The Justice Department spent three days last week turning the SBA affiliation rules into cash. Between July 21 and July 23, 2026, U.S. Attorney's Offices in New Jersey, Wisconsin, California and Texas announced five False Claims Act settlements over Paycheck Protection Program loans, recovering a combined $11,648,830.04. Four turned on affiliation and size-standard certifications, the same machinery that decides which firms may compete for small-business set-asides. The Northern District of California drove two, including a $3,168,901.75 settlement with IGEL Technology Corporation, a multinational software company whose North American arm claimed only 105 employees.

Background

PPP borrowers certified eligibility on the application, but the number that mattered was never only their own payroll. Both California releases note that first-draw applicants had to certify they met size standards counting employees "including in most cases employees of any U.S. and foreign affiliates." Second Draw loans, per the Texas release, generally required fewer than 300 employees across affiliated entities. A U.S. subsidiary with sixteen people on its badge list is not a sixteen-person company if a global parent controls it.

Affiliation normally surfaces as a size protest that costs a company one award. These settlements show the same question in a different forum: a False Claims Act case, with treble-damages exposure and a whistleblower attached.

The whistleblowers here were corporate entities, not employees. Two recoveries came from qui tam suits filed by Verity Investigations, LLC, and a third from Clearwater Metrics LLC; a fourth, in Texas, stems from a qui tam whose relator DOJ did not name. In each case where the government disclosed the relator's share, it was exactly 10 percent.

Key Details

The New Jersey case came first. On July 21, CAN USA, Inc., an inspection, repair and maintenance company based in Harvey, Louisiana with offices in Hackensack, agreed to pay $2,916,900. CAN USA took a $2 million PPP loan in January 2021 after certifying it employed no more than 300 people. DOJ alleged that counting employees of the company's foreign affiliates pushed it past the limit, and that CAN USA then obtained forgiveness of the loan plus accrued interest. Assistant U.S. Attorney David V. Simunovich in Newark represented the government. The qui tam is captioned United States ex rel. Clearwater Metrics LLC v. CAN USA Inc., No. 26-3469 (D.N.J.), and the relator is receiving $291,690. U.S. Attorney Robert Frazer announced the settlement, and DOJ noted CAN USA fully cooperated.

The Wisconsin case broke differently. On July 22, Ozaukee Country Club of Mequon paid $750,000 on a theory of categorical ineligibility, not size. Under 13 C.F.R. § 120.110(i), "private clubs and businesses which limit the number of memberships for reasons other than capacity" are not eligible for SBA loans, and Congress expressly endorsed that regulation for PPP at 15 U.S.C. § 636(a)(37)(A)(iv)(III)(aa). The club required nominees to be sponsored by members, undergo background checks and win board approval. First Assistant U.S. Attorney Brad D. Schimel announced it; Assistant U.S. Attorney Aaron R. Wegrzyn represented the government, with Kandace Zelaya of SBA's Office of General Counsel. The club does not admit liability.

Advertisement

July 23 produced three more. IGEL Technology Corporation, with North American headquarters in San Francisco, claimed 105 employees on a first-draw application in June 2020. DOJ alleged that including affiliated entities and its multinational parent put it over the size standards, and that IGEL sought forgiveness anyway. The qui tam is United States ex rel. Verity Investigations, LLC v. IGEL Technology Corporation, No. 3:25-cv-03290-SK (N.D. Cal.), with a $316,890.17 relator share. Assistant U.S. Attorney Savith Iyengar handled it with assistance from Jacqueline Hollar.

The same office announced the week's largest recovery. SoftBank Robotics America, Inc., a San Francisco-headquartered robotics business within SoftBank Group Corp., agreed to pay $3,637,499.09 after claiming only 16 employees on a first-draw loan obtained in March 2021. Again the allegation was affiliation with a multinational parent. The case is United States ex rel. Verity Investigations, LLC v. SoftBank Robotics America, Inc., No. 3:25-cv-1442-SK (N.D. Cal.); the relator share was $363,749.91. U.S. Attorney Craig H. Missakian announced it alongside SBA General Counsel Wendell Davis, who was also named in the IGEL release.

In Houston, Matrix Metals LLC, a Stafford, Texas stainless-steel components supplier, agreed to pay $1,175,529.20 over a Second Draw loan taken in January 2021. At the time it was a wholly owned subsidiary of Matrix Metals Holdings Inc., owned by interests based in India, and DOJ alleged the company and its affiliates employed more than 300 people. Assistant U.S. Attorney Kenneth Shaitelman is handling the matter with Amber Perez of SBA's Office of General Counsel. All five releases state the resolved claims are allegations only, with no determination of liability.

What It Means for Contractors

The staffing pattern deserves study. SBA's Office of General Counsel appears throughout: Wendell Davis in both California releases and quoted in the Wisconsin one, Kandace Zelaya in Wisconsin, Amber Perez in Texas. DOJ also used the Ozaukee release to point at its National Fraud Enforcement Division, announced April 7, 2026. That is a coordinated civil posture on eligibility certifications, and no principled line keeps it confined to pandemic lending. Testing a size self-certification against a corporate structure is the same work whether the certification sits on a PPP application, a SAM registration, or a representation under FAR 52.219-1.

Three operating conclusions follow. First, treat foreign ownership as an affiliation problem, not a compliance footnote. All four size cases involved a foreign parent or foreign affiliates, and where DOJ disclosed the U.S. entity's own headcount — 105 at IGEL, 16 at SoftBank Robotics America — the domestic number looked comfortably small alone. If a foreign parent, a common owner or a sister company anywhere in the structure exercises control, those employees belong in the count on every certification the company signs.

Second, expect the affiliation question to come from outside. Four of these five recoveries began with qui tam complaints, three filed by investigative firms rather than employees. A firm whose organizational chart has changed since it last refreshed its representations should re-run its size calculation before someone else does.

Third, cooperation shows up in the outcome. DOJ specifically flagged CAN USA's full cooperation, and its $2,916,900 payment on a $2 million forgiven loan sits well below the treble figure the False Claims Act allows. Companies that find an affiliation error and disclose it fare better than those waiting for a complaint to be unsealed. Ozaukee is the reminder that eligibility is not only about size: the categorical bars in 13 C.F.R. § 120.110 remain enforceable, and a certification that ignores them is as actionable as one that miscounts heads.

Sources