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 [email protected] or (410) 960-1779.
SOURCE Rifkin Weiner Livingston LLC