![]() ![]() Fintech loans rate as “highly suspicious” at a rate of over six times that of traditional lenders.PPP lending generated $38 billion of lender processing fees, of which nearly $9 billion went to fintech lenders.Of the nearly $800 billion disbursed in PPP loans, one study categorizes at least $64 billion in such loans as “suspicious.”.Examples of such findings/assertions include: Moreover, certain investigative media reports and academic papers have underscored concerns both about abuse and fraud related to PPP loans and about the fintech industry’s significant role in administering such loans. Meanwhile, the House Select Subcommittee on the Coronavirus Crisis has announced investigations of at least six fintech lenders: Kabbage, BlueVine, Cross River Bank, Celtic Bank, Blue Acorn PPP, and Womply. Recent reports suggest that the DOJ’s focus is not solely on the lenders cited above. Nearly $800 billion was disbursed under the PPP through the close of the program in May 2021. The PPP was enacted as part of the CARES Act on March 27, 2020, in response to Covid-19 and was launched by the Small Business Administration (“SBA”) on April 3, 2020. These and other recent developments are part of what appears to be a significant new DOJ initiative: enforcement activity targeting fintech firms and other financial institutions that processed loans under the PPP. Three months earlier, the DOJ charged a former CEO of a fintech lender (MBE Capital Partners) with wire fraud, bank fraud and making false statements to the Small Business Administration (“SBA”), in what we believe is the first criminal prosecution involving the activities of a PPP lender. The investigation, Kabbage further disclosed, relates to its Paycheck Protection Program (“PPP”) loan approval practices. Department of Justice (“DOJ”) under the False Claims Act. (doing business as KServicing), a fintech lender, disclosed that it is under investigation by the U.S. ![]()
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