EuWe Eugen Wexler US Plastics Certified 169 Employees. Regulators Say the Real Number, With Its German Parent, Was Far Higher.

Five manufacturing companies operating in South Carolina, each backed by a foreign parent corporation, have agreed to pay more than $7.9 million combined to resolve allegations that they falsely certified their employee headcounts to qualify for Paycheck Protection Program loans during the COVID-19 pandemic — loans that were, according to the underlying claims, actually reserved for smaller businesses.DOCUMENTED

The settlements, announced by the U.S. Attorney's Office for the District of South Carolina, resolve allegations that the companies undercounted their total workforce by excluding employees of their overseas parent companies and affiliated subsidiaries — a calculation the loan program's rules required them to include.DOCUMENTED

How the employee-count rule was supposed to work

The Paycheck Protection Program, created under the CARES Act, offered forgivable loans to small businesses to help retain employees during pandemic-driven revenue disruption.DOCUMENTED To qualify, businesses had to certify they met specific size standards, generally based on the total number of employees across the company and all of its affiliates, combined — meaning a small U.S. subsidiary of a much larger foreign parent company was required to count the parent's total global workforce, not just its own domestic staff, when determining eligibility.DOCUMENTED Businesses with more than 500 employees were ineligible for first-draw loans, and those with more than 300 employees were ineligible for second-draw loans.DOCUMENTED

Five companies, one recurring pattern

According to the settlements, EuWe Eugen Wexler US Plastics Inc., a Williamston-based producer of automotive plastics parts, received a $1,627,947 second-draw loan in 2021 after certifying it had 169 employees — a figure that, combined with its German parent company, EuWe Eugen Wexler Holdings GmbH & Co. KG, and its subsidiaries, exceeded the 300-employee cap for second-draw eligibility.DOCUMENTED EuWe Eugen US later sought and received full forgiveness of the loan, plus interest, before agreeing to pay $2,175,000 to resolve the allegations.DOCUMENTED

Charleston-based Mankiewicz Coatings, LLC, which specializes in industrial coating systems, certified 80 employees on its 2021 first-draw loan application, a figure that similarly excluded its German parent company, KG Erste Grau Verwaltungs-GmbH & Co., pushing its true combined headcount above the 500-employee first-draw threshold.DOCUMENTED Laurens-based Fukoku America, Inc., a rubber-parts manufacturer, certified 157 employees on a second-draw loan while its Japanese parent, Fukoku Co. Ltd., pushed the real combined total above 300.DOCUMENTED Spartanburg-based AWL Automation, LLC and Charleston-based Stoba USA Corp. followed the identical pattern with their Dutch and German parent companies, respectively.DOCUMENTED

Each company certified a headcount well below the program's cap — a number that only worked if the employees of its own foreign parent company were left out of the count entirely.

The whistleblowers behind three of the settlements

Three of the five settlements trace back to qui tam lawsuits filed under the False Claims Act's whistleblower provisions. The case against EuWe Eugen US was brought by relator GNGH2 Inc., which will receive $217,500 of the settlement.DOCUMENTED The case against Fukoku America was brought by relator Blockquote, Inc., which will receive $180,000.DOCUMENTED The case against Stoba USA was brought by Verity Investigations, LLC, which will receive a share of that settlement as well.DOCUMENTED

Officials' statements

"These settlements reflect our commitment to protecting taxpayers and holding those accountable who disregard program requirements in order to obtain federal funds they are not entitled to," said U.S. Attorney Bryan Stirling for the District of South Carolina. "Our team secured these settlements in the first five months of 2026, and we'll continue to aggressively pursue individuals or businesses who defraud our taxpayers."DOCUMENTED

Why foreign-affiliate counting rules keep surfacing in PPP cases

The affiliation rules requiring foreign parent and sister-company employees to be counted toward a small business's total headcount were a specific, well-publicized feature of PPP eligibility guidance, precisely because the program's forgivable-loan structure created an obvious incentive for a U.S. subsidiary of a large multinational company to understate its true corporate size.REVIEWED Because all five settlements involve companies that received full loan forgiveness before the alleged misrepresentation came to light, the recoveries in each case function as a retroactive correction — taxpayers effectively absorbed the cost of payroll support the companies were never eligible to receive in the first place, until each settlement clawed back a portion of that amount years later.REVIEWED

Why the same pattern hit five unrelated companies

The five companies named in the South Carolina settlements have no corporate relationship to one another — different industries, different foreign parent countries, different loan amounts — yet each followed an identical basic template: a mid-sized U.S. manufacturing subsidiary applied for PPP funding using only its own domestic employee count, without including the workforce of the international parent company that actually controlled it.REVIEWED That consistency across five otherwise unconnected businesses suggests the underlying confusion, or the underlying incentive to look past the affiliation rule, was widespread among foreign-owned manufacturers navigating PPP applications during a period when loan officers processed applications quickly and rarely had the resources to independently verify a borrower's full corporate structure.REVIEWED

For any U.S. subsidiary of a foreign parent company that received PPP funding during the program's active years, the South Carolina settlements are a reminder that loan forgiveness granted years ago does not close the door on liability if the underlying eligibility certification turns out to have been inaccurate — as these five cases each demonstrate, the False Claims Act's qui tam provisions give whistleblowers, often former employees or business associates with direct knowledge of a company's real corporate structure, a continuing incentive to bring exactly this kind of case forward.REVIEWED

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