On August 12, 2026, the U.S. Department of Justice (DOJ) announced that a Chinese-owned aviation company has agreed to pay $11.772 million to settle charges of falsely claiming Paycheck Protection Program (PPP) loans.
According to the announcement posted on the DOJ’s official website on Tuesday, Continental Aerospace Technologies has agreed to pay $11,772,680 to settle allegations of violating the False Claims Act by falsely reporting to obtain PPP loans for which they were not eligible.
The case was jointly handled by the Civil Fraud Section of the DOJ’s Commercial Litigation Unit, the Eastern District of Wisconsin, and the Southern District of Alabama U.S. Attorney’s Offices.
Brad Schimel, the Assistant U.S. Attorney for the Eastern District of Wisconsin, stated that Continental Aerospace Technologies provided false information to the Small Business Administration in order to secure PPP loans they were not entitled to.
The PPP was established by the U.S. Congress in March 2020 to provide loans to American small businesses impacted by the COVID-19 pandemic. Eligible businesses could receive loans guaranteed by the Small Business Administration, which could be forgiven under certain conditions.
Companies applying for PPP loans were required to self-certify their eligibility, including criteria such as the number of employees and business affiliations.
The DOJ revealed that Continental Aerospace Technologies had falsely certified their compliance with the application requirements. Upon investigation, it was found that their actual circumstances did not meet the stipulated criteria.
During the PPP loan application, Continental Aerospace Technologies was already part of a large multinational corporate group, exceeding the Small Business Administration’s limits for the industry size of applying companies, making them ineligible for PPP loans.
Moreover, the regulatory authorities alleged that a portion of Continental Aerospace Technologies’ equity was held by the Aviation Industry Corporation of China (AVIC), which is fully owned by the State-owned Assets Supervision and Administration Commission of the State Council of China (SASAC). The DOJ concluded that the company also violated the government ownership restrictions for PPP eligibility.
Formerly known as China Aviation International Holdings (Hong Kong) Limited, Continental Aerospace Technologies Holdings Limited is listed in Hong Kong and has been controlled by AVIC through its subsidiaries. Its primary business involves designing, manufacturing aviation gasoline engines, Jet-A diesel engines, and providing after-sales maintenance services through its U.S. subsidiary.
Brett A. Shumate, Assistant Attorney General of the DOJ’s Civil Division, emphasized that the PPP was intended to aid American small businesses affected by the pandemic, and the DOJ will continue to hold those accountable who violate the regulations to defraud taxpayers.
Sean P. Costello, U.S. Attorney for the Southern District of Alabama, stated that this settlement reflects the government’s efforts to investigate fraud involving taxpayer funds and achieve results.
Wendell Davis, General Counsel for the Small Business Administration, mentioned that the agency will continue to collaborate with the DOJ and federal prosecutors to uncover PPP fraud and recover pandemic relief funds obtained improperly.
Under the terms of the settlement agreement, GNGH2, the company that brought the lawsuit in the Eastern District of Wisconsin, will receive $1,765,902 from the settlement.
Under the Qui tam provisions of the False Claims Act, private entities can file lawsuits on behalf of the U.S. government and receive a certain percentage of the recovery after the funds are reclaimed.
Qui tam, derived from Latin meaning “he who sues for the king as well as for himself,” is a legal provision that allows civilians or insiders (called whistleblowers or relators) to sue companies or individuals defrauding the government on behalf of the government. In the U.S., this provision is primarily included in the federal False Claims Act. If successful, the whistleblower may receive a percentage of the recovered amount by the government.