Court filing
Exhibit 14 Manger Deposition Excerpts — Marshall v. Prestamos CDFI, LLC (Dkt. 142-19, E.D. Pa. No. 5:21-cv-04337)
Filed August 26, 2024 in Marshall v. Prestamos CDFI, LLC; one of 344 filings from this case.
Record facts
| Court | U.S. District Court for the Eastern District of Pennsylvania |
|---|---|
| Filed | 2024-08-26 |
U.S. District Court for the Eastern District of Pennsylvania · No. 5:21-cv-04337-JMG · Doc. 142-19 · 2024-08-26 · Docket on CourtListener
Full text
Ex. 14 – Excerpts of Deposition of William M.
Manger, Jr., dated August 26, 2024
Case 5:21-cv-04337-JMG Document 142-19 Filed 10/04/24 Page 1 of 10
Deposition of William M. Manger, Jr.
Alicia Marshall, et al. v. Prestamos CDFI, LLC
215-341-3616 transcripts@everestdepo.com
Everest Court Reporting LLC
Page: 1 (1)
1
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
2
3
ALICIA MARSHALL, et. al., )
4
individually and on behalf of )
all others similarly situated, )
5
)
Plaintiffs, )
6
vs. )Case No.
)5:21-cv-04337-JMG
7
PRESTAMOS CDFI, LLC., )
)
8
Defendant. )
9
10
11
REMOTE DEPOSITION OF WILLIAM M. MANGER, JR.
12
Monday, August 26, 2024
13
South Hampton, New York
14
15
16
17
18
19
20
21
Reported By: TRICIA J. LATHOURIS, CSR, RPR
22
JOB NO. 31472
23
24
Case 5:21-cv-04337-JMG Document 142-19 Filed 10/04/24 Page 2 of 10
Page 14
1 arbitration. The other was a case between a lender
2 and a recipient that was not arbitrated but in which
3 you were deposed?
4 A That is correct.
5 Q Can you tell me --
6 A Wait. Wait. Sorry. Sorry. Sorry.
7 Incorrect.
8 I was not deposed in the case in Texas that
9 I cited.
10 Q And did you testify in court in Texas in
11 that matter?
12 A No, I did not. The -- no.
13 Q What was the gist of the dispute in Texas?
14 A The lender claimed that they had not gotten
15 the size of loan that they were eligible for, and
16 they were claiming that it was the bank's fault for
17 not applying to the SBA for a larger loan.
18 Q I think you began your answer by saying
19 "The lender."
20 Did you mean to say the borrower claimed --
21 A I'm sorry. Yes. I apologize. Yes. The
22 borrower claimed that they did not get the size of
23 loan that they believed they were eligible for.
24 Q And what was the basis of that complaint?
Page 15
1 A The basis of the complaint was that --
2 well, from the lender side or the borrower side?
3 Q Well, we'll start with the borrower side.
4 I'm just trying to understand how this
5 became a lawsuit.
6 A Yeah. So the -- I'm sorry, did you say the
7 lender or the borrower first?
8 Q The borrower.
9 A Okay. So the borrower claimed that the
10 loan he received from the SBA through the PPP was
11 not the size that his business was eligible for,
12 and, really, the dispute hinged on the number of
13 employees that that business had.
14 Q And what was the outcome of the lawsuit?
15 A So the lawsuit was settled, and, you know,
16 I would say it was settled in favor of the bank.
17 Q And your expert testimony on behalf of the
18 bank was to express an opinion that the bank lent
19 the correct amount?
20 MR. LEDERER: Objection. Form.
21 A I mean, yeah, the bank lent the correct
22 amount on the information that the borrower had
23 provided to the bank.
24 BY MR. ROGERS:
Page 16
1 Q Understood.
2 Have we covered all of your expert
3 engagements, or is there one more?
4 A Well, so, again, I've worked with Larry
5 previously, Bailey Glasser, previously on a case
6 very similar to the one that we're discussing today.
7 Q And that's the Capital Plus/Greathouse
8 case?
9 A That is correct.
10 Q So have we now covered all of your expert
11 experience?
