Regions Bank, headquartered in Birmingham, Alabama, has agreed to pay the United States $4,919,631 to resolve allegations that Regions received payments it should not have received from the United States in connection with Regions approving forgiveness of a customer’s Paycheck Protection Program (PPP) loan, despite the fact that the PPP loan was not eligible for forgiveness.
“The PPP was intended to provide critical assistance to eligible businesses during the economic uncertainty caused by the Covid-19 pandemic,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “The department is committed to ensuring that PPP lenders are held accountable for failing to comply with applicable program requirements, including approving forgiveness of PPP loans that were not eligible under program rules.”
Congress created the PPP in March 2020 as part of the Coronavirus Aid, Relief and Economic Security (CARES) Act to provide federally guaranteed loans to small businesses suffering economic hardship due to the COVID-19 pandemic. The U.S. Small Business Administration (SBA) administered the PPP. The CARES Act authorized private lenders to approve PPP loans for eligible borrowers who could later seek forgiveness of the loans so long as they used loan funds on employee payroll and other eligible expenses. Upon forgiveness of a PPP loan, the SBA paid the lender the forgiven principal loan balance and any accrued interest. SBA also paid to lenders who originated PPP loans a fee calculated as a percentage of the loan amount.
The United States alleged that, on or about Aug. 3, 2021, Regions Bank approved forgiveness of a PPP loan obtained by an individual through Regions Bank, but the PPP loan was not eligible for forgiveness. The United States further alleged that Regions Bank was unjustly enriched by the payment the SBA made to Regions Bank upon forgiveness of the PPP loan.
The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the U.S. Attorney’s Office for the Western District of Missouri, with assistance from the Small Business Administration’s Offices of the General Counsel and the Inspector General as well as from the Federal Deposit Insurance Corporation’s Office of Inspector General.
Trial Attorney Gavin Thole of the Civil Division’s Commercial Litigation Branch, Fraud Section, and Assistant U. S. Attorney Matthew Sparks of the U.S. Attorney’s Office for the Western District of Missouri are handling the matter.
The claim resolved by the settlement reflects allegations only. There has been no determination of liability.
