Quantcast

SOUTHEAST TEXAS RECORD

Saturday, November 2, 2024

Lawsuit: JPMorgan Chase gave preferential treatment to large clients seeking PPP loans

Lawsuits
General court 10

shutterstock.com

CHICAGO – JPMorgan Chase gave preferential treatment to large commercial  banking clients seeking emergency loans through the Paycheck Protection Program (PPP) at the expense of smaller businesses, according to a  proposed class-action lawsuit filed Wednesday that will be the subject of a consolidation hearing today by a Joint Panel on Multistate Litigation.

According to the lawsuit filed by Dallas-based Fears Nachawati Law Firm on behalf of Illinois technology company Ajira AI LLC, Chase and other banks  participating in the Small Business Administration’s Paycheck Protection  Program became key gatekeepers in the disbursement of nearly $349  billion in pandemic-related financial aid for businesses. The program  awarded participating banks with an origination fee based on a  percentage of the value of each loan they processed. 

According  to published reports, nearly all of Chase’s private and commercial  banking clients who applied for a PPP loan received one, while only  about 1 out of 15 smaller businesses that sought loans was successful.  While small companies struggled to navigate glitches in the Chase  website, larger businesses received individualized personal attention,  according to the lawsuit. Chase ultimately awarded $14 billion in loans –  the most of any bank participating in the PPP program.

“Small  companies like Ajira AI deserved a fair chance for emergency funding to  avoid layoffs and save their businesses,” said Fears Nachawati trial  lawyer Matthew McCarley. “Instead, they were victims of a two-tiered system that processed loans for favored customers first.”

Ajira  AI applied for a $30,000 PPP loan through Chase on April 7. The company  was informed on April 17 that the funds had been exhausted. The company  later provided additional information when funding was replenished, but  that application was denied because bank representatives wrongly  rejected it for lacking documentation. 

The  lawsuit seeks damages for negligence, fraudulent concealment, tortious  interference and unfair and deceptive business practices. Since similar  lawsuits have been filed on behalf of other small businesses, Mr.  McCarley said those lawsuits should be consolidated so that they can  move through the courts more efficiently for all parties.

The case is Ajira AI LLC et al. v JPMorgan Chase Bank,  Cause No. 20-CV-04428, in the U.S. District Court for the Northern  District of Illinois, Eastern Division. In addition to Fears Nachawati,  Ajira is represented by Chicago-based Khowaja Law Firm.

Dallas-based  Fears Nachawati Law Firm represents individuals and businesses in cases  involving environmental and water contamination litigation, public  entities, private entities, mass torts, drug and medical device cases,  wrongful death, and products liability. For more information, visit https://www.fnlawfirm.com

ORGANIZATIONS IN THIS STORY

More News