NY Lender Pays $26.3 Mil Settlement on SBA Loans
Ciena Capital LLC has agreed to settle fraud claims with the United States Department of Justice for $26.3 million. It is alleged that Ciena Capital and a subsidiary submitted false claims for payment on loans which were made through the Small Business Administration. Ciena Capital, LLC has been in bankruptcy since 2008 and the settlement must be approved by the Bankruptcy Court.
The lawsuit was filed by James R. Brickman and Greenlight Capital Inc., under the whistleblower provisions of the False Claims Act. Under the False Claims Act, Brickman and Greenlight Capital will receive $4.3 million as their share of the government's recovery.
The United States Department of Justice issued a press release on the settlement stating,
[We] will not tolerate fraud in lending programs designed to assist small businesses, which are so vital to our nation's economy, said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. We will pursue those who seek to take unfair advantage of programs designed to help people start a business and earn a living.
The settlement includes a credit for over $18 million which had already been paid to the Small Business Administration. The general counsel for the Small Business Administration was pleased with the settlement.
As a result of strong collaboration between SBA's attorneys, the SBA Office of Inspector General, the Justice Department and the U.S. Attorney's Offices in Atlanta and New York, we have recovered a significant amount of the loan loss stemming from Ciena's operations, SBA General Counsel Sara Lipscomb said. The size of these payments sends a strong message that the government will not tolerate fraud, waste or abuse of SBA programs, said SBA Inspector General Peggy E. Gustafson.
Related Resources:
- New York Small Business Lender to Pay U.S. $26.3 Million to Resolve False Claims Act Allegations (Department of Justice)
- Small Business Lender to Pay U.S. $26.3 Million in False Claims Act Action (SmallBusinessTrends.com)
- False Claims Act (FindLaw)
- American Small Business League Calls out Obama (FindLaw's Free Enterprise)
- Awards in Qui Tam Actions (FindLaw)
- False Claims Act FAQs (provided by Begelman, Orlow & Melletz, Attorneys at Law)
- Whistleblower FAQ (provided by Rawls, Dickinson & Scheer, P.A.)