Greathouse v. Capital Plus Financial LLC
(4:21-cv-01243)
District Court, E.D. Arkansas
DEC 29, 2021 | REPUBLISHED BY LIT: JAN 4, 2022
Assigned to Snr Federal Judge:
Scott County native Billy Roy Wilson is a raconteur, a mule and guinea fowl farmer, and a longtime civil and criminal defense attorney. In 1993, he began serving as U.S. District Judge for the Eastern District of Arkansas. In 2008, he chose to go on senior status designation, maintaining a ninety percent case load.
LENDER COMMISSIONS AND FEES FOR PPP LOAN APPLICATIONS
For their participation, the PPP originally provided that lenders would receive fees at a rate of five percent for loans $350,000.00 or less, three percent for loans between $350,000.00 and $2,000,000.00, and one percent for loans over $2,000,000.00.
To address institutional lenders’ neglect of PPP loan applications from many small businesses — especially minority, underserved, veteran, and women-owned businesses — in favor of larger PPP loans, the Economic Aid Act added that lenders processing loans ofup to $50,000.00 would receive an increased fee of fifty percent or $2,500.00, whichever is less, per PPP loan beginning December 27, 2020.
As the vast majority of PPP loans — even those to the smallest businesses and sole proprietors — exceeded $5,000.00, PPP lenders received a flat fee of $2,500 for virtually every PPP loan less than $50,000.00.
Once a PPP loan was funded, the lender had ten days to submit an SBA Form 1502 to report to the SBA that the loan proceeds had been disbursed. After the lender submitted a Form 1502, the SBA would initiate payment of the processing fee to the lender.
By submitting a Form 1502, the lender represented to the SBA that the PPP loan had been fully funded. Further, a lender was required to update the SBA with monthly Form 1502 reports detailing each PPP loan’s status.
THE OVER-CAPITALIZED SPECIAL CASH DIVIDEND PAYOUT DUE TO SURGE IN FEE INCOME FROM PPP LOAN APPLICATIONS
Crossroads, Chairman Alpert received $59,691,400 in cash from the special dividend; Crossroads’s and CPF’s dual CEO Donnelly received $90,227,080; and Alpert, Donnelly and other corporate insiders and directors collectively received $157,696,080 of the approximately $238.9 million total special dividend.
PPP LENDERS RAKING IN FEE INCOME REDEFINES THEIR P&L
On December 14, 2021, Crossroads issued a news release reporting its fiscal year 2021 financial results.
In that news release, Crossroads stated that its total fiscal year “revenues increased 2,446% to $932. 7 million, up from $36.6 million in the comparative 2020 period”;
that “removing PPP impact from the year’s operations, total revenues were $34.9 million compared to $36.6 million in 2020”;
that “operating income increased 4,127% to $243.4 million, up from $5.8 million in 2020”;
that “the substantial increase in operating income was primarily due to origination fees associated with the Company’s participation in the PPP loan program”;
and that
“cash EPS (operating income less income to non-controlling interests) was $36.19, which was a 4,820% increase compared to $0.74 during the same period in 2020.”
THE FRAUDULENT RECEIPT OF PAYMENT FOR FUNDS WHICH WERE CLAIMED TO BE DISBURSED, BUT CLEARLY WERE NOT FUNDED
“Capital Plus Financial has kept hundreds of people’s PPP loans that were already approved by the SBA.” -Consumer Financial Protection Bureau ComplaintDatabase, Complaint No. 4409176, May 26, 2021.
THE SHOCKING THREATS IN VIOLATION OF FEDERAL LAWS
CPF has reportedly received many complaints about its failure to fund SBAapproved PPP loans. In fact, CPF states as follows on its website:
NOTICE CONCERNING THREATENING OR HARASSING COMMUNICATIONS
The partnership of Capital Plus Financial and Blue Acom has successfully served hundreds of thousands of individuals and small businesses through the funding of Paycheck Protection Program (PPP) loans.
Feedback from customers is always appreciated. Customer service remains our top priority.
However, we will not tolerate any threatening or harassing actions or communications from customers in any form.
Any communication from an applicant we deem threatening, harassing or intimidating will result in the immediate withdrawal of the loan.
Additionally, we will pursue all available criminal and civil legal avenues to defend and protect our companies and our associates.
Our team includes former federal agents and prosecutors. We are working closely with federal, state, and local law enforcement to identify and prosecute those who would make threats against our companies or our associates. We will pursue these options to the fullest extent of the law.
See https://capitalplusfin.com/home/ (visited Dec. 26, 2021)
Dirty Deals: Austin Car Dealer and Businessman Bryan Hardeman’s Arrest on Suspicion of Arson
The same Hardeman who made a statement on video at Nate Paul’s auction “go find a court in this building to stop this”.
PPP Loan Fraud in The State of Thieves, Texas
A Texas man, Dinesh Sah was sentenced today to more than 11 years in prison in connection with his fraudulent PPP loan applications.
Greedy Texas Auto Dealer Expected to End Up in Jail for a Very Long Time
Reagor Dykes Auto Group owner Bart Reagor convicted of lying to a bank about his company’s prospects and pocketing much of the loan capital.
