CLEVELAND, Ohio — A South Korean company that manufactured cosmetics and nutritional supplements in Solon has agreed to pay $6 million to settle whistleblower claims that it lied to the federal government to get money meant to help small businesses’ stay afloat during the coronavirus pandemic.
Cosmax USA, a business based in South Korea that merged with Nu-World Corp. in 2017, lied about how many employees it had across all of its companies on loan applications and included temporary workers who didn’t actually work for the company, according to the U.S. attorney’s office in Cleveland.
Of the $6 million, half is to pay restitution to the government.
Cleveland.com and The Plain Dealer reached out to Cosmax USA for comment.
Cosmax did not admit to any wrongdoing as part of the settlement.
A former Cosmax USA controller and human resources director, Alexander Novik, filed the lawsuit under seal 2022 and federal prosecutors in Cleveland intervened in the case on Novik’s behalf on May 5. The case settled on Thursday.
Because Novik filed the whistleblower lawsuit, he’s entitled to a portion of the money the company agreed to pay back.
The lawsuit accused the company of getting $11.9 million in loans via fraud by underrepresenting how many employees it had across its affiliated businesses by thousands, the lawsuit said.
The loans were meant only for businesses with less than 300 employees to help the those companies pay their employees during the pandemic.
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