Lender Agrees To Pay $26.2 Million To Settle Allegations That It Submitted False Claims For Payment To The Government In Connection With SBA Loan Programs

On May 6, 2010, the U.S. Department of Justice announced that it had entered into a settlement agreement with Ciena Capital LLC, a private lender located in New York City, to resolve allegations in a lawsuit brought under the False Claims Act that the company submitted false claims for payment on loans backed by the Small Business Administration (SBA).  The SBA provides financial aid to small businesses by guaranteeing as much as 85% of the value of loans made by private lenders.  According to the lawsuit, Ciena falsely certified that it had complied with SBA regulations when it submitted claims for payment on loans the company underwrote.  A number of the loans defaulted shortly after they were made as a result of Ciena’s failure to comply with SBA regulations and underwriting requirements.

The qui tam lawsuit was filed on behalf of the Government by a whistleblower.  The whistleblower received a $4.3 million share of the settlement as a reward for disclosing the fraud to the Government.

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