12 A I believe that's correct.
13 Q Okay. Am I also correct that of those
14 three matters, one was a class action lawsuit, and
15 that was the Capital Plus case?
16 A That's correct.
17 Q Okay. And was that your first professional
18 experience dealing with class action litigation?
19 I understand it was the first time you were
20 an expert in a class action matter, but my question
21 is a bit broader than that.
22 A You know, I think over the years I may
23 have, you know, signed some things that entered me
24 in a class action lawsuit as one of the members of
Page 17
1 the -- of the classes.
2 Does that make sense?
3 Q It does.
4 A Yeah.
5 Q You participated as a class member in a
6 prior -- one or more prior cases?
7 A That's correct.
8 Q Can you tell me, in your own words, what is
9 necessary for a case to be certified as a class
10 action?
11 MR. LEDERER: Objection to form. You can
12 answer.
13 A Yeah. I'm not a lawyer, so, again, I'm not
14 well-versed on exactly how you certify a class.
15 BY MR. ROGERS:
16 Q Okay. And your engagement in this case
17 does not include legal opinion; correct?
18 A That's correct. I'm not an attorney.
19 Yeah.
20 Q So you were not expressing an opinion
21 whether this case should or should not proceed as a
22 class action; correct?
23 A Again, I'm not an attorney, so, again, I am
24 not well-versed on the specifics of class
Deposition of William M. Manger, Jr.
Alicia Marshall, et al. v. Prestamos CDFI, LLC
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Everest Court Reporting LLC
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Page 30
1 A Yeah, I don't know if it really stated that
2 they disagreed with my interpretation of the PPP
3 rules.
4 BY MR. ROGERS:
5 Q Okay. Let me just orient you by marking as
6 Manger 4 the class certification decision that you
7 cite on the second line of paragraph 24, which we
8 are looking at now.
9 (Exhibit 4 marked for identification.)
10 BY MR. ROGERS:
11 Q Have we made this big enough?
12 A Yeah, I can see that.
13 Q Great.
14 You see the page numbers at the top there,
15 Mr. Manger, where it says "Page 6 of 8" in the upper
16 right-hand corner? My colleague is moving it now,
17 but that's okay --
18 A I see. Yes. Yes. Yes. Now I see it.
19 Sorry.
20 Q Where it says "Page 5 of 8."
21 Do you see that?
22 A Yes, I see it. I see it.
23 MR. ROGERS: Why don't you bring him to the
24 first page.
Page 31
1 BY MR. ROGERS:
2 Q Have you ever read this decision?
3 A It was sent to me and I think I skimmed it.
4 I don't think I spent that much time on it. So, you
5 know, it would be tough for me to recall it.
6 Q I am not going to give you a quiz on what's
7 in the opinion.
8 A Okay.
9 Q I am going to ask you whether you know the
10 outcome of the motion for class certification in the
11 Greathouse versus Capital Plus case?
12 A You know, again, I -- I mean, I recognize
13 Judge Pittman because Judge Pittman I quoted,
14 actually, in my report. You know, he was speaking
15 specifically about public policy and, you know,
16 different elements of the Promissory Note that was
17 contained in all of these loans.
18 But, again, I don't know if I could speak
19 to exactly what the outcome of this was. I just
20 know that there were issues with the class being,
21 you know -- I don't know. You have to help me
22 because, again, I'm not an attorney.
23 Q I appreciate that.
24 A I'm doing the best I can.
Page 32
1 Q No. That's fine.
2 My question is -- this particular question
3 is just a very basic one which is: Do you know
4 whether Judge Pittman certified the class or not?
5 A I believe he did not certify the class.
6 Q And is it correct that you were an expert
7 on behalf of the plaintiffs seeking to certify the
8 class?
9 A No, I wouldn't say I was an expert on
10 certification of the class, no.
11 Q No. No. I understand.
12 But you were engaged by the plaintiffs?
13 A Yes. Again, in regard to my knowledge,
14 intimate knowledge, of the PPP.
15 Q And when you say "my intimate knowledge of
16 the PPP," are you including in that area of intimate
17 knowledge the meaning of the SBA regulations? And
18 by that I mean to include both IFRs and notices --
19 A And Procedural Notices and SOPs and Q&As.
20 Yeah. Everything that went along with PPP.
21 Q And you talked about, in your report, being
22 involved in writing some of these regulations.
