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The Federal Reserve Sued a $4 Billion PPP Lender. Its Owner Settled, Then Became Ambassador to Peru.

The Reserve Bank's lawsuit against Bernardo "Bernie" Navarro and Benworth Capital ended in a confidential settlement three months before Navarro's Senate confirmation. The Fed alleged Benworth sent more than $50 million to a Puerto Rico LLC the Navarros created in 2021 and paid Navarro at least $49 million in dividends; Claudia Navarro later received a personal resident-investor decree.

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Bernardo "Bernie" Navarro, now U.S. Ambassador to Peru, settled a $66.98 million lawsuit with the Federal Reserve Bank of San Francisco in September 2025, on undisclosed terms, three months before the Senate confirmed him.1 The case, Federal Reserve Bank of San Francisco v. Benworth Capital Partners LLC et al. (D.P.R. 24-cv-01313, consolidated with 23-cv-01034), was filed by the Reserve Bank in July 2024.2 The Reserve Bank declined to comment to the Miami Herald.3

Navarro's Senate nomination paperwork lists him as "Bernardo Navarro, of Puerto Rico."4 The Reserve Bank's lawsuit, the Miami Herald reported, says the Navarros "established a Puerto Rican offshoot of Benworth in 2021 and moved most of their Florida business there."5

The lender of record

The Reserve Bank lent under three Paycheck Protection Program Liquidity Facility Letters of Agreement, dated May 4, 2020, January 14, 2021 and January 30, 2023. Under them it advanced Benworth Capital Partners LLC ("Benworth FL") approximately $4.3 billion, secured by approximately 300,000 pledged PPP loans.6 Benworth was the lender of record on the underlying loans and worked with the fintech platform Oto Analytics, dba Womply, and its "PPP Fast Lane" service. A release by Womply's counsel put the volume at more than 300,000 PPP loans with principal exceeding $4 billion, and the fees Benworth received from the Small Business Administration at more than $680 million.7

The arbitration

According to Womply's counsel, Womply commenced JAMS arbitration against Benworth in August 2021, alleging unpaid fees under the parties' agreements; Benworth counter-claimed for more than $420 million on the theory that Womply's contracts violated SBA fee caps and were invalid.8 The arbitrator issued an interim award on December 21, 2023, a final award dated May 30, 2024, and a corrected final award on June 26, 2024. The corrected award grants Womply's three breach-of-contract claims and denies every Benworth counterclaim but one, which required Womply to send Benworth its borrowers' loan files or restore its access to Womply's platform. It awards Womply $86,299,892 in referral, API and technology fees. Benworth, the arbitrator wrote, did not treat the technology fees as subject to the SBA's 1% agent-fee cap, "at least not until the parties' relationship began to deteriorate and litigation was imminent."9 The award adds $25,363,697.68 in finance charges, $5,883,708.58 in attorneys' fees and $372,956.46 in costs, for a total of $117,920,254.72.10

The default notice and the suit

On December 27, 2023, six days after the arbitrator's interim award, Benworth informed the Reserve Bank that it might not have enough money to pay Womply.11 On February 27, 2024, the Reserve Bank issued a Default Notice declaring multiple Events of Default under the PPPLF Program Agreements.12 The same notice cites SBA denial of guaranty-purchase applications on "over 3,600 PPP Loans pledged as PPPLF Collateral."13 On July 10, 2024, the Reserve Bank filed its complaint, seeking $66,980,967.08 plus interest, rescission of alleged fraudulent transfers, alter-ego liability against Benworth's Puerto Rico affiliate, veil-piercing against the Navarros personally, and a finding of conversion against all four defendants.14

The Puerto Rico affiliate

In 2021, a year after the PPPLF cash began flowing, the Navarros incorporated Benworth Capital Partners PR LLC ("Benworth PR") in Puerto Rico. The two entities entered "Loan Servicing Agreements" under which (according to the Reserve Bank's filing at Docket No. 127, ¶ 22) Benworth PR was to provide "fraud monitoring and loan forgiveness" services to Benworth FL.15 The agreements paid Benworth PR $550 for each PPP loan file; on about 311,000 loans, Womply's lawyers put the total at $171 million. Deposed in the arbitration in December 2022, Navarro was asked whether Benworth FL had paid Benworth PR that sum in 2021 and answered "Possibly," then "To the best of my knowledge, yes."

