A Buffalo Grove accounting firm has launched a class action in federal court, accusing Fifth Third Bank of allegedly stiffing it and other accountants and agents the fees they said the bank owes them for helping to prepare and process applications under the federal COVID-19 business loan program.
On July 29, attorney Jonathan D. Selbin and others with the firm of Lieff Cabraser Heimann & Bernstein, of New York and offices elsewhere in the U.S., filed suit in Chicago federal court against Fifth Third Bank.
According to the lawsuit, Fifth Third Bank has loaned out more than $5 billion of funds to employers throughout its service area under the federal so-called Paycheck Protection Program.
Created by Congress in response to the economic devastation wrought by the onset of the COVID-19 pandemic, and the stringent state and local government response to the disease outbreak, the program was designed to prevent even worse economic devastation by distributing money in the form of mostly forgivable loans to employers to reduce the needs for layoffs and job cuts.
The loans were designed to be processed by banks throughout the country, who would collect fees from those loans.
According to the complaint, the legislation also included provisions requiring banks to pay the fees of accountants, attorneys, financial advisors and others who assisted businesses and employers in applying for the loans.
According to the complaint, these fees should amount to 1% for loans less than $350,000; 0.5% for loans between $350,000 and $2 million; and 0.25% for loans of more than $2 million.
According to the complaint, the legislation required those preparation assistance fees to be paid out of funds the banks processed through the federal Small Business Administration.
The complaint, however, accused Fifth Third of instead allegedly pocketing those fees themselves, amounting to at least “tens of millions of dollars.”
“Fifth Third has refused to pay the agents,” the complaint said. “This refusal is a company-wide policy. In response to an email request to describe the process for Plaintiff to be paid agent fees, a Fifth Third representative responded, ‘Under NO circumstances will the bank pay agent fees for PPP.’ (emphasis in original).
“Fifth Third’s stated policy directly conflicts with the instructions the SBA provided for lenders regarding the payment of agent fees. Instead of distributing the funds the SBA provided Fifth Third for the payment of agents, Fifth Third has decided to keep all of the money for itself.”
According to the complaint, Picker and Associates claims it has been shorted $11,000 for its work in processing two PPP loan applications through Fifth Third.
Picker and their attorneys are seeking to expand the action to include a class of additional plaintiffs across the U.S., which would include any agent which assisted employers in securing PPP loans through Fifth Third. The complaint estimates this could include thousands of potential additional class members.
The complaint is seeking unspecified damages, including “all economic, monetary, actual, consequential, compensatory, and punitive damages available under the law” allegedly caused by Fifth Third’s alleged conduct.
They are also seeking attorney’s fees.