23 Am I correct?
24 A Yes.
Page 33
1 Q Was that a collaborative effort within the
2 agency?
3 A Oh, most definitely. And it was also
4 collaborative not only within the Small Business
5 Administration, but also within the US Treasury
6 Department.
7 Q Were government lawyers involved in writing
8 the regulations?
9 A Absolutely.
10 Q And do the regulations have the force of
11 law, as you understand it?
12 A Yes.
13 Q When you say that you were involved in the
14 drafting, can you tell me what you mean by involved
15 in the drafting?
16 A Sure. I mean, I recall conference calls
17 that we would be on with the Treasury Department
18 where we would go over different elements of the
19 program discussing different aspects and rules and
20 regulations that we were going to incorporate into
21 the IFRs.
22 You know, you were on, usually, with the
23 attorneys and we discussed, you know, specifics
24 about how it would be structured. Because the
Deposition of William M. Manger, Jr.
Alicia Marshall, et al. v. Prestamos CDFI, LLC
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Everest Court Reporting LLC
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Page 58
1 BY MR. ROGERS:
2 Q Now, before we get into paragraph 20, can
3 you estimate the number of hours you have spent on
4 this expert engagement, not including today?
5 A Oh, gosh. That's tough. I mean, I'm
6 trying to keep records of it, but it would be --
7 it's hard for me to say exactly what that would be.
8 I mean -- I don't know. Going back to the very
9 beginning, reading all of the different documents?
10 Q Yes.
11 A Honestly, I'd have to -- I'd really have to
12 refer to my notes to know exactly. I mean, it was
13 done, obviously, over periods of time and at
14 different times, so it's very hard for me to just
15 give one number for the whole thing. I just don't
16 think I'd be able to do that.
17 Q Okay. That's fine.
18 Turning to paragraph 20, there is a
19 reference in paragraph 20, which I think you're
20 going need to search for because it's so long -- oh,
21 here we go.
22 At the bottom of page 6 it says -- you say
23 in paragraph 20, "To quote the Complaint, the
24 definition of the class in this case includes only
Page 59
1 those from plaintiffs' respective states, who, in
2 2021, applied for PPP loans with defendant Prestamos
3 as the lender for whom the SBA provided an SBA loan
4 number and who executed and submitted their loan
5 documents and provided to Prestamos all required
6 loan documentation, but as to whom Prestamos both
7 failed to disburse the PPP loan proceeds and
8 reported to the SBA that the loan proceeds were
9 disbursed."
10 Okay?
11 A Yes.
12 Q I want to focus on the term -- the phrase
13 "all required loan documentation" at the very end of
14 page 6.
15 Do you see that?
16 A Yeah.
17 Q I just want to make sure that we are on the
18 same page here.
19 So it is your understanding -- and, again,
20 you're quoting the Complaint, and you're not a
21 lawyer, and you're not a class action expert.
22 A Right.
23 Q But it is your understanding that the class
24 here is being defined as applicants for PPP loans
Page 60
1 who submitted all required loan documentation;
2 correct?
3 A Correct.
4 Q And we talked earlier about various forms
5 of required loan documentation.
6 Do you recall that?
7 A Yes.
8 Q And we can just quickly go through the
9 litany to refresh you.
10 Obviously, the borrower needed to fill out
11 the loan application form; correct?
12 A Correct. I mean -- yeah. The lender,
13 would, you know, do that in conjunction with them on
14 their behalf, yeah.
15 Q Right.
16 But the application itself was not
17 sufficient; correct?
18 A No. You had to show other -- other things
19 such as like the business had been in operation
20 prior to a certain date and, you know, lots of
21 different components. Yeah.
22 Q Right.
23 And then there were various types of
24 documents that addressed what you've referred to as
Page 61
1 lots of components, and those would include -- or
2 did include tax returns, including Schedule Cs, bank
3 statements, payroll records, that type of thing;
4 right?