The arbitrator's January 2023 Order No. 5 says that "Benworth had transferred $171 million to Benworth Puerto Rico." The Reserve Bank's filings cite Womply's complaint for the figure, label it the "Fraudulent Transfer," and claim the Reserve Bank's lien reaches it to the extent it is PPP collateral.16

The Reserve Bank's own complaint alleges that Benworth FL "transferred over $50 million to Benworth PR" between 2021 and 2023, and says the Reserve Bank had no transaction-level information for 2021 or 2022. Paragraph 58 of that complaint alleges that Mr. Navarro "caused Benworth FL to pay dividends to himself as sole shareholder of at least $48,240,502.75, a portion of which was paid between 2021 and 2023," and a further "at least $804,860.89 between January 1, 2024 and May 23, 2024". Together that is roughly $49 million in personal dividends, as also reported by the Miami Herald. Benworth FL and Navarro denied both allegations "as drafted" and said the distributions to Navarro were "not prohibited by the Letters of Agreement."17

The Puerto Rico decree

The Reserve Bank sued on creditor-protection grounds (fraudulent transfer, alter ego, veil piercing, conversion). Claudia C. Pezzia Navarro received an Act 60 individual-investor decree in August 2022. The DDEC's published list of decree holders names neither Bernardo nor the Benworth entities. A decree establishes eligibility, not tax actually claimed.18 Whether the structure saved any tax is not in the public record.

The political backdrop

The Miami Herald reported that Navarro is a "close friend" of Marco Rubio, now Secretary of State.19 Senator Rubio had earlier supported Benworth in the underlying Womply fee dispute.20

The litigation

Judge Gina R. Méndez-Miró denied Benworth's Rule 12(b)(6) motion to dismiss in full on April 2, 2025, in a 31-page opinion that found each Reserve Bank theory (alter ego, veil piercing, fraudulent transfer, and conversion) plausibly pled.21 On May 21, the court ordered Benworth to produce its QuickBooks accounting data.22 Six days later, defendants told the court (Docket No. 246, ¶ 2): "Due to technical issues out of their control, Defendants have not had access to their servers, including the QuickBooks database, since May 18, 2025", three days before the production order.23 The next day, defense counsel moved (Docket No. 248) to seal the supporting declaration because "the technical issue is of a confidential and sensitive nature and remains subject to an ongoing investigation."24

The case settled four months later. Benworth president Henry Jimenez said the agreement "explicitly states there was no finding of fault or admission of liability" and called the suit a "political lawsuit."25 Final judgment dismissing the matter with prejudice was entered September 10, 2025.26 The Senate confirmed Navarro on December 18, 2025.27

