The settlement involved nearly $6 million of Small Business Administration loans that a branch manager employed by the bank allegedly secured by encouraging business owners to submit loan applications in which they overstated the amount of their payroll expenses and the number of people they employed, Reuters reported Wednesday (Jan. 7), citing the U.S. Attorney’s Office in New Jersey.
KeyBank did not admit wrongdoing in the settlement, and it cooperated with the government’s investigation, according to the report.
The settlement includes $6.2 million in restitution, per the report.
KeyBank did not immediately reply to a PYMNTS request for comment sent outside of business hours.
According to the Reuters report, the branch manager in this case, Tommy Hawkins, who held that post at a Conshohocken, Pennsylvania, branch, pleaded guilty to a bank conspiracy charge and received a 65-month prison sentence in 2024.
Law360 also reported on the settlement.
The U.S. Attorney’s Office in New Jersey announced Hawkins’ guilty plea in a May 2024 press release, without naming the national financial institution for which he managed a branch in Conshohocken.
The release said: “Hawkins helped the recruited individuals submit PPP loan applications that contained materially false representations about the companies’ number of employees and payroll expenses. The applications also included false documentation, including tax forms. Based on these applications, Hawkins’ bank approved at least 38 PPP loans and disbursed approximately $5 million.”
It added that Hawkins received compensation through the bank for opening the business bank accounts and had agreements with some of the recruited individuals in which they would pay him part of the loan proceeds.
It was reported in November 2020 that hundreds of probes into PPP loan fraud had been opened, that the Justice Department had charged 73 defendants with fraud related to PPP, and that the government’s ability to follow up on allegations of PPP fraud would affect how much the program would cost taxpayers.
PYMNTS reported in December 2021 that the U.S. Secret Service said criminals had made off with about $100 billion in pandemic relief monies.