Valley National Bank Resolves Civil Liability Relating To Self-Disclosure Of Its Role In The Impermissible Use Of PPP Loan Proceeds By Bank Customer

Tampa, FL – Valley National Bank (VNB), a national bank and member of the Federal Reserve System, has agreed to pay $216,784.50 to resolve its civil liability under the False Claims Act for its self-disclosed role in the administration of two loans to a bank customer made under the Coronavirus Aid, Relief and Economic Security Act (CARES), the Payroll Protection Program (PPP) and Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (Economic Aid Act).

Congress created the PPP in March 2020 as part of the CARES Act to provide emergency loans to small businesses suffering economic hardship due to the COVID-19 pandemic. The CARES Act authorized these businesses to seek forgiveness of the loans if they spent the loan funds on eligible expenses. The PPP was administered by the U.S. Small Business Administration (SBA).

This settlement resolves VNB’s civil liability related to a bank customer who had applied for two PPP loans with VNB. VNB, through a bank relationship manager, assisted the customer in the impermissible use of a portion of the PPP loan proceeds from its first PPP loan to repay an outstanding loan to a third party. After learning of this conduct, VNB conducted an independent investigation and review of those issues and provided the United States with a detailed and thorough written self-disclosure. VNB cooperated fully with the government’s investigation of the conduct, disclosing relevant documents, facts, and information gathered during its investigation. Although PPP lending has ended, VNB took steps to remediate and improve the issues with its PPP lending policies and practices, including requiring PPP borrowers to open a deposit account to undergo depositor screening, retaining an accounting firm to serve as a PPP loan help desk, and utilizing a company to interface with the SBA E-Tran platform.

“The United States Attorney’s Office is committed to investigating and holding responsible those who failed to follow the rules of the PPP program,” said U.S. Attorney Roger B. Handberg for the Middle District of Florida. “We will continue to seek civil redress and, where appropriate, federally prosecute those individuals and entities that engage in improper uses of PPP loan proceeds.”

SBA’s General Counsel Therese Meers stated, “The favorable settlement in this case is the product of enhanced efforts by federal agencies such as the Small Business Administration working with the U.S. Attorney’s Office, other federal law enforcement agencies, as well as financial institutions or private individuals who uncover borrower misconduct to recover the lending program’s damages.”

The resolution obtained in this case was the result of a coordinated effort by the United States Attorney’s Office for the Middle District of Florida and the Small Business Administration. The matter was handled by Assistant U.S. Attorney Kelley Howard-Allen, with assistance from the Small Business Administration - Office of General Counsel. 

The claims resolved by the settlement are allegations only and there has been no determination or admission of liability by VNB.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The task force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

Tips and complaints from all sources about potential fraud affecting COVID-19 government relief programs can be reported by visiting the webpage of the Civil Division’s Fraud Section, which can be found here. Anyone with information about allegations of attempted fraud involving COVID-19 can also report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.