FTC complaint for permanent injunction — FTC v. Ponte

Record facts

U.S. District Court for the District of Rhode Island · No. 1:20-cv-00177 · Doc. 1 · 2020-04-17 · Docket on CourtListener

Full text

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UNITED STATES DISTRICT COURT 
DISTRICT OF RHODE ISLAND 
 
 
FEDERAL TRADE COMMISSION, 
 
 
Plaintiff, 
 
 
v. 
 
PONTE INVESTMENTS, LLC, a limited liability 
company, also d/b/a SBA LOAN PROGRAM and 
d/b/a SBA LOAN PROGRAM.com, and 
 
JOHN C. PONTE, individually and as an officer 
of PONTE INVESTMENTS, LLC, 
 
 
Defendants. 
 
 
 
 
Case No. ____________ 
 
COMPLAINT FOR PERMANENT 
INJUNCTION AND OTHER 
EQUITABLE RELIEF 
 
 
 
 
 
 
 
 
 
 
 
 
Plaintiff, the Federal Trade Commission (“FTC”), for its Complaint alleges: 
1. 
The FTC brings this action under Section 13(b) of the Federal Trade Commission 
Act (“FTC Act”), 15 U.S.C. § 53(b) to obtain temporary, preliminary, and permanent injunctive 
relief, rescission or reformation of contracts, restitution, the refund of monies paid, disgorgement 
of ill-gotten monies, and other equitable relief for Defendants’ acts or practices in violation of 
Section 5(a) of the FTC Act, 15 U.S.C. § 45(a).   
JURISDICTION AND VENUE 
2. 
This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1337(a), 
and 1345. 
3. 
Venue is proper in this District under 28 U.S.C. § 1391(b)(1), (b)(2), and (c)(2), 
and 15 U.S.C. § 53(b). 
 
