×
Search

866-540-5505

Se Habla Espanol
Menu
Search

Our Blog

Home/Blog/Bank of America Sued for PPP Loan Fraud

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 (nfinkelman@millershah.com) or Nathan C. Zipperian (nczipperian@millershah.com). The Firm can also be reached toll-free at (866) 540-5505.

Share Post:
facebooktwitterLinkedin

Categories

Archives

Contact
Miller Shah LLP

While this website provides general information, it does not constitute legal advice. The best way to get guidance on your specific legal issue is to contact a lawyer. To schedule a meeting with an attorney, please call 866-540-5505 or complete the intake form to email us.
Alec J. Berin - Associate

PA Philadelphia | 866-540-5505

Alfonso Vilaboa - Of Counsel

NJ Hoboken |

Anika S. Keuning - Project Analyst

CA San Diego | 866-540-5505

Anna D’Agostino - Associate

NY New York City | 866-540-5505

Betsy Ferling-Hitriz - Legal Assistant

CT Chester | 866-540-5505

Bruce D. Parke - Partners

PA Philadelphia | 866-540-5505

Caroline Soper - Project Analyst

NY New York City | 866-540-5505

Christopher A. Miller - Associate

PA Philadelphia | 866-540-5505

Deborah C. England - Of Counsel

CA San Francisco | 866-540-5505

Edward H. Glenn - Of Counsel

NY New York City | 866-540-5505

Edward M. Fitzgerald - Staff Attorney

CA Los Angeles | 866-540-5505

Elena M. DiBattista - Legal Assistant

FL Fort Lauderdale | 866-540-5505

Elise M. Wilson - Project Analyst

NY New York City | 866-540-5505

Eric L. Young - Of Counsel

PA Philadelphia | 866-540-5505

Finn M. Mutrux - Office Staff

CA Los Angeles | 866-540-5505

Gina S. Demetriades - Office Staff

CT Chester | 866-540-5505

Heidi A. Wendel - Of Counsel

NY New York City | 866-540-5505

James C. Shah - Partners

CA Los Angeles | 866-540-5505

James E. Miller - Partners

CT Chester | 866-540-5505

Jayne A. Goldstein - Partners

FL Fort Lauderdale | 866-540-5505

Jillian M. Boyce - Office Staff

CT Chester | 866-540-5505

Jocelyn McNamara - Project Analyst

NY New York City | 866-540-5505

Johanna C. Richter - Law Clerk

PA Philadelphia | 866-540-5505

John C. Roberts - Associate

PA Philadelphia | 866-540-5505

Jonathan Dilger - Office Staff

NY New York City | 866-540-5505

Julie M. Capito - Legal Assistant

CA San Francisco | 866-540-5505

Katie Edwards - Legal Assistant

PA Philadelphia | 866-540-5505

Kolin C. Tang - Partners

CA San Diego | 866-540-5505

Laurie Rubinow - Partners

CT Chester | 866-540-5505

Madison Gregg - Associate

NY New York City | 866-540-5505

Marialisa Samo - Legal Assistant

CA San Diego | 866-540-5505

Mark Xiao - Associate

NY New York City | 866-540-5505

Natalie Finkelman Bennett - Partners

PA Philadelphia | 866-540-5505

Nathan C. Zipperian - Partners

FL Fort Lauderdale | 866-540-5505

Nicholas Day - Of Counsel

NJ Hoboken | 866-540-5505

Nicholas K. Ono - Project Analyst

NY New York City | 866-540-5505

Raffaele Scalcione - Of Counsel

IT Milan | 866-540-5505

Reilly K. Powers - Project Analyst

PA Philadelphia | 866-540-5505

Robert W. Biela - Staff Attorney

PA Philadelphia | 866-540-5505

Ronald S. Kravitz - Of Counsel

CA San Francisco | 866-540-5505

Rrita Osmani - Project Analyst

CT Chester | 866-540-5505

Shuping Li - Project Analyst

NY New York City | 866-540-5505

Stephen T. Rutkowski - Law Clerk

CT Chester | 866-540-5505

Sue Moss - Legal Assistant

PA Philadelphia | 866-540-5505

Sydney D. Finlay - Associate

CA San Diego | 866-540-5505

Tina Moukoulis - Staff Attorney

PA Philadelphia | 866-540-5505