The Small Business Administration (SBA) is a federal agency that provides support to entrepreneurs and small businesses, including a government-backed guarantee, of up to 90 percent, on loans to eligible small businesses made by banks, credit unions, and other lenders.
Lenders originating SBA-guaranteed loans face the risk of False Claims Act liability when they knowingly fail to follow and falsely certify compliance with SBA underwriting practices and lending standards and the loans they write subsequently default.
Several successful FCA cases have been brought in this area. By way of example:
In 2013, PNC Bank, N.A. agreed to pay $7.1 million to settle claims that it had violated the False Claims Act by originating loans guaranteed by the SBA to unqualified borrowers, as the result of knowingly shoddy underwriting practices and lending standards. Read more
In May 2010, Ciena Capital LLC agreed to pay $26.3 million to settle whistleblower claims that the company and its Business Loan Center unit violated the False Claims Act by falsely certifying its compliance with SBA regulations and underwriting requirements when they sought payments on defaulted loans they had originated, underwrote, and serviced. The two whistleblowers in this case were a hedge fund and a fund manager. They received $4.3 million as their share of the recovery. Read more
If you have knowledge and solid evidence of fraud or false claims involving SBA-guaranteed loans, please contact our whistleblower attorneys.
Consultations are free and confidential.