Warren warns Biden administration on PPP fees

Sen. Elizabeth Warren is pressing the Biden administration to explain the extent to which accountants and lawyers who helped businesses receive aid under the Paycheck Protection Program may have been shortchanged for their services.

Warren in a June 14 letter to the Small Business Administration, obtained by POLITICO on Wednesday, raised concerns about “contradictory guidance” from the agency that may have prevented businesses from receiving fees for helping employers file applications with banks for forgivable loans under the nearly $1 trillion rescue program. Warren’s office has not yet received a response from the SBA. The agency did not respond immediately to a request for comment on the letter.

The fee dispute, which also has been the subject of litigation, is the latest concern that Warren has raised about how the PPP was carried out. She earlier called on government watchdogs to investigate whether large companies got more money than they deserved.

The program, which has had broad, bipartisan support, was first enacted in March 2020 as a way to keep workers attached to their jobs. The PPP allowed banks to issue government-backed loans that could be forgiven if businesses maintained their payroll. Banks receive fees for their role. The program closed to new applicants in late May.

In her June letter to the SBA, Warren referenced a class action suit filed by American Video Duplicating Inc. against Citigroup, Wells Fargo, Bank of America and other lenders that alleged “that the banks have systematically failed to pay to agents of borrowers — in most cases accountants — their share of the processing fees established under the program, stiffing agents out of an average of $22,000.” A Bank of America spokesperson noted that all litigation on the issue, including this suit, has ended, citing the December legislation that led to many PPP disputes being resolved. The other banks mentioned did not immediately respond to requests for comment about the suit.

Warren cited initial SBA rules that the so-called agent fees would be paid by the lender followed by later rules that shifted the responsibility to borrowers.

Warren requested data on how many loan applications were submitted with the assistance of an agent and information on why the SBA changed its guidance — in addition to payments made to agents.

Ratliff CPA Firm filed a lawsuit in July 2020, on behalf of the SBA, against First-Citizens Bank & Trust Company, Intuit Inc. and Intuit Financing Inc., Pinnacle Bank and Truist Bank, with the stated purpose “to recover damages and civil penalties arising from a scheme to submit the actual submission of false claims for payment to the Small Business Administration.” A Truist spokesperson did not comment, saying the bank does not discuss pending litigation. The other defendants did not immediately respond to requests for comment.

The Department of Justice declined to join the suit in March.

Dick Harpootlian, co-counsel for Ratliff CPA Firm, said he made a presentation about the suit to both Warren’s office and the SBA in June, prior to Warren’s letter.

His presentation centered around the changing language surrounding the PPP, as banks were originally supposed to pay their agents, but this later caused confusion and was changed by law in December 2020 to say that borrowers were to pay the agents.

“And here’s the thing,” Harpootlian said, “no one will take credit for putting that in the bill… and again, who’s getting screwed? These small businesses that provided services in a very difficult time.”

Harpootlian said if there was a chance of anyone paying attention to the suit, he knew it would be Warren, which is why his team decided to present to her. “Whether it’s overdraft fees or any consumer protection from the banks, she’s been a champion,” he said.

In terms of how much has gone unpaid, Harpootlian in his presentation estimated that, as of Aug. 8, 2020, “given that many large banks refused to pay and given the volume of lawsuits filed, it seems reasonable to suppose that it exceeds $100 million.”

Marc Caputo contributed to this report.

Read Entire Article