A settlement has been reached to resolve False Claims Act allegations against Saehan Bank who is accused of misrepresenting or withholding information from the Small Business Administration (SBA).
The settlement resolves allegations that the California-headquartered bank misrepresented or withheld information to induce the SBA to fund a loan under the SBA’s 504 loan program, which offers small businesses long-term, fixed-rate financing to acquire major fixed assets for expansion or modernization.
Before finalizing a 504 loan, the SBA requires certain certifications regarding the borrower’s financial condition and ability to repay the loan. The government alleges that Saehan Bank falsely certified that the borrowers had experienced no adverse change in their financial circumstances since their initial loan application, even though the bank knew that the borrowers were facing serious financial difficulties. Relying on these alleged misrepresentations, the SBA approved the borrowers’ 504 loan. In addition to resolving its counterclaims against Saehan Bank, the United States obtained a default judgment on its cross claims against the borrowers, who never made any payments on the loan.
