Fremont Company Settles Nearly $1M PPP Fraud

A Fremont tech company just cut a $950,000 deal with the federal government over a pandemic relief loan it allegedly should never have received in the first place. The company is Innodisk USA, the U.S. arm of Taiwan-based memory and storage maker Innodisk Corporation. The basic claim is simple — Innodisk USA got a second-draw Paycheck Protection Program loan in 2021 even though it didn’t qualify, then kept going and got the loan forgiven anyway. That settlement landed on May 4. (justice.gov) ### What was the PPP loan supposed to do? The Paycheck Protection Program was one of the big emergency business-rescue tools from early COVID. It offered forgivable loans to smaller businesses that were struggling to keep paying workers and covering basic (justice.gov)cap on employee size and a real revenue hit. (justice.gov) ### Why does “second-draw” matter here? Because the rules were more specific. To get a second-draw PPP loan, a business had to certify that it and its affiliates had no more than 300 employees. It also had to show gross receipts had fallen by more than 25% compared with an earlier period. Those weren’t side details — they were core gates for getting the money. (justice.gov) ### So what did Innodisk USA allegedly do wrong? Federal prosecutors say Innodisk USA applied for and obtained a second-draw PPP loan on March 17, 2021, even though it failed both gates. The government’s position is that the company was over the size limit(justice.gov) allegation goes a step further — prosecutors say the company knew it was ineligible but still pursued forgiveness after getting the loan. (justice.gov) ### Why do affiliates count? That’s the part that trips up a lot of companies. PPP eligibility was not always based on the headcount of the single U.S. entity filing the application. In many cases, the government looked at affiliated businesses too — basic(justice.gov)nce the larger corporate family got folded in. Innodisk USA is a subsidiary of a multinational Taiwanese parent, which is why that affiliate question was central here. (justice.gov) ### Was this a criminal case? No — this was a civil False Claims Act settlement. That matters because a settlement like this resolves allegations without a trial and without necessarily proving every claim in court. But it still carries teeth. Innodisk USA(justice.gov)giveness as serious enough to pursue years later. (justice.gov) ### Who brought the case forward? A whistleblower did. The case was filed under the False Claims Act’s qui tam provisions by Blockquote, Inc., which let private parties sue on behalf of the government and share in any recovery if the case succeeds. Blockqu(justice.gov)disk Corp., USA*. (justice.gov) ### Why is this still happening in 2026? Because PPP enforcement never really ended — it just moved from fast pandemic aid to slower audits, investigations, and settlements. The money went out quickly in 2020 and 2021. The cleanup takes years. Cases like t(justice.gov)nd revenue-loss claims. (justice.gov) ### What’s the bottom line? This is not really a story about one Fremont company missing paperwork. It’s a story about how pandemic-era relief rules kept following companies long after the emergency passed. If a business certified that it was small enough and hurt enough to qualify, the government can still come back and test both claims now. (justice.gov)