U.S. District Court
Eastern District of Arkansas (Central Division)
CIVIL DOCKET FOR CASE #: 4:21-cv-01243-BRW
| Greathouse v. Capital Plus Financial LLC et al Assigned to: Judge Billy Roy Wilson Cause: 28:1332 Diversity-Contract Dispute |
Date Filed: 12/29/2021 Jury Demand: Plaintiff Nature of Suit: 140 Negotiable Instrument Jurisdiction: Diversity |
| Plaintiff | ||
| Eric Greathouse Individually and on behalf of all others similarly situated |
represented by | Bart D. Cohen Bailey & Glasser LLP 1055 Thomas Jefferson Street NW Suite 540 Washington, DC 20007 202-463-2101 LEAD ATTORNEY ATTORNEY TO BE NOTICEDJustin A. Heller Nolan Heller Kauffman LLP 80 State Street 11th Floor Albany, NY 12207 518-449-3300 LEAD ATTORNEY ATTORNEY TO BE NOTICEDKatherine Church Campbell Friday, Eldredge & Clark, LLP 3350 South Pinnacle Hills Parkway Suite 301 Rogers, AR 72758 479-695-6040 Email: kcampbell@fridayfirm.com LEAD ATTORNEY ATTORNEY TO BE NOTICEDLawrence J. Lederer Bailey & Glasser LLP 1055 Thomas Jefferson Street NW Suite 540 Washington, DC 20007 202-463-2101 LEAD ATTORNEY ATTORNEY TO BE NOTICEDMarshall S. Ney Friday, Eldredge & Clark, LLP 3350 South Pinnacle Hills Parkway Suite 301 Rogers, AR 72758 479-659-6049 Fax: 501-244-5389 Email: mney@fridayfirm.com LEAD ATTORNEY ATTORNEY TO BE NOTICEDMatthew M. Zapala Nolan Heller Kauffman LLP 80 State Street 11th Floor Albany, NY 12207 518-449-3300 LEAD ATTORNEY ATTORNEY TO BE NOTICEDMichael L. Murphy Bailey & Glasser LLP 1055 Thomas Jefferson Street NW Suite 540 Washington, DC 20007 202-463-2101 LEAD ATTORNEY ATTORNEY TO BE NOTICED |
| V. | ||
| Defendant | ||
| Capital Plus Financial LLC | ||
| Defendant | ||
| Crossroads Systems Inc | ||
| Date Filed | # | Docket Text |
|---|---|---|
| 12/29/2021 | 1 |
COMPLAINT – CLASS ACTION with Jury Demand against All Defendants, filed by Eric Greathouse. Summons issued and returned to counsel. (Fee of $402. Receipt Number LIT085022.) (Attachments: # 1 Civil Cover Sheet) (jbh) (Entered: 12/29/2021) |
Vines v. Welspun Pipes Inc
(4:18-cv-00509-BRW)
District Court, E.D. Arkansas
A federal appeals court has vacated a federal judge’s $1 attorney fee award to a law firm that he thought was engaged in “incorrigible practices.”
The 8th U.S. Circuit Court of Appeals at St. Louis said U.S. District Judge Billy Roy Wilson of the Eastern District of Arkansas should have calculated lodestar attorney fees before reducing the award to the Sanford Law Firm, report Reuters and Bloomberg Law.
The lodestar is calculated by multiplying the reasonable number of hours worked by the prevailing hourly rate.
The judge had the authority to reduce the award for unprofessional conduct, but it shouldn’t be considered until after the lodestar calculation, the appeals court said in its 2-1 decision.
“Based on the record before us, it is unlikely that a $1.00 attorneys’ fee is reasonable,” Chief Judge Lavenski Smith wrote for the majority. “The plaintiffs obtained an almost $270,000 settlement, and SLF likely performed some reasonably expended hours.”
The law firm had represented Anthony Vines and Dominique Lewis in an overtime suit against Welspun Pipes Inc. and other Welspun companies. The company had agreed to pay $96,000 in attorney fees and an estimated $270,000 settlement.
Wilson sent the parties back for new negotiations because they had failed to negotiate attorney fees separately from the settlement. The parties returned with the same settlement amount and no agreement on attorney fees. The law firm again sought $96,000.
Wilson awarded only $1 in attorney fees after concluding that the law firm overstaffed the case and performed very little legal work, according to prior coverage by Law360 and the Arkansas Democrat-Gazette.
Wilson said he came to the conclusion after considering the firm’s “incorrigible practices” and the “attempted extortion of $96,000 in unearned fees” from the company during the simultaneous fee and damages negotiations.
Dissenting 8th Circuit Judge Steven Colloton would not have disturbed the $1 fee award.
The basic problem, Colloton said, is that there is a significant conflict of interest between a lawyer and client when the lawyer negotiates a settlement with an employer while at the same time negotiating fees.
An employer is looking only at the total payout, and “there is little to deter plaintiffs’ counsel from urging ‘settlement at a low figure or on a less-than-optimal basis in exchange for red-carpet treatment on fees,’” Colloton wrote, citing a decision by another federal appeals court.
LIT UPDATE: It’s on appeal again as the judge reaffirmed his order on remand….