5 MR. LEDERER: Objection to form.
6 A Yeah. You had to show that you were -- you
7 were, you know, a business that was actually in
8 operation and had all of these documents to prove
9 that, obviously. Yeah.
10 BY MR. ROGERS:
11 Q Okay. I am now going to show you a
12 document by way of example.
13 A Okay.
14 Q This is a document that I think you've
15 seen, but you'll tell me if I'm wrong. It is from
16 one of the loan files of the class representatives.
17 And before I show it to you, are you
18 familiar with the term "class representative" as it
19 applies here?
20 A I mean, are you just saying that this is
21 one person in the class?
22 Q Yes.
23 A Yeah.
24 Q In other words, your understanding is that
Deposition of William M. Manger, Jr.
Alicia Marshall, et al. v. Prestamos CDFI, LLC
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Page 86
1 Larry rather than just give it to someone else.
2 That's my scenario?
3 A Well, yeah, yeah, yeah --
4 MR. LEDERER: Excuse me. Is there a question?
5 BY MR. ROGERS:
6 Q My question is: Can Larry force you to
7 take that money and credit it to Ed Roger's account
8 at Manger Bank & Trust, which you believe doesn't
9 exist?
10 A Well, I would just say if there's no
11 account, you can't put the money in no account. So,
12 yeah, that's logical.
13 Q Okay. And how about the next item is an
14 "Invalid Account Number Initiated Under Questionable
15 Circumstances."
16 Can Larry force you to take the money in
17 that instance?
18 A Again, if -- I've had this happen to me,
19 actually, with an ACH. I had one number in a series
20 that was incorrect. Although I have a legitimate
21 account, the one number off made it very difficult.
22 So in that instance the bank reached out to me and
23 said we're having a problem with this. Can you help
24 us verify your account number. And then I actually
Page 87
1 told the bank, this is the correct number, and then
2 they said, oh, yes, we were one digit wrong in the
3 series of numbers that we had for the account, so
4 now that we've corrected it, now -- now it will
5 work.
6 So, again, I would say that you'd have to
7 -- the lender would have to understand why this
8 wasn't working properly and try and rectify the
9 situation just like my bank did with my ACH account.
10 Q Okay. Let's build on that example.
11 MR. ROGERS: We can take down the document now.
12 BY MR. ROGERS:
13 Q Are you aware, sitting here today, based on
14 your review of the Castillo Declaration, that
15 Prestamos had a process to correct errors of the
16 type you mentioned, among others, and it was
17 referred to as the reverification process?
18 MR. LEDERER: Objection to form.
19 A Yeah. I mean, they may have had that
20 system. Again, I don't -- I'm not able to say
21 whether it was used in every instance.
22 BY MR. ROGERS:
23 Q I'm not asking you whether it was used in
24 every instance.
Page 88
1 I'm asking you if you are aware that it was
2 used in some instances.
3 A I think -- I think I read that they had,
4 yes, a process to try and do that.
5 Q And is it fair to characterize that as,
6 essentially, giving the borrower a second chance,
7 just like your bank gave you a second chance when
8 they were off a digit?
9 A Yeah. But, again, I don't know, again, if
10 this happened in every instance, so, you know, I
11 don't know if it was like a foolproof -- a foolproof
12 system.
13 Q I'm not asking you about the success rate
14 or the foolproof nature of the system?
15 A Okay.
16 Q I'm asking whether it's fair to describe
17 that as, essentially, giving the borrower a second
18 chance to meet the requirements so that the loan
19 could go through?
20 MR. LEDERER: Objection to form. Asked and
21 answered.
22 BY MR. ROGERS:
23 Q Can you answer that question, please,
24 Mr. Manger.
Page 89
1 A I would say, that, again, the lender should
2 have been ensuring in every instance what they were
3 doing in terms of disbursing fully loans to PPP
4 borrowers.
5 Q So I want to talk a little bit about the
6 administration of the program, as you understand it,
7 and I think the best way to do that is to go to the
8 Third Amended Complaint in this case.
9 MR. ROGERS: Which we are going to mark as
10 Manger 10.
11 (Exhibit 10 marked for identification.)
