COVID-19

January 24, 2023

Popular Bank was fined $2.3 million by the Federal Reserve Board following an investigation into its processing of Paycheck Protection Program loans.  Popular Bank was approved as a PPP lender by the Small Business Administration, and was required to follow the Bank Secrecy Act and program guidelines, including verification of customer identity and the documentation, investigation, and reporting of suspicious activities.  The Board’s Consent Order found that in August 2020, the Bank processed and funded six PPP loans, totaling approximately $1.1 million, despite having detected that the loan applications contained significant indicia of potential fraud.  The Bank self-reported to the Board.  Fed

December 20, 2022

Following his conviction on charges related to his direction of a Ponzi scheme and the fraudulent sale of purported N95 masks during the pandemic, Christopher Parris was sentenced to 20.3 years in prison.  In the Ponzi scheme, which collapsed in 2018, Parris and co-conspirators – including Perry Santillo, obtained at least $115.5 million from approximately 1,000 investors, with claims that they were investing in a diversified investment portfolio when, in fact, very little investor money was deployed in productive investments.  Parris also pleaded guilty to charges that he defrauded the U.S. Department of Veterans’ Affairs and others between February and April, 2020, by falsely representing that he was able to obtain brand-name N95 masks directly from authorized sources in the United States, when in fact, he had no ready access to such masks or other PPE.  Parris obtained upfront payments totaling approximately $7.4 million from at least eight clients, knowing that he had no access to or ability to obtain or deliver the PPE.  DOJ; USAO WD NY

July 14, 2022

Bank of America will pay fines totaling $225 million to following federal investigation into its administration of state unemployment insurance and other public benefit programs, which it provided pursuant to contracts with 12 states to deliver benefits through prepaid debit cards. When demand for benefits surged with the COVID-19 pandemic, the Bank adopted automated fraud detection practices which it the government alleged it knew or should have known would lead to its incorrectly freezing or blocking accounts. The CFPB and OCC found that the Bank imposed unreasonable barriers that made it difficult for people to report fraudulent use of their cards or unfreeze their prepaid debit cards, and failed to establish adequate operational processes, risk management, and internal controls. In addition to the penalties – $100 million imposed by the CFPB and $125 million imposed by the OCC – the Bank was ordered to provide redress to consumers and take corrective action with respect to its oversight over the programs.  CFPB; OCC

May 31, 2022

Healthcare company SCWorx Corp. has agreed to resolve SEC charges that it made false and misleading statements in an April, 2020 press release, claiming in a press release that it had received a purchase order for millions of COVID-19 rapid test kits.  The announcement caused the company’s stock price to surge, but the SEC alleged that the company had neither a legitimate supplier of COVID-19 test kits nor an executed purchase agreement with a buyer.  When the true facts became public, investors lost at least $116 million.  The company has agreed to pay a civil penalty of $125,000 and contribute stock valued at $600,000 as disgorgement and prejudgment interest to harmed investors in a private class action.  The company’s former CEO, Marc Schessel, has been indicted for securities fraud with respect to the scheme.  SEC; USAO NJ