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PLAINTIFF 
4. 
The FTC is an independent agency of the United States Government created by 
statute.  15 U.S.C. §§ 41–58.  The FTC enforces Section 5(a) of the FTC Act, 
15 U.S.C. § 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce.   
5. 
The FTC is authorized to initiate federal district court proceedings, by its own 
attorneys, to enjoin violations of the FTC Act and to secure such equitable relief as may be 
appropriate in each case, including rescission or reformation of contracts, restitution, the refund 
of monies paid, and the disgorgement of ill-gotten monies.  15 U.S.C. § 53(b). 
DEFENDANTS 
6. 
Defendant Ponte Investments, LLC, also doing business as SBA Loan Program 
and SBA Loan Program.com, is a Rhode Island limited liability company with its principal place 
of business at 1300 Division Road, Suite 305, West Warwick, RI 02893.  SBA Loan Program 
transacts or has transacted business in this District and throughout the United States. 
7. 
Defendant John C. Ponte, is the owner, managing member, and President of SBA 
Loan Program.  At all times material to this Complaint, acting alone or in concert with others, 
he has formulated, directed, controlled, had the authority to control, or participated in the acts 
and practices of SBA Loan Program, including the acts and practices set forth in this Complaint.  
Defendant Ponte resides in this District and, in connection with the matters alleged herein, 
transacts or has transacted business in this District and throughout the United States. 
COMMERCE 
8. 
At all times material to this Complaint, Defendants Ponte Investments, LLC, also 
doing business as SBA Loan Program and SBA Loan Program.com and John C. Ponte 
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(hereinafter Defendants or SBA Loan Program) have maintained a substantial course of trade in 
or affecting commerce, as “commerce” is defined in Section 4 of the FTC Act, 15 U.S.C. § 44. 
DEFENDANTS’ BUSINESS ACTIVITIES 
9. 
SBA Loan Program preys on small businesses seeking financial relief from the 
devastating effects of the coronavirus pandemic.  Small businesses, which typically cannot 
survive less than a month without incoming revenue, have particularly felt the damaging effects 
of the pandemic.  These businesses have been struggling to retain employees and keep their 
doors open. 
10. 
SBA Loan Program claims to make funds available to small businesses through 
federal legislation creating a new SBA loan program, but Defendants are not authorized to make 
and approve such loans.  SBA Loan Program is not affiliated with the true SBA loan program, 
or with the SBA. 
Background on Federal Legislation on Small Business Relief 
11. 
The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”), P.L. 
116-136, was enacted to provide immediate assistance to individuals, families, and businesses 
affected by the Proclamation on Declaring a National Emergency Concerning the Novel 
Coronavirus Disease (COVID-19) Outbreak.  Under the CARES Act, eligible small businesses 
can obtain loans under a new, temporary SBA loan program, also called the Paycheck Protection 
Program (“PPP”).  The loans can only be made by lenders authorized by the SBA. 
12. 
 Consumer demand for these loans has been extremely high and unprecedented.  
As of mid-day Thursday, April 16, 2020 at least 1.6 million PPP loans already have been 
approved, accounting for the full $349 billion Congress has presently allotted to this program.  
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SBA is authorized to guarantee these loans through June 30, 2020 or until allotted funds are 
exhausted. 
13. 
SBA’s website, sba.gov, provides a PPP borrower application form. 
SBA Loan Program’s Deceptive Claims 
14. 
SBA Loan Program has solicited applications for the PPP program from desperate 
small business owners, targeting them via telephone and e-mail, as well as through the website 
sbaloanprogram.com. 
15. 
For example, one small business consumer in Maine received a call from an SBA 
Loan Program representative who claimed to be calling from the SBA.  The representative 
informed the consumer that SBA Loan Program was working with that consumer’s bank and 
urged the consumer to apply immediately because the PPP program had limited funds that would 
run out. 
16. 
A second representative followed up with the consumer by e-mail, claiming: “We 
are the SBALoanProgram.com and as mandated by the SBA, getting approved is easier than 
ever!” 
17. 
SBA Loan Program also lures consumers through the website, 
sbaloanprogram.com.  The sbaloanprogram.com website immediately triggers a pop-up screen 
that states in large, bold font, “CARES Act Paycheck Protection Program.”  Right below that, 
this pop-up also at times has represented in all caps “WE ARE A DIRECT LENDER FOR THE 
PPP LOAN PROGRAM!”  
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A true and correct copy of the webpage is attached as Exhibit A. 
18. 
The pop-up screen then invites consumers to “Apply Here.”  Clicking on “Apply 
Here” brings consumers to an online application that again prominently touts “CARES Act 
Paycheck Protection Program” and at times has reiterated to applying consumers “We are a 
Direct Lender for the Paycheck Protection Program”.   
CARES Act Paycheck Protection Program 
m 
WE ARE A DIRECT LENDER FOR THE PPP LOAN PROGRAM! 
Paycheck Protection Program questions? Can't get your bank to answer the phone? Get the personal attention 
you need. Our staff are here to help. 
On March 27, 2020, the CARES Act was signed into law making the SBA Paycheck Protection Program disaster loan available to small 
business owners 
Program highlights are 
No Collateral 
No Personal Guaranty 
No Fees 
No SBA Guamtty Fees 
For answers to frequently asked questions click HERE If you are ready to begin the application process, Apply 
Here. 
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A true and correct copy of the webpage is attached as Exhibit B.  
19. 
SBA Loan Program further represents, “The Paycheck Protection Program is 
being processed through lenders across the country participating in this program. No fee, No 
collateral, and No personal guaranty required. Lending is at a fixed 1.00% interest rate for two 
years and the SBA guaranty fee is waived. Apply now!”  Id. 
20. 
SBA Loan Program also has represented to some applying consumers that “[w]e 
are currently offering stimulus relief funding under the Economic Security Act (Cares Act).”  
~~ ~BA ~~AN 
,..•.~PROGRAM 
o division of Ponte Investments, llC 
Call Us 888-982-8380 
CARES Act Paycheck Protection 
Program 
B 
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A true and correct copy of the webpage is attached as Exhibit C. 
21. 
At the bottom of the page beyond the “Submit” button, small-print text, in faint 
grey typeface against a white backdrop, states: “We are not the US Government, If [sic] you 
wish to apply for a Disaster Relief Loan follow this link to the SBA website 
www.sba.gov/disaster. The Paycheck Protection Program is not provided by the SBA.”  
Exhibits B & C.  Even if a consumer located this text, the language does not disclose that SBA 
Loan Program is not authorized to make PPP loans.   
22. 
SBA Loan Program, however, is not an SBA-authorized lender.  
23. 
Indeed, SBA issued a cease and desist letter to SBA Loan Program on April 10, 
2020, stating “SBA does not have any record” that SBA Loan Program “is a participating lender 
and SBA believes this assertion to be false.” 
24. 
Nevertheless, SBA Loan Program has continued to claim that it will make PPP 
loans and has encouraged consumers to submit applications. 
25. 
As part of this scheme, SBA Loan Program has collected hundreds, if not 
thousands, of applications for PPP loans that it has not made.  Meanwhile, as of April 16, at 
We are currently offering stimulus relief funding 
under the Economic Security Act (Cares Act). No 
collateral or personal guaranty required. Lending is 
at a fixed 4% interest rate and the SBA guaranty 
fee is waived. Apply now for same-day-ild-
approval. .. 
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least 1.6 million small businesses that applied through authorized lenders have received $349 
billion in relief, and the program has hit its current funding cap. 
26. 
Struggling small businesses who have applied through SBA Loan Program 
instead of through actual SBA loan program lenders have not received PPP loans, while small 
businesses who have applied through these lenders have exhausted the majority of the allotted 
CARES Act funds available for PPP loans.  SBA Loan Program’s victims thus continue to 
suffer significant economic injury, including further jeopardizing employee jobs and potentially 
even losing their entire businesses.   
27. 
Based on the facts and violations of law alleged in this Complaint, the FTC has 
reason to believe that Defendants are violating or are about to violate laws enforced by the 
Commission.   
VIOLATIONS OF THE FTC ACT 
28. 
Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), prohibits “unfair or deceptive acts 
or practices in or affecting commerce.” 
29. 
Misrepresentations or deceptive omissions of material fact constitute deceptive 
acts or practices prohibited by Section 5(a) of the FTC Act.  
Count I 
Misrepresentations About Loans 
30. 
In numerous instances in connection with the advertising, marketing, promotion, 
or offering of PPP loans, including through the means described in Paragraphs 14-21, 
Defendants have represented, directly or indirectly, expressly or by implication, that Defendants 
are authorized to make PPP loans or to otherwise accept or process PPP loan applications. 
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31. 
In truth and in fact, in numerous instances in which Defendants have made the 
representations set forth in Paragraph 30, Defendants are not authorized to make PPP loans. 
32. 
Therefore, Defendants’ representations as set forth in Paragraph 30 are false and 
misleading and constitute deceptive acts or practices in violation of Section 5(a) of the FTC Act, 
15 U.S.C. § 45(a). 
Count II 
Misrepresentations Concerning Government Status 
33. 
In numerous instances in connection with the advertising, marketing, promotion, 
or offering of PPP loans, including through the means described in Paragraphs 14-21, 
Defendants have represented, directly or indirectly, expressly or by implication, that Defendants 
are the United States Small Business Administration, or are affiliated or otherwise associated 
with, or endorsed, sponsored, or approved by the United States Small Business Administration. 
34. 
In truth and in fact, in numerous instances in which Defendants have made the 
representations set forth in Paragraph 33, Defendants are not the United States Small Business 
Administration, and are not affiliated or otherwise associated with, or endorsed, sponsored, or 
approved by the United States Small Business Administration. 
35. 
Therefore, Defendants’ representations as set forth in Paragraph 33 are false and 
misleading and constitute deceptive acts or practices in violation of Section 5(a) of the FTC Act, 
15 U.S.C. § 45(a). 
CONSUMER INJURY 
36. 
Consumers are suffering, have suffered, and will continue to suffer substantial 
injury as a result of Defendants’ violations of the FTC Act.  In addition, Defendants have been 
unjustly enriched as a result of their unlawful acts or practices.  Absent injunctive relief by this 
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Court, Defendants are likely to continue to injure consumers, reap unjust enrichment, and harm 
the public interest.   
THIS COURT’S POWER TO GRANT RELIEF 
37. 
Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), empowers this Court to grant 
injunctive and such other relief as the Court may deem appropriate to halt and redress violations 
of any provision of law enforced by the FTC.  The Court, in the exercise of its equitable 
jurisdiction, may award ancillary relief, including rescission or reformation of contracts, 
restitution, the refund of monies paid, and the disgorgement of ill-gotten monies, to prevent and 
remedy any violation of any provision of law enforced by the FTC. 
 