Citations

Notes

  1. U.S. Mission Lima, "Bernie Navarro, U.S. Ambassador to Peru", February 3, 2026 (nominated June 16 and "confirmed by the Senate on December 18, 2025"); settlement and judgment at notes 30 and 31. ↩
  2. Primary court documents (CourtListener RECAP) Motion to Intervene with proposed Complaint in Intervention, Docket No. 127 (D.P.R., July 10, 2024) (CourtListener). Cover sheet, signature page, and caption confirm filing of July 10, 2024 by Cleary Gottlieb Steen & Hamilton (Lisa M. Schweitzer, Thomas S. Kessler, pro hac vice) and O'Neill & Borges LLC (Antonio L. Roig Lorenzo, Salvador J. Antonetti Stutts, Ubaldo M. Fernández Barrera, Aníbal A. Román Medina) for the Federal Reserve Bank of San Francisco. ↩
  3. Secondary reporting Ben Wieder, Miami Herald, "Awaiting ambassador confirmation, Bernie Navarro settles with Federal Reserve bank" (Sept. 12, 2025, via InsuranceNewsNet); InsuranceNewsNet. ↩
  4. Primary U.S. government records Nomination PN345-13, "Bernardo Navarro, of Puerto Rico, to be Ambassador Extraordinary and Plenipotentiary of the United States of America to the Republic of Peru," 119th Congress (2025–2026) (Congress.gov). ↩
  5. Ben Wieder, Miami Herald, "PPP loans earned this Miami lender millions" (July 24, 2024, via AOL). ↩
  6. Motion to Intervene, Docket No. 127, at ¶¶ 4–5, describing the three "Paycheck Protection Program Liquidity Facility Letters of Agreement dated May 4, 2020, January 14, 2021, and January 30, 2023," and incorporation of Operating Circular No. 10. ↩
  7. Willkie Farr & Gallagher LLP, release of June 24, 2024: "Benworth, a Florida-based lender, used PPP Fast Lane to fund more than 300,000 PPP loans with a principal amount exceeding $4 billion, for which it received more than $680 million in fees from the SBA." ↩
  8. Primary arbitration record (via law-firm release) Willkie Farr & Gallagher LLP, "Willkie Arbitration Award for Womply Resolves More Than Half a Billion Dollars of Liability" (June 24, 2024); Willkie. Willkie was Womply's counsel in the JAMS arbitration. The release reports that arbitration commenced in August 2021 and that Benworth counterclaimed for more than $420 million, alleging that Womply's fees exceeded SBA caps and that its contracts were illegal and void. ↩
  9. JAMS, Corrected Final Award, Oto Analytics d/b/a Womply v. Benworth Capital Partners LLC, Ref. No. 1210038203 (June 26, 2024), analysis of the Technology Fees and the 1% Agent Fee Cap. ↩
  10. Corrected Final Award (June 26, 2024), Final Award ¶¶ 1–7: $4,348,275 in referral fees, $17,067,000 in API fees and $64,884,617 in technology fees; finance charges at 10% simple interest of $25,363,697.68 as of May 30, 2024; $5,883,708.58 in attorneys' fees; $372,956.46 in costs. The total is the sum of those items. ↩
  11. Opinion and Order, Docket No. 225, at pages 6–8, summarizing the December 27, 2023 disclosure from Benworth to the Reserve Bank. The Miami Herald (note 5) reports that Benworth told the bank "it might not have enough cash to pay Womply what it owes." ↩
  12. Opinion and Order, Docket No. 225 (D.P.R., Apr. 2, 2025), at pages 6–9, summarizing the Reserve Bank's February 27, 2024 Default Notice (Doc. 1-8 in 24-cv-01313). ↩
  13. Opinion and Order, Docket No. 225 (D.P.R., Apr. 2, 2025) (CourtListener), at pages 8–9, quoting Default Notice (Doc. 1-8): "Benworth informed the Reserve Bank that the U.S. Small Business Administration (the 'SBA') has denied guaranty purchase applications for over 3,600 PPP Loans pledged as PPPLF Collateral . . . ." ↩
  14. Opinion and Order, Docket No. 225, summary of the Reserve Bank's prayer for relief, at page 10 ("the amounts owed, specifically $66,980,967.08"), and Docket No. 127, prayer for relief. ↩
  15. Motion to Intervene, Docket No. 127 (D.P.R., July 10, 2024), ¶ 22 (original: https://storage.courtlistener.com/recap/gov.uscourts.prd.175040/gov.uscourts.prd.175040.127.0.pdf): "Upon information and belief, pursuant to Loan Servicing Agreements ('LSAs') executed in 2021, Benworth PR services Benworth FL's loans and provides other services such as fraud monitoring and loan forgiveness." ↩
  16. Womply letter to Arbitrator Alexander L. Brainerd, Dec. 21, 2022 (Dkt. 163-1) (original: https://storage.courtlistener.com/recap/gov.uscourts.prd.175040/gov.uscourts.prd.175040.163.1.pdf), p. 3 ($550 a loan on about 311,000 loans, "more than $171 million") and p. 5, quoting Navarro's Dec. 16, 2022 deposition at 54:11–22: "Q. We discussed earlier that Benworth Florida was paying Benworth Puerto Rico $550 per loan on 311,000 loans. That's $171 million. Did Benworth Florida pay $171 million to Benworth Puerto Rico in 2021? A. Possibly. Q. To the best of your knowledge, did it? A. To the best of my knowledge, yes." JAMS Order No. 5, Jan. 17, 2023 (Dkt. 163-2) (original: https://storage.courtlistener.com/recap/gov.uscourts.prd.175040/gov.uscourts.prd.175040.163.2.pdf), p. 2: "In fact, well before the representation contained in Paragraph 17 of Benworth's Answer, Benworth had transferred $171 million to Benworth Puerto Rico, a related company located in Puerto Rico." The Reserve Bank's Motion to Intervene (Dkt. 127), ¶ 35, and Complaint in Intervention (Dkt. 127-7, filed as Dkt. 146), ¶ 41, both citing the Womply complaint ¶ 2: "Based on information gained through discovery in the Arbitration, Womply filed the instant case to, among other things, 'unwind' a transfer of approximately $171 million (the 'Fraudulent Transfer') from Benworth FL to Benworth PR, which the Navarros own and control." The Complaint in Intervention claims the Reserve Bank's first-priority lien reaches that transfer "to the extent any such assets constitute PPP Collateral" (¶ 59; see also ¶¶ 51–52). The Reserve Bank's own complaint also attributes the figure to Womply's suit (Doc. 1 in 24-cv-01313, ¶ 45 and n. 8), and the court's Opinion and Order denying the motion to dismiss (Dkt. 225, p. 6) repeats the "Fraudulent Transfers" label, citing that ¶ 45. ↩
