Federal Reserve Bans Six Bankers for COVID-19 Loan Fraud

The Federal Reserve on Tuesday (April 5) banned six former bank employees, including two who had previously worked in Bank of America Corp.’s wealth management unit, for approving fraudulent loans for small businesses that needed a financial boost during the COVID-19 pandemic.

Autumn Jordan and Manuel F. Pinazo, who previously worked at Merrill Lynch Wealth Management, and Dedryck O. Carson, Wendy Rodriguez Legon, Michael T. Lemley and Tracy L. Mallory, who were at Regions Financial Corp., applied for assistance under one of the government’s pandemic relief programs “based on false and fraudulent representations and used the funds for unauthorized personal expenses,” the Fed said in handing down its lifelong bans from working in the industry, according to a Bloomberg report.

The bankers secured loans through the Small Business Administration’s COVID-19 Economic Injury Disaster Loan program. They didn’t admit or deny their involvement in the scheme as part of their punishment.

A representative for Bank of America declined to comment, and a Regions spokesman did not immediately respond to Bloomberg’s request for comment. Jordan said in a message that the actions alleged by the Fed were done “fraudulently in my name.” The other five people charged in the scheme either did not respond or could not be reached for comment.

Related: California Man Convicted for PPP Fraud, Money Laundering Scheme

In March, the U.S. Department of Justice said a California man was convicted by a federal jury of submitting fraudulent applications for funds from the Paycheck Protection Program (PPP) and money laundering.

The Paycheck Protection Program is a CARES Act program designed to provide small businesses with the funds to pay up to eight weeks of payroll costs and benefits. Fraudulent PPP loan submissions are not uncommon, and the New York Times reported in October that more than 15% of the program’s loans, totaling $76 billion, had at least one indication of potential fraud.

Robert Benlevi, 53, of Encino, California, submitted 27 PPP loan applications totaling $27 million to four different banks between April and June 2020 on behalf of eight companies he owned.

Benlevi’s companies were shown to have no employees or payroll expenses, while his fraudulent PPP applications falsely claimed that each of the companies had 100 employees and $400,000 in average monthly payroll costs.