ANNAPOLIS, Md., April 4, 2020 /PRNewswire/ -- Rifkin Weiner
Livingston LLC filed an amended complaint against Bank of America
today for prioritizing its lending clients and denying or
restricting access to the PPP Program to its depository clients and
other small businesses. The complaint states that:
"With the outbreak of coronavirus disease 2019 ("COVID-19"), the
People of the United States face
the most severe national crisis of our time, which threatens the
shutdown of thousands upon thousands small business in this country
and thereby the collapse of our economy.
In response to this unprecedented crisis impacting every
American small business and the tens of millions of employees who
depend upon them, the federal government enacted emergency
legislation designed to assist America's small businesses in
keeping their doors open and their employees employed through the
crisis by creating a Payroll Protection Program ("PPP"), which
allows lenders to give federally backed and guaranteed loans to
protect payroll expenses and cost for two months. The loan pool,
however, is limited in size, and the PPP is run on a
first-come-first-served basis.
Instead of seeing this program as the relief for small
businesses that it is, Defendants Bank of America Corporation
("Bank of America") and Bank of America, N.A. ("BNA")
(collectively, "Defendants" or "BOA") instead privileged
discriminatory policies of corporate greed over the needs of
America's small businesses.
Authorized by Congress and the President under the Coronavirus
Aid, Relief, and Economic Security Act, H.R. 748 ("CARES Act") and
its loan programs to administer billions of dollars in federal
funding to small businesses in a fair, equitable and uniform
manner, Defendants initially implemented a loan process that
unlawfully prioritized their existing borrowing clients and barred
their depository clients and other small businesses from even
applying for funds from the governmental loan programs.
Following the filing of the Class Action Complaint in this
action, BOA revised its policy on April 4,
2020, by allowing depository-only clients to apply for PPP
loans but added an additional illegal requirement – that
depository-only clients have no credit card or loan with any other
bank.
Nothing in the CARES Act authorizes or permits Defendants to
pick and choose who would gain access to or benefit from the
federally backed lending program. And, the priority of access to
these limited "first come, first served" funds is material – the
demand is overwhelming as America responds to the economic tsunami
of COVID-19 upon small businesses. BOA had no legal authority under
the CARES Act to deny access, restrict or otherwise impede the
access of small businesses to these critically important
business-saving funds nor did BOA have the legal right or
justification to make certain classes of small businesses go to the
back of the line or be selectively denied access to the line at
all.
Named Plaintiff Profiles, Inc. ("Profiles" or "Named Plaintiff")
brings this action, on behalf of itself and all others similarly
situated, against BOA for violations of the CARES Act, violations
of the Small Business Administration's ("SBA") 7(A) loan program,
15 U.S.C. § 636(a), unjust enrichment, and a declaratory judgment
and a preliminary and permanent injunction pursuant to 28 U.S.C. §§
2201 and 2202.
The PPP, which is part of the $2
trillion stimulus package created by the CARES Act in
response to the COVID-19 pandemic that was signed in to law on
March 27, 2020, empowers lenders to
make available as much as $349
billion in government-guaranteed loans to cover eight weeks
of payroll and other expenses.
BOA – creating an improper and unlawful restrictions on PPP
loans – originally refused to accept PPP loan applications unless
the small business is an active borrower with BOA. After the filing
of the lawsuit, BOA has amended its policy and now illegally bars
PPP loans to depository-only clients who have a credit card or loan
with another bank. BOA is thus unlawfully prioritizing existing
customers who are active borrowers of BOA as of February 2020 or have no credit cards or debt
with any other financial institution.
Indeed, BOA has denied access to the PPP program to small
businesses that do not have a "lending" relationship with BOA.
Profiles, which has a depository relationship with BOA, was
prohibited by BOA from even applying for a PPP loan with BOA,
despite meeting the statutory requirements for a PPP loan.
Only after the filing of this lawsuit and being chastised by
prominent members of Congress did BOA make any adjustment to it
unlawful gating restrictions a day after prioritizing its lending
customers at the expense of all others small businesses, BOA
modified its application restrictions but continued to unlawfully
limit classes of applicants. On information and belief, BOA denied
PPP loans or chilled BOA clients and other small businesses from
applying to BOA for a small business loan based on the unlawful
requirement that the business have no credit card or debt with any
other financial institution.
The purpose and motivation behind BOA's discriminatory practice
is transparent – it is using the PPP as a credit enhancement – a
strategy for improving its own credit risk profile – by giving
priority to its clients with preexisting BOA debt at the expense of
small business customers who have lending relationships with other
banks.
Senators Marco Rubio (R.-Fla.)
and Ben Cardin (D.-Md.) have already
chastised BOA for imposing criteria not found in the law and
selectively choosing who can apply.
BOA's discriminatory practices are abhorrent and in violation of
federal law. In this time of national need, BOA's discriminatory
practices can only be described as corporate greed."
For the full complaint or for more details about the lawsuit,
contact Alan Rifkin, Rifkin Weiner
Livingston LLC, at arifkin@rwllaw.com or
(410) 960-1779.
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SOURCE Rifkin Weiner Livingston LLC