Banks Behaving Badly: Regions to Pay $4.9 Million Over Bogus PPP Loan Forgiveness

WASHINGTON — A major regional bank has agreed to pay nearly $5 million to settle allegations that it approved forgiveness for a Paycheck Protection Program loan that never should have qualified — a move that prosecutors say improperly enriched the lender at taxpayer expense.

Regions Bank, headquartered in Birmingham, Alabama, will pay the United States $4,919,631 to resolve civil claims that it received payments it was not entitled to after green-lighting forgiveness of a customer’s PPP loan, the Justice Department announced.

“The PPP was intended to provide critical assistance to eligible businesses during the economic uncertainty caused by the Covid-19 pandemic,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “The department is committed to ensuring that PPP lenders are held accountable for failing to comply with applicable program requirements, including approving forgiveness of PPP loans that were not eligible under program rules.”

The Paycheck Protection Program was created in March 2020 under the CARES Act to help small businesses stay afloat during the pandemic. Private lenders like Regions were authorized to approve loans backed by federal guarantees. Borrowers could later seek forgiveness — meaning the government would pay off the remaining principal and accrued interest — as long as the funds were used for payroll and other eligible expenses. Lenders also received origination fees based on a percentage of the loan amount.

But according to the government, on or about Aug. 3, 2021, Regions approved forgiveness for a PPP loan obtained by an individual customer, despite the fact that the loan was not eligible for forgiveness under program rules. The Small Business Administration (SBA) then paid Regions the forgiven balance, and the bank was “unjustly enriched,” the Justice Department alleged.

Regions has not admitted liability. The settlement resolves allegations only, and no determination of liability has been made.

War Tech for Sale: Two Defense Contractors Arrested in $1.25 Million Bribery Scheme Targeting Army Innovation Hub

HONOLULU — A Florida defense contractor and his co-conspirator allegedly turned a high-tech U.S. Army laboratory into a piggy bank — inflating government contracts by nearly $2 Million to secretly fund a five−year,1.25 million bribe for a corrupt Army employee, federal prosecutors announced Thursday.

Leonard Pick, 62, of Palm Beach Shores, Florida, and Brian Kent, 59, of Tampa, Florida, were arrested on criminal charges for orchestrating a bribery and major fraud conspiracy that corrupted the competitive bidding process for the U.S. Army Pacific Command’s Hawaii-Pacific Innovation Campus — a facility intended to test cutting-edge technologies for the Department of War.

The indictment, filed in the District of Hawaii on May 14 and unsealed today, alleges that from January 2021 to October 2022, Pick and Kent conspired to bribe a U.S. Army employee with approximately $1.25 million over five years. To hide the payments, they fraudulently inflated government contracting costs, prosecutors said.

But the scheme didn’t stop there. According to the indictment, Kent separately defrauded the government by padding contract costs to funnel roughly $680,000 in unauthorized payments to his personal consulting business between September 2020 and October 2022.

“When defense contractors obtain government-funded work through bribery and fraud, they rob our military and the American people of the benefits of a fair, competitive procurement process,” said Acting Deputy Assistant Attorney General Daniel W. Glad of the Justice Department’s Antitrust Division. “The Antitrust Division and its partners in the Procurement Collusion Strike Force will vigorously prosecute those that seek to profit at the expense of American taxpayers.”

The Hawaii-Pacific Innovation Campus was envisioned as a state-of-the-art hub for testing emerging technologies — from artificial intelligence to unmanned systems — to support U.S. military operations in the Pacific. Instead, prosecutors allege, it became a target for corruption.

“Government contracts must be awarded based on fair competition, not secret bribes hidden in inflated costs,” said Acting Director of Criminal Enforcement Paul V. Courtney. “Those who corrupt the procurement process and defraud the American taxpayer should know this: we will find you, prosecute you, and hold you accountable.”

Both defendants face a laundry list of felony charges. Pick and Kent are each charged with one count of conspiracy to commit bribery and major fraud, one count of bribery, one count of major fraud against the United States, and one count of wire fraud. Kent faces an additional count of major fraud.

The potential penalties are steep: up to 15 years for bribery, 10 years for major fraud, 20 years for wire fraud, and five years for the conspiracy charge — plus fines that could reach into the millions.

“Corruption in our military procurement processes harms honest companies seeking to compete fairly, steals from our taxpayers, and erodes faith in our government institutions,” said U.S. Attorney Ken Sorenson for the District of Hawaii. “We remain committed to holding accountable in federal court any defense contractors who attempt to undermine fair competition through bribery and corrupt practices.”

“The criminal conduct uncovered in this investigation represents a profound betrayal of the public trust,” said FBI Special Agent in Charge David Porter. “The defendants used bribery and fraud to obtain significant defense contracts, prioritizing personal profit over national security. Let this serve as a clear warning — the FBI and our federal partners will aggressively pursue and hold accountable anyone who attempts to corrupt government procurement processes for personal gain.”

For now, Pick and Kent face a federal district court judge, who will determine any sentence based on U.S. Sentencing Guidelines.

An indictment is merely an allegation. The defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.