KeyBank to Pay $7.77 Million to Settle PPP Fraud Allegations

Core Viewpoint - KeyBank will pay $7.77 million to settle allegations of seeking forgiveness for fraudulent loans from the Paycheck Protection Program (PPP) during the pandemic [1]. Group 1: Settlement Details - The settlement includes nearly $6 million in Small Business Administration loans, with allegations that a branch manager encouraged business owners to submit inflated loan applications regarding payroll expenses and employee numbers [3]. - The total settlement amount comprises $6.2 million in restitution [4]. - KeyBank did not admit wrongdoing and cooperated with the investigation [4]. Group 2: Legal Proceedings - The branch manager, Tommy Hawkins, pleaded guilty to a bank conspiracy charge and was sentenced to 65 months in prison in 2024 [5]. - Hawkins assisted individuals in submitting PPP loan applications that contained false information about employee numbers and payroll expenses, leading to the approval of at least 38 loans totaling approximately $5 million [6]. Group 3: Broader Context - As of November 2020, hundreds of investigations into PPP loan fraud were underway, with 73 defendants charged by the Justice Department [7]. - The U.S. Secret Service reported that criminals had misappropriated about $100 billion in pandemic relief funds [7].