Six Former Bank Employees Banned over Covid Loan Fraud

Six former banking employees have been banned from working in the industry again after they each fraudulently obtained loans or grants through the US’s national Covid-19 support system.

According to a notice published by the Federal Reserve, four employees of Regions Bank and two from Merrill Lynch Wealth Management defrauded the federal government of $88,900 by submitting false claims under the Coronavirus Aid, Relief and Economic Security (CARES) legislation.

The six staffers applied for economic injury disaster loans, or EIDLs, which were designed for small businesses and administered by the Small Business Administration to mitigate the effects of the Covid-19 pandemic.

The Federal Reserve said Regions Bank’s Tracy Mallory, formerly a branch manager in Albany, Georgia, obtained a total of $21,600 through two applications “based on materially false and fraudulent representations”.

Manuel Pinazo, who worked for Merrill Lynch Wealth Management in Miami, Florida, obtained $20,000 through an EIDL, while fellow Merrill Lynch staffer Autumn Jordan, based in Jacksonville, claimed $9,000.

Former Regions Bank financial relationship consultant Dedryck Carson, based in Birmingham, Alabama, secured a $10,000 EIDL.

Michael Lemley, a former Regions Bank branch manager in Keller, Texas, obtained a $12,500 EIDL, while Wendy Rodriguez Legon, a former Miami-based financial relationship specialist for the same bank, claimed a $15,800 EIDL.

The Federal Reserve said each of the individuals had submitted the claims based on “materially false and fraudulent representations and used these funds for personal and other unauthorized expenses in violation of the terms of the EIDL and applicable laws and regulations”.

There is no suggestion that the individuals acted together in any way.

While the CARES Act — introduced in 2020 — helped millions of Americans negatively impacted by the pandemic through loan programs such as the EIDL and the Paycheck Protection Program, the Small Business Administration’s Office of Inspector General estimates that the agency handed out more than $80 billion in potentially fraudulent loans during the crisis.

The Department of Justice has launched a Covid-19 Fraud Enforcement Task Force to coordinate enforcement with other agencies.