PPP loans earned a Miami lender $680 million. Now it’s being sued by the Federal Reserve
A
The lender was sued earlier this month by the
It appears to be the only lawsuit to date brought by a
The lawsuit also says that Benworth fraudulently transferred funds from
The politically connected Navarros are longtime friends and financial supporters of
The lawsuit comes in the wake of a May ruling by a
The
In a statement, Benworth said “we categorically deny these allegations” and that the company “has always upheld its legal and ethical requirements under the law and in all its dealings.”
The
Benworth’s prolific lending in the federal program was driven by its partnership with Womply, which automated the PPP approval process, allowing the lender to process hundreds of thousands of applications quickly.
But Benworth and other lenders who worked with the technology company ultimately came to doubt Womply’s vetting of applicants, and Womply was accused in a congressional report of contributing to “rampant fraud” in the program.
“Unfortunately, these lenders are still dealing with the aftermath that Womply has caused to our businesses,” Benworth said in its statement, attributing the lawsuit by the
Benworth also told the bank that it hasn’t been able to get reimbursed by the
In spite of Womply’s alleged failings, Benworth and other lenders who partnered with Womply were required to turn over the bulk of the fees they earned on PPP loans to the technology company, under the terms of their contracts.
Benworth has already paid Womply nearly
In May, a
The
The lawsuit says that the Navarros established a Puerto Rican offshoot of Benworth in 2021 and moved most of their
Benworth’s
Benworth also transferred more than
Billions of fraudulent loans
The Paycheck Protection Program was created as part of the
Last year, the Small Business Administration’s
Womply and other financial technology, or fintech, companies were accused of facilitating extensive fraud in the program through lax anti-fraud controls, according to a scathing congressional report release in late 2022.
Following the congressional investigation, which was triggered in part by the Miami Herald’s reporting, Womply was barred from doing business with the
Womply also recently reached a settlement with the
Another fintech company featured in the congressional report,
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