12 BY MR. ROGERS:
13 Q And the good news is although the Third
14 Amended Complaint is a 117-page PDF --
15 A I'm well aware.
16 Q -- we're only going to look at one
17 document. We may not even need that one document.
18 We are going to look at the -- this
19 is Exhibit A to the Third Amended Complaint,
20 Mr. Manger, and what it is, is it's a series of
21 documents that were signed by a borrower by the name
22 of Alicia Marshall who is a class representative in
23 this case.
24 You with me so far?
Deposition of William M. Manger, Jr.
Alicia Marshall, et al. v. Prestamos CDFI, LLC
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Page 94
1 Q And they -- the OIG and the Secret Service
2 identified three return codes that were appropriate
3 when there is a suspicion of fraud.
4 Do you remember that?
5 A Yeah. I don't know if it was -- if it was
6 highlighting that it was fraud, but, yes, I remember
7 seeing the three codes.
8 Q Okay. Well, I'll represent to you that it
9 says that. I don't need to take it back and have
10 you read it and all that?
11 A Okay.
12 Q That is what that document said. So for at
13 least under the OIG guidance, it's really three of
14 those 80 return codes that are of particular
15 relevance here.
16 Now, Mr. Castillo's Declaration goes
17 through them and explains this process. Okay? And
18 it gives a number of examples.
19 For example, the borrowers's bank account
20 was closed or frozen or invalid or non-existent. Or
21 the borrower had a bank account that couldn't take
22 business loans like a PPP loan. Or the bank
23 detected fraud. And then it goes on to say that
24 when an ACH payment was rejected, the borrower's
Page 95
1 bank would notify Prestamos. And it then goes on to
2 describe what I have called the reverification
3 process.
4 And I'm going to move now to start with
5 paragraph 37, which is at the bottom, and then we're
6 going to go on just to 38 and 39 -- you can read
7 that to yourself -- and I'm just going to ask you
8 whether this is -- whether you knew about this
9 before you read Mr. Castillo's Declaration, that
10 Prestamos had this process?
11 MR. LEDERER: Objection to form.
12 A Yeah, I don't think -- I don't think I knew
13 much about this process, but if you go back -- could
14 you just scroll back for a second -- it says, "Blue
15 Acorn resolved a large number of PPP loan
16 rejections." It doesn't say they resolved every PPP
17 loan rejection.
18 So, again, they had some process that was
19 identifying, you know, some of them, but, again, I
20 don't know if it's definitive for all of them.
21 BY MR. ROGERS:
22 Q Okay. Fair enough.
23 My question is whether you were familiar
24 with this process, however comprehensive it was or
Page 96
1 was not, prior to reading this Declaration?
2 A I don't know if I remembered anything about
3 a specific process that I had knowledge of, and --
4 yeah, and then -- yeah, it gets more confusing in
5 that it says that if it didn't go through, they got
6 like a prepaid card.
7 So it gets more confusing because,
8 obviously, that wasn't part of the PPP, to get
9 prepaid cards. So I can't really speak to that.
10 That's out of my realm of understanding in regard to
11 the Paycheck Protection Program.
12 Q Okay. Now I want to go back to paragraph
13 20 of your opening report, and we're going to go to
14 the middle of page 7. It says -- it's just a little
15 below the middle of the page. Chesley will
16 highlight it for us. This, again, is your opening
17 report.
18 "A mere attempt to fund a loan, or an
19 attempt to do so that, for instance, the borrower's
20 bank rejected, should have resulted in the loan
21 being cancelled in SBA's e-tran system."
22 Do you see that?
23 A Yes.
24 Q Is it your view that consistent with the
Page 97
1 program, Prestamos should not have given the
2 borrower a second chance to satisfy the
3 documentation requirements, but should simply have
4 cancelled the loan if it was rejected by the bank
5 the first time?
6 A No. The lender should have tried to clear
7 up with the borrower any of the, you know,
8 documentation that didn't, you know, seem to be
9 accurate. Like my example, one of the digits in the
10 account number was off.
11 Q Right.
12 And that's consistent with the purpose and
13 the intent of the program that you were in charge of
14 running, that you wanted to get the money out and
15 you wanted to maximize the federal financial support
16 to COVID-affected small businesses?
