On September 28, 2018, the United States Attorney’s Office for the Northern District of California (USAO) announced a civil settlement with an online peer-to-peer lender over allegations that it made false statements to its loan originator, resulting in the origination of over 200 loans to consumers who did not satisfy the originator’s credit requirements. Under the lender’s agreements with its loan originator, the lender represented that all information in the borrower’s application was true and correct, to the best of its knowledge, and that each borrower was eligible for a loan. The lender allegedly implemented a program whereby the applications of consumers who did not meet its originator’s credit requirements and were declined by the lender were re-reviewed by the lender’s executive management team and approved. The USAO alleged that these actions constituted false statements, and were violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), which authorizes the federal government to seek civil penalties for false statements and fraud concerning federally insured financial institutions.
The lender agreed to pay a civil penalty of $2 million to resolve the allegations without any admission of liability.