June 17, 2021

Volume XI, Number 168

Advertisement

June 16, 2021

Subscribe to Latest Legal News and Analysis

June 15, 2021

Subscribe to Latest Legal News and Analysis

June 14, 2021

Subscribe to Latest Legal News and Analysis

DOJ Investigates FinTechs Over PPP Loan Miscalculations

According to Reuters, the civil division of the U.S. Department of Justice (DOJ) is investigating several FinTech companies, including Kabbage Inc., to determine if the firms miscalculated the amount of aid owed to individual borrowers during the distribution of Paycheck Protection Program loans.

The Paycheck Protection Program (PPP) relied on banks, FinTechs and community lenders to distribute $780 billion of forgivable government-backed loans to small businesses who maintained their payrolls.  PPP participant lenders, however, faced widespread confusion over how to account for payroll taxes in the calculation of the loans, with some lenders over-accounting for taxes and thus inflating the loans, while others under-accounted taxes, thus denying borrowers aid to which they were entitled.

Fintech lenders, who issued around $26.6 billion worth of PPP loans, have attracted particular scrutiny from the DOJ over these miscalculations. According to Reuters’ sources, the industry’s use of high-speed software and automated lending platforms to process and approve PPP loans—which received few manual checks and was prone to software glitches—exacerbated loan errors by replicating miscalculations across thousands of loans. The DOJ is examining these possible errors.

While it is unclear whether the investigation will result in penalties against these companies, the probes highlight the unique legal and regulatory risks faced by the FinTech industry.

Copyright ©2021 Nelson Mullins Riley & Scarborough LLPNational Law Review, Volume XI, Number 133
Advertisement
Advertisement
Advertisement

TRENDING LEGAL ANALYSIS

Advertisement
Advertisement
Advertisement

About this Author

Matthew G. Lindenbaum Financial Litigation Attorney Nelson Mullins
Partner

Matthew represents companies in high-stakes litigation with an emphasis on class action defense in the automotive and financial services industries, including the emerging crypto-currency industry. He also defends companies and individuals in government investigations and enforcement actions involving the United States Department of Justice, the Securities and Exchange Commission, and conducts internal investigations for companies and special board committees.

Matthew is the leader of Nelson Mullins’ Boston Litigation Team and has been...

617-217-4632
Robert L. Lindholm White Collar Defense Lawyer Nelson Mullins
Partner

Rob focuses his practice on government investigations and white collar defense, high stakes business litigation and class action defense, and e-discovery and litigation readiness. He represents financial institutions, Fortune 500 companies, private equity firms, hedge funds, and companies/individuals involved in the cryptocurrency industry in a wide array of internal/government investigations and commercial litigation.

704.417.3231
Robert Bob McGahan White Collar Defense Attorney Nelson Mullins Law Firm
Partner

Bob represents business entities and individuals in government enforcement, white collar criminal defense, and high-exposure civil litigation matters. A former federal prosecutor and experienced trial lawyer, for nearly 30 years Bob has successfully represented “C-suite” executives and Fortune 50 companies in some of the most prominent enforcement and litigation matters throughout the country. He has been recognized as one of the “Top 100 Lawyers in California” by the Los Angeles Daily Journal and was a recipient of the Attorney General’s Award for Fraud Prevention, one of the U.S...

202-689-2860
Melanie Todd Govt Investigations Attorney Nelson Mullins Law Firm
Partner

Melanie focuses her practice on internal and governmental inquiries and investigations, high-stakes litigation, and risk counseling and assessments, focusing on the life sciences and financial services industries. Melanie also assists companies with commercial disputes and advises private and governmental entities on issues related to litigation prevention, governance, data privacy, and emerging life sciences technologies.

617-217-4629
Advertisement
Advertisement