17 A Correct. And I think what I stated here is
18 completely in line with that.
19 Q So, in other words, when you say a mere
20 attempt to fund a loan, included in the mere attempt
21 is this verification -- reverification process?
22 A Yes. I mean, what I was getting at here is
23 if the bank, you know, formally rejected it for some
24 reason, that should have been communicated to the
Deposition of William M. Manger, Jr.
Alicia Marshall, et al. v. Prestamos CDFI, LLC
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Page 102
1 Q I won't share that insight with
2 Mr. Castillo.
3 A Okay.
4 Q But I would like to ask you, in terms of
5 the writing of the sentence --
6 A Yeah.
7 Q -- is there any loophole that you are
8 pointing to here? In other words, is there a reason
9 you don't believe this is comprehensive?
10 A Yes. I mean, it says, "In September 2021,
11 Prestamos returned credit" -- I mean, I don't know
12 which ones they're referring to. I don't know -- it
13 just doesn't seem -- it doesn't seem fulsome to me.
14 It seems like a throw away last sentence trying to
15 cover themselves.
16 Q So it says -- just so that we can all be
17 clear on the record -- "Prestamos returned the
18 credit advances from the Fed for loans that were
19 ultimately not funded."
20 A To me it's just unclear. I don't know how
21 to help you, Ed. It doesn't seem like a full
22 response. It says "In September 2021." I mean, I
23 don't know -- it seems -- I don't know. It seems
24 just strange to me.
Page 103
1 Q Really?
2 A Yes.
3 Q If the word "all" were inserted between
4 "for" and "loans," would that solve your problem?
5 A If it identified that every single credit
6 advance from the Federal Reserve for loans that
7 were, again, not funded, yes, it's just -- that
8 sentence would have to be reconstructed for it to be
9 comprehensive in my mind.
10 Q What, other than adding the term "all"
11 before "loans," would you require?
12 A Well, I think it's strange just to refer to
13 September 2021. I don't understand how they just
14 name a whole month that all of a sudden all of these
15 things were taken care of. It needs more definition
16 and more backup or background as to exactly what
17 happened in September of 2021.
18 Q Would you be comfortable if we added -- if
19 the dates in September 2021 were added, the
20 particular days of September 2021?
21 MR. LEDERER: Objection to form.
22 A Again, I just think that a better record
23 should be provided to back up this short sentence.
24 BY MR. ROGERS:
Page 104
1 Q That's fine.
2 Well, assuming that the sentence is
3 comprehensive and true, did Prestamos do the right
4 thing?
5 MR. LEDERER: Objection to form.
6 A Again, I would have to -- I'd have to see
7 the evidence to be able to render my opinion on if
8 the right thing was done.
9 BY MR. ROGERS:
10 Q And that evidence would be that you would
11 need the amount of the credit advances that were
12 returned? Would that do it for you?
13 A I think you'd want to verify, again, that
14 the information is all accurate and that it's fully
15 covering the unfunded loans. I don't know, I just
16 would like to -- you know, you'd like to just verify
17 what he's trying to get across here.
18 Q Okay. I want to talk about the lender
19 processing fees.
20 You're aware that lenders received
21 processing fees for PPP loans; correct?
22 A Yes. That was -- that was always an
23 integral component of the program.
24 Q That was an incentive for lenders to
Page 105
1 participate?
2 A Absolutely.
3 Q And at some point, I think in 2021, after
4 you left the agency, those processing fee
5 requirements were modified to be a bit more
6 generous; correct?
7 MR. LEDERER: Objection to form.
8 A I think the -- I think that the language
9 for changing those fees was -- the change in
10 language for those fees was begun while I was still
11 at the agency. Because I'm not sure exactly when it
12 was implemented, but obviously, you know, there was
13 a lead time and preparation for the IFRs and
14 everything that, you know -- again, it took some
15 time.
16 So I believe we discussed, actually, while
17 I was there, how we were going to change the fees.
18 BY MR. ROGERS:
19 Q Okay. Is it your position that Prestamos
20 was not entitled to keep the processing fees on
21 loans that were ultimately not received by the
22 borrower?
