BOSTON — An allegation by an outside whistleblower led to a Southwick company agreeing to pay more than $2 million to resolve allegations that it violated the False Claim Act by receiving a Paycheck Protection Program loan for which it was not eligible, according to a release from U.S. Attorney Leah B. Foley.
Located on Feeding Hills Road, Hitachi Kokusai Electric Comark, LLC, which reverted to its original name as Kokusai Denki Electric America, Inc. in December 2024, agreed to pay $2,092,371 for violating the act, according to the release.
At the time of the violations, Comark was a wholly owned subsidiary of Hitachi Kokusai Electric, Inc., a company based in Tokyo.
According to the settlement agreement between all the parties involved, in April 2025, Daniel Foster filed a qui tam action in U.S. District Court in Boston alleging that Comark violated the False Claims Act because when it applied and was approved for a “Second Draw PPP loan,” it indicated it had only 67 employees but didn’t include employees at affiliate companies, which was under the 300 employee threshold.
A “qui tam action” is a type of whistleblower lawsuit where a private citizen sues on behalf of the federal government, which was confirmed by Foster’s attorney Gregg Shapiro.
“He’s not [an employee of the company],” Shapiro said Monday.
He said Foster researches companies that received PPP loans but were not eligible.
With the success of Foster’s action, he is eligible for 10% of the settlement, which also includes Comark paying him $8,516.
When the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was implemented in March 2020, it authorized forgivable loans to small businesses for job retention and certain approved expenses through the PPP.
The U.S. Small Business Administration administered the loans in two rounds. When applying for the second round of loans, Comark certified that it was eligible for the loan under the PPP regulations in effect at the time of the application and represented that it had 67 employees, including affiliates’ employees, according to the release.
In the settlement, it admitted that, in January 2021, it received a $1,342,232 second-round PPP loan.
“Comark later sought and received forgiveness from SBA of the full amount of that loan,” according to the release.
However, when it applied for forgiveness, Comark did not qualify for the loan because it had more than 300 employees, considering the employees of its affiliates.
The settlement credits Comark for cooperation under the Department of Justice’s Guidelines for Taking Voluntary Disclosure, Cooperation and Remediation into Account in False Claims Act Matters, according to the release.
Assistant U.S. Attorney Brian M. LaMacchia, chief of the Affirmative Civil Enforcement Unit, handled the matter.
