of PPP cases get real fast. The program was built for smaller businesses under stress, so companies could not just look at the headcount on one U.S. subsidiary in isolation. If a parent company or related entities effectively mad(justice.gov)tion from slicing itself into smaller pieces on paper and claiming small-business aid anyway. (justice.gov) ### What is a second-draw loan, exactly? The first round of PPP was emergency cash in 2020. Second-draw loans came later for businesses that were still hurting and could prove it. That made the rules tighter. You had to certify both size and revenue loss. So this case is not about a tec(justice.gov)pplied and again before it sought forgiveness. (justice.gov) ### Why is forgiveness such a big part of the case? Because PPP loans could turn into grants. Once a borrower got forgiveness, the government was out the money unless it later clawed something back. That is why these settlements often focus on both steps — obtaining the loan and then ke(justice.gov)certifying eligibility, and then asking taxpayers to permanently eat the cost. (justice.gov) ### Who brought the case? A whistleblower did. The settlement resolved a qui tam case filed by Blockquote, Inc. under the False Claims Act, which lets private parties sue on behalf of the United States and share in any recovery. Blockquote will receive $95,000 from the settlement. That (justice.gov)an tee these cases up for them. (justice.gov) ### Why does this still matter in 2026? Because PPP enforcement has turned into a long-tail cleanup job. The loans went out fast during a crisis, but the audits, whistleblower suits, and civil fraud reviews move slowly. This case shows the government is still willing to revisit 2021 certifications and chase money years later, especially where the issue is not gray-area spending but basic eligibility. (justice.gov) ### Bottom line The headline is one Fremont company and a $950,000 settlement. But the broader point is bigger — if a business took PPP money while failing the size or revenue-loss tests, time alone is not much of a shield. (justice.gov)