23 A Yeah. Well, again, the fact of the matter
24 is if the loans weren't made, I still firmly believe
Deposition of William M. Manger, Jr.
Alicia Marshall, et al. v. Prestamos CDFI, LLC
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Page 110
1 A Yeah, so the first sentence is definitely
2 correct. You had to keep monthly reports on the
3 status of PPP loans.
4 Q You're referring, now, to the first
5 sentence of paragraph 46; correct?
6 A Yes.
7 Q Okay. The second sentence of paragraph 46
8 says, "During reverification and/or the enhanced due
9 diligence process, Prestamos would keep the loan
10 status as funded on 1502."
11 A I see that.
12 Q Okay. Was that correct?
13 MR. LEDERER: Objection to form. You've asked
14 him to assume it's correct.
15 BY MR. ROGERS:
16 Q I've asked you to assume it's factually
17 correct.
18 Assuming it's factually correct, was it
19 consistent with the program rules?
20 A I don't know -- it's a little -- it's a
21 little tricky because -- I mean, I guess it seems
22 though, again, at some point, you know, a
23 reverification shouldn't take that long and it
24 should be pretty easy to tell whether it was going
Page 111
1 to go through or not.
2 Like I said, changing the one number on an
3 ACH code or something, but I don't understand how
4 consistently 1502s kept being filed and filed and
5 filed. That would give someone the idea that the
6 loan was coming, and then the loan didn't come. So
7 I just don't -- I don't -- I don't get it.
8 Q And 47 refers to what happened after
9 reverification and/or enhanced due diligence, and it
10 deals with a situation in which the borrower had
11 failed that process.
12 Do you see that?
13 A Yes.
14 Q And at that point, Prestamos changed the
15 status to "cancelled" on the 1502.
16 Do you see that?
17 A Yes.
18 Q And that was -- assuming that is what
19 Prestamos did, that was consistent with the program;
20 correct?
21 A Well, assuming that that's what they did,
22 yes. But from what I've read, that's not the case.
23 Q Well, when you say "from what I've read" --
24 A Right.
Page 112
1 Q -- you've read the Third Amended
2 Complaint --
3 A Right.
4 Q -- you've read some SBA documents --
5 A Correct.
6 Q -- and you've now read the Castillo
7 Declaration --
8 A Yes.
9 Q -- and the Castillo Declaration, is -- he
10 is the only person with personal knowledge of what
11 Prestamos did --
12 A Well, I mean --
13 Q -- of the materials you have reviewed;
14 correct?
15 MR. LEDERER: Objection to form. You're
16 mischaracterizing his prior testimony. He also said
17 he read 1502s.
18 BY MR. ROGERS:
19 Q You can answer.
20 A Well, and I would answer that -- the thing
21 is I don't know if I can take Mr. Castillo's word as
22 -- as truly authentic. I mean, you know, he says
23 this is what they did. I have no way to verify
24 that.
Page 113
1 Q I appreciate that. And the day may come
2 when Larry will ask Mr. Castillo those questions
3 under oath, and maybe that will advance your
4 understanding. But we can't do that today.
5 MR. ROGERS: So I'd like to mark as Manger 12
6 an email thread between Mr. Castillo and an official
7 at the SBA.
8 (Exhibit 12 marked for identification.)
9 BY MR. ROGERS:
10 Q I'd like to go to the end of the thread,
11 which is really the beginning.
12 A Of course.
13 Q Of course.
14 So the first email is an email from
15 Castillo to Craig Jordan at the SBA. You can read
16 it to yourself.
17 A Okay.
18 Q And in that email Castillo is saying to
19 Craig Jordan that Prestamos is in the process of
20 cancelling disbursed loans and Prestamos wants to
21 return the fees to the SBA.
22 Do you see that?
23 A Yes.
24 Q Okay. And we then go -- there's a few,
Deposition of William M. Manger, Jr.
Alicia Marshall, et al. v. Prestamos CDFI, LLC
215-341-3616 transcripts@everestdepo.com
Everest Court Reporting LLC
Page: 32 (110 - 113)
Case 5:21-cv-04337-JMG Document 142-19 Filed 10/04/24 Page 9 of 10
Page 114
1 what I'm going to call procedural emails, and then
2 when we get to page 2 of the thread, there is a
3 substantive response from Craig Jordan which says,
4 among other things, "PPP processing fees -- The
5 lender is able to retain the processing fees on
6 these loans."
