A recent report on COVID-19 reveals that the government agency that oversees compliance with the Equal Credit Opportunity Act (ECOA) has identified a risk for consumers with PPP lending. The report, however, does not test whether good faith protections apply to these loans. In light of these recent findings, the agency may soon be reexamining the COVID-19 PPP lending rules. As such, this study could have a substantial impact on the industry.
In a recent settlement, Grover Cleveland Mooers agreed to pay the government $250,000 and resign from his position as governor and principal employee of the company. He will also be required to step down as a director and advisor of HPMC for three years. Additionally, he will have to hire an independent auditor to review HPMC’s accounting practices. The settlement lays out the consequences of the alleged mismanagement of COVID-19 PPP funds.
The settlement outlines the terms of the agreement, which include paying penalties and restitution. HPM Corporation will be required to pay $2,939,400 in restitution and assume additional responsibilities. HPM will be required to pay the penalties in 90 days, and the money paid to the charities will not be deductible as a tax deduction. HPM must also pay back the money they owe to the government.
In a separate COVID-19 PPP lawsuit, HPMC’s former president, Grover Cleveland Mooers, and a former HPMC officer were accused of mismanagement. HPMC was required to pay a portion of the money to Mooers. The Mooers’ actions led to HPMC being forced to pay more than $380 million in damages. Although the settlement reached by the parties did not settle the claims, the agreement does provide some certainty for the government.
In April, the first PPP lawsuits were filed against Bank of America Corp. and Wells Fargo & Co. Plaintiffs alleged that banks systematically discriminated against new PPP loan applicants by limiting PPP loans to established clients with a history of large loans. As a result, many individuals were denied the opportunity to obtain PPP loans. The lawsuits allege that banks systematically discriminated against new PPP loan applicants and denied them access to loans from existing clients.
The lawsuits against the government are a result of the same fraud scheme. When businesses receive PPP loans, they often use the money to purchase luxury items or pay off debt. Some loans are even used to cover medical bills. The federal government is currently investigating dozens of such instances. The government is also enforcing stricter rules regarding PPP loan applications. As a result, the Department of Justice has announced that it intends to prosecute fraudulent PPP schemes.
The company sued was not just attempting to stop the COVID pandemic, but it also violated the Fair Credit Reporting Act. In Rucker v. COVID-19, the plaintiff sought reinstatement, compensatory damages, and front pay. Her employer denied her requests for PPP loans based on her history of misdemeanors. She also requested information on the use of PPP funds and the payment of other employees’ sick leave.
One of the Great Dane COVID-19 PPP cases involves allegations of financial mismanagement, fraud, and alleged violations of the federal Fair Labor Standards Act (FLSA). Rucker, a former employee of Great Dane, claims the company misused federal program funds and kept a fictitious paper trail to mask its failure to comply with PPP requirements. She claims she was terminated by Great Dane after reporting her employer’s illegal activities.
A former employee has filed a complaint under the federal False Claims Act and Florida’s whistleblower protection statutes against Great Dane. She alleges that Great Dane improperly used $3 million in PPP funds. Additionally, she claims the company failed to follow accounting and payroll records and approved leaves of absence for employees without her knowledge. The company denied her claims. Nevertheless, the lawsuit continues to build.