PNC Bank to pay $7.1M settlement over bad SBA loans
PNC Bank has agreed to pay $7.1 million to settle Department of Justice claims that it failed to do its homework on a series of government-backed loans that went bad.
In addition to the payment, Downtown-based PNC agreed to take “corrective action to prevent similar occurrences in the future,” the Justice Department said in a statement on Friday.
“The government will pursue vigorously lenders that fail to adequately safeguard public funds due to deficient lending standards,” Stuart Delery, principal deputy assistant attorney general for the department's civil division, said in the statement.
PNC spokesman Fred Solomon declined to comment, citing the bank's practice of not discussing litigation.
The Justice Department noted the claims against PNC were allegations and that there had been “no determination of liability.”
PNC in 2005 issued 64 loans, guaranteed by the Small Business Administration, for the purchase of 98 Uni-Marts stores in the Mid-Atlantic region, the government said.
The SBA guaranteed 75 percent of the value of the loans. The Justice Department did not provide a total value for the loans.
Officials in the department's press office could not be reached for comment.
PNC relied on unaudited financial statements in making the loans and did not try to verify the accuracy of the statements, the government alleged. Eventually, 36 of the loans defaulted and the SBA paid PNC 75 percent of the balances of the bad loans.
In May 2008, Uni-Marts filed for Chapter 11 bankruptcy protection, the department said.
Alex Nixon is a staff writer for Trib Total Media. He can be reached at 412-320-7928 or firstname.lastname@example.org.