7 Do you see that?
8 A I do.
9 Q Is that consistent with your understanding
10 of the program?
11 A Yes. If there was no evidence of fraud.
12 Q Okay. And when you say "no evidence of
13 fraud," you mean no evidence of fraud by Prestamos?
14 A Correct.
15 Q As opposed to the borrower?
16 A Correct.
17 Q And when you say "no evidence of fraud,"
18 are you referring, now, to the Procedural Notice we
19 looked at a few minutes ago?
20 A Yes.
21 Q And let's just go back to that Procedural
22 Notice, and we'll go to footnote 5, and it says at
23 the end that you have "to repay the fee if the
24 lender is found guilty of an act of fraud."
Page 115
1 And that's what you were referring to?
2 A Yes.
3 Q Okay. So it isn't just impetuous of fraud.
4 It's an actual finding of guilt of an act of fraud;
5 correct?
6 A As this is written, correct.
7 Q Okay.
8 MR. ROGERS: I've got about no more than 15
9 minutes. You guys okay plunging ahead?
10 MR. LEDERER: Mr. Manger, totally defer to you,
11 sir? Do you want to go 15 minutes more, or Ed's
12 asking if you want five or ten minutes of a break.
13 THE WITNESS: Could I just have five minutes
14 for a bathroom break?
15 MR. ROGERS: Five minutes is perfect for us.
16 (Recess held.)
17 BY MR. ROGERS:
18 Q Mr. Manger, I want to go back to your
19 opening report. I want to go to the very end of
20 your opening report, paragraph 25.
21 A Okay. That was Manger 1. Yeah.
22 Q Manger 1. Paragraph 25.
23 Do you see that?
24 A Yes. Yes.
Page 116
1 Q I want to keep going down 25 until we get
2 to the next page.
3 A Okay.
4 Q So I'm going to ask you a question about
5 what I'm going to call the carryover sentence.
6 A Okay.
7 Q Okay. You say, "Finally, a central purpose
8 of the PPP was to make money available to small
9 businesses and not-for-profits as loans that would
10 then be forgiven, essentially creating and
11 distributing grants."
12 Do you see that?
13 A Yes.
14 Q Are you aware that the issue of whether the
15 PPP was a loan program or a grant program has been
16 covered in at least one Court opinion?
17 A Yes, I think I was -- I was aware of that a
18 little bit. But maybe if there's more to it, you
19 can enlighten me.
20 Q Okay. Well, based on what you do recall,
21 the argument that the PPP was a grant program was
22 one that the Court rejected.
23 Is that your recollection?
24 A Yeah. Although, I would disagree with that
Page 117
1 to a certain extent.
2 Q When you say "I would disagree with that,"
3 let's take a look at what I'm referring to.
4 MR. ROGERS: I'm going to mark as Manger 13 a
5 decision by the United States Court of Appeals for
6 the Second Circuit from 2022.
7 (Exhibit 13 marked for identification.)
8 BY MR. ROGERS:
9 Q It's entitled Springfield Hospital, Inc.
10 Against Guzman.
11 Is that the opinion that you are referring
12 to? Can you tell me that?
13 A Yeah. I did not read this opinion. I
14 think I just -- I just heard about that. I mean, I
15 know Isabel Guzman is now the administrator of the
16 Small Business Administration.
17 Q We don't need to take up everyone's time
18 with the background on the Springfield Hospital
19 decision, but I do want to go and look together at
20 page 17 of the PDF, and the Section C addresses the
21 issue of whether the PPP is a loan or a grant
22 program as a legal matter, and the Court of Appeals
23 ultimately reverses the bankruptcy court on that
24 issue, and I want to focus your attention towards
Deposition of William M. Manger, Jr.
Alicia Marshall, et al. v. Prestamos CDFI, LLC
215-341-3616 transcripts@everestdepo.com
Everest Court Reporting LLC
Page: 33 (114 - 117)
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