Bankrupt lender Kabbage, Inc. d/b/a KServicing, has agreed to resolve allegations that it knowingly submitted thousands of false claims for loan forgiveness, loan guarantees, and processing fees to the U.S. Small Business Administration (SBA) as part of the Paycheck Protection Program (PPP), in violation of the False Claims Act (FCA).
Kabbage is now winding down its operations as KServicing Wind Down Corp. after filing for Chapter 11 bankruptcy in the District of Delaware in October 2022. The resolution consists of two separate settlements with KServicing Wind Down Corp., that together provide the United States with an allowed, unsubordinated, general unsecured bankruptcy claim for recovery of up to $120 million. The amount the government will recover on this claim will depend on the ultimate amount of assets available to the bankruptcy estate for distribution to unsecured creditors.
“When the nation was facing a pandemic-induced crisis, Kabbage received tens of millions of dollars through the PPP to help lend taxpayer funds to businesses in need. Instead of safeguarding those funds, Kabbage doled out inflated and fraudulent loans, in an effort to maximize its profits,” said Acting United States Attorney Joshua S. Levy for the District of Massachusetts. “Then, Kabbage sold its assets and left the remaining company so low on cash that it ultimately went bankrupt, leaving taxpayers exposed to the risk of loss caused by Kabbage’s conduct. This office will continue pursuing any company or individual, like Kabbage, that took advantage of the PPP.”
Full story:
So many corrupt executives