PRAYER FOR RELIEF 
 
Wherefore, Plaintiff FTC, pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), 
and the Court’s own equitable powers, requests that the Court: 
A. 
Award Plaintiff such preliminary injunctive and ancillary relief as may be 
necessary to avert the likelihood of consumer injury during the pendency of this action and to 
preserve the possibility of effective final relief, including, but not limited to, a temporary and 
preliminary injunction; 
B. 
Enter a permanent injunction to prevent future violations of the FTC Act by 
Defendants; 
C. 
Award such relief as the Court finds necessary to redress injury to consumers 
resulting from Defendants’ violations of the FTC Act, including rescission or reformation of 
contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten monies; and 
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D. 
Award Plaintiff the costs of bringing this action, as well as such other and 
additional relief as the Court may determine to be just and proper. 
 
 
 
 
 
 
Respectfully submitted, 
 
 
 
 
 
 
 
ALDEN F. ABBOTT 
 
 
 
 
 
 
General Counsel 
 
 
Dated: April 17, 2020 
 
 
/s/ Thomas J. Widor 
 
 
 
 
 
 
THOMAS J. WIDOR 
 
 
 
 
 
 
(DC Bar No. 490184) 
 
 
 
 
 
 
 
 
 
SANYA SHAHRASBI 
 
 
 
 
 
 
(DC Bar No. 1671001) 
 
 
 
 
 
 
 
 
 
DANIEL DWYER 
 
 
 
 
 
 
(CA Bar No. 286701) 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Federal Trade Commission 
 
 
 
 
 
 
600 Pennsylvania Ave., NW, CC-10232 
 
 
 
 
 
 
Washington, DC 20580 
 
 
 
 
 
 
(202) 326-3039 (Widor) 
 
 
 
 
 
 
(202) 326-2709 (Shahrasbi) 
 
 
 
 
 
 
(202) 326-2957 (Dwyer) 
 
 
 
 
 
 
twidor@ftc.gov 
 
 
 
 
 
 
sshahrasbi@ftc.gov 
 
 
 
 
 
 
ddwyer@ftc.gov 
 
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