  17. Complaint, Federal Reserve Bank of San Francisco v. Benworth Capital Partners LLC et al., No. 3:24-cv-01313 (D.P.R. July 10, 2024), Doc. 1 (original: https://storage.courtlistener.com/recap/gov.uscourts.prd.183139/gov.uscourts.prd.183139.1.0.pdf), ¶ 57 (p. 13): "Between 2021 and 2023, Benworth FL transferred over $50 million to Benworth PR, which left Benworth FL unable to pay its debts as they came due, insolvent, and with inadequate capital." Footnote 10 says the Reserve Bank lacked Benworth's complete financial statements and transaction records and had no transaction-level information on transfers "to cover 2021 and 2022." When it questioned the transfers, Benworth FL called them advances on Benworth PR's allocation of anticipated PPP-loan net income, which it put at 86% for 2021 through 2023, with $50 million for 2023 alone. ¶ 58 (pp. 13–14): Mr. Navarro "caused Benworth FL to pay dividends to himself as sole shareholder of at least $48,240,502.75, a portion of which was paid between 2021 and 2023," and "of at least $804,860.89 between January 1, 2024 and May 23, 2024" — together $49,045,363.64. (These figures appear in the Reserve Bank's standalone complaint, since consolidated into the lead case No. 23-cv-01034, not in the Complaint in Intervention at Docket No. 146.) Benworth FL and Navarro denied ¶¶ 57–58 "as drafted": Benworth FL's answer (Dkt. 234) and Navarro's answer (Dkt. 236), both Apr. 16, 2025 (originals: https://storage.courtlistener.com/recap/gov.uscourts.prd.175040/gov.uscourts.prd.175040.234.0.pdf, https://storage.courtlistener.com/recap/gov.uscourts.prd.175040/gov.uscourts.prd.175040.236.0.pdf). Reported by Ben Wieder, Miami Herald, "PPP loans earned a Miami lender $680 million. Now it's being sued by the Federal Reserve" (July 24, 2024, via AOL): "Benworth also transferred more than $49 million to Bernie Navarro between 2021 and 2024 in the form of dividends, according to the lawsuit." ↩
  18. Statutory and tax-regime authorities Puerto Rico Law No. 60 of July 1, 2019 ("Puerto Rico Incentives Code Act"), consolidating prior Acts 20 of 2012 (export services) and 22 of 2012 (individual investors). For an overview, see McConnell Valdés LLC, "Puerto Rico Act 60 (20/22)". Decree list: Puerto Rico DDEC, list of decree beneficiaries ("Claudia C Pezzia Navarro, 8/18/2022, Individuos Inversionistas"); statute: Act No. 60-2019, English text. ↩
  19. Ben Wieder, Miami Herald, "Awaiting ambassador confirmation, Bernie Navarro settles with Federal Reserve bank" (Sept. 12, 2025, via InsuranceNewsNet) ("The lawsuit was brought against Benworth and Navarro in July 2024 as Navarro's close friend Secretary of State Marco Rubio was being considered to be President Donald Trump's pick for vice president."). ↩
  20. Ben Wieder, Miami Herald, "Miami lender close to Rubio got senator's support as it fought over PPP loan spoils" (Aug. 6, 2024); excerpt on X. Rubio's August 26, 2021 letter to the SBA is in the court record. Case documents: Oto Analytics, LLC v. Benworth Capital Partners PR LLC, 3:23-cv-01034 (D.P.R.) (CourtListener RECAP). ↩
  21. Opinion and Order, Docket No. 225 (D.P.R., Apr. 2, 2025) (CourtListener) (31 pp.), denying the motion to dismiss in full and sustaining each of the Reserve Bank's theories (alter ego, veil piercing, fraudulent transfer, conversion) under Fed. R. Civ. P. 12(b)(6). ↩
  22. Docket No. 245 (May 21, 2025) (order granting Reserve Bank's motion to enforce Doc. 224's earlier order compelling production of Benworth's QuickBooks accounting data; rejecting Benworth's alternative-access proposals as "unduly burdensome and impractical"). The motion it granted is Docket No. 238. ↩
  23. Joint Motion for Extension of Time, Docket No. 246, ¶ 2 (D.P.R., May 27, 2025) (CourtListener): "Due to technical issues out of their control, Defendants have not had access to their servers, including the QuickBooks database, since May 18, 2025." ↩
  24. Joint Motion to Restrict Viewing Level, Docket No. 248 (D.P.R., May 28, 2025) (CourtListener), ¶ 2: "The technical issue is of a confidential and sensitive nature and remains subject to an ongoing investigation. Publicly revealing the limited known details surrounding the technical issue at this time may expose Defendants to further harm." ↩
  25. Ben Wieder, Miami Herald, "Awaiting ambassador confirmation, Bernie Navarro settles with Federal Reserve bank" (Sept. 12, 2025, via InsuranceNewsNet) (statement of Benworth president Henry Jimenez). ↩
  26. Final Judgment, Docket No. 281 (D.P.R., Sept. 10, 2025), entered pursuant to Order at Docket No. 280 granting Joint Stipulation of Dismissal at Docket No. 279. ↩
  27. U.S. Mission Lima, "Bernie Navarro, U.S. Ambassador to Peru", February 3, 2026 ("confirmed by the Senate on December 18, 2025"); Nomination PN345-13. ↩
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