Bank of America Sued for PPP Loan Fraud

On August 22, 2022, Modern Perfection LLC and Fruitful Bear, LLC (collectively, “Plaintiffs”) filed a complaint on behalf of themselves and similarly situated Class members against Bank of America, N.A. (“Bank of America” or “Defendant”) in the United States District Court for the District of Maryland.

Bank of America was the second largest private lender of loans from the Paycheck Protection Program (“PPP”), a $669 billion business loan program intended to assist certain small businesses and nonprofit organizations in retaining and paying their workers during the COVID-19 pandemic. The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), which President Trump signed into law on March 27, 2020.

PPP loans allowed applicants to borrow up to 2.5 times their qualifying monthly payroll costs and provided generous terms, including up to 100% loan forgiveness of both principal and interest if the borrower met certain conditions. In addition, the CARES Act allowed private lenders of PPP loans to receive a commission worth a percentage of the loan amounts issued.

Plaintiffs, represented by Miller Shah LLP and Grant & Eisenhofer P.A., allege that Bank of America breached its contracts with Plaintiffs, breached the implied covenant of good faith and fair dealing, committed common law fraud, fraud in the inducement, and negligent misrepresentation, and violated the North Carolina Unfair and Deceptive Trade Practices Act.

According to Plaintiffs, Bank of America issued loans to borrowers in amounts greater than what they qualified for under the PPP and inhibited borrowers from applying for loan forgiveness.

Specifically, Plaintiffs allege that Bank of America falsely instructed small businesses to include payroll expenses attributed to 1099-MISC workers (“1099 Workers”) in their PPP loan applications and their calculations of maximum PPP loan eligibility. Bank of America then falsely included 1099 Worker expenses in its definition of qualifying “payroll” costs, despite knowing that such expenses could not be used to calculate loan eligibility and that loans used to pay 1099 Workers were not forgivable. 

Plaintiffs and other Class members who used funds from PPP loans towards 1099 Worker payroll expenses were later informed by Bank of America that their loans were either not entitled to forgiveness or were only forgivable in nominal amounts, rather than the tens of thousands of dollars that Bank of America had previously represented as forgivable.

According to Plaintiffs, Bank of America’s false statements and misrepresentations were material to their decisions to apply for PPP loans, take out the loans in the amounts that they did, include 1099 Worker expenses in their calculations of monthly payroll costs, and allocate the loan funds in the ways that they did.

Defendants have not yet filed a response to Plaintiffs’ complaint. The Honorable Lydia Kay Griggsby, United States District Judge for the District of Maryland, is assigned to the case.

Updates will be posted to this blog as the matter progresses. The case caption for the lawsuit is Modern Perfection, LLC et al. v. Bank of America, N.A., No. 22-cv-02103, filed in the United States District Court for the District of Maryland.

The legal team at Miller Shah LLP has extensive experience representing breach of contract matters. If you have any questions regarding this subject or this post, please contact Natalie Finkelman ( or Nathan C. Zipperian ( The Firm can also be reached toll-free at (866) 540-5505.

Miller Shah LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, and Pennsylvania. The firm is an active member of International Advisory Group (IAG Global), which provides clients access to excellent legal and accounting resources across the globe. For more information about the firm, please visit

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