Complaint for Permanent Injunction and Other Equitable Relief — No. 1:20-cv-00177 (Dkt. 1, D.R.I.)

Summary

A complaint for permanent injunction and other equitable relief filed by the Federal Trade Commission in the U.S. District Court for the District of Rhode Island, Case 1:20-cv-00177, on April 17, 2020 as Document 1, against Ponte Investments, LLC, also doing business as SBA Loan Program and SBA Loan Program.com, and John C. Ponte. The FTC brings the action under Section 13(b) of the FTC Act for violations of Section 5(a). It alleges that SBA Loan Program preys on small businesses seeking relief from the coronavirus pandemic by claiming to make funds available through a new SBA loan program, when the defendants are not authorized to make such loans and are not affiliated with the SBA.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Cite this document

“Complaint for Permanent Injunction and Other Equitable Relief — No. 1:20-cv-00177 (Dkt. 1, D.R.I.).” Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/complaint-for-permanent-injunction-and-other-equitable-relief-no-1-20-d1580f9aaf/, SHA-256 9489282e5d683031aa52c0a27b33cd8df3df630bf16eba5b67ba6548fc6912df.

Full text

Case 1:20-cv-00177 Document 1 Filed 04/17/20 Page 1 of 11 PageID #: 1

UNITED STATES DISTRICT COURT
DISTRICT OF RHODE ISLAND

FEDERAL TRADE COMMISSION, Case No. ____________

Plaintiff, COMPLAINT FOR PERMANENT
INJUNCTION AND OTHER
v. EQUITABLE RELIEF

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.

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).

1
Case 1:20-cv-00177 Document 1 Filed 04/17/20 Page 2 of 11 PageID #: 2

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

2
Case 1:20-cv-00177 Document 1 Filed 04/17/20 Page 3 of 11 PageID #: 3

(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.

3
Case 1:20-cv-00177 Document 1 Filed 04/17/20 Page 4 of 11 PageID #: 4

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!”

4
Case 1:20-cv-00177 Document 1 Filed 04/17/20 Page 5 of 11 PageID #: 5

CARES Act Paycheck Protectio n 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.

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”.

5
Case 1:20-cv-00177 Document 1 Filed 04/17/20 Page 6 of 11 PageID #: 6

~~ ~BA ~~AN
,..• . ~ PROGRAM
o division of Ponte Investments, llC
B
Call Us 888-982-8380

CARES Act Paycheck Protection
Program
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).”

6
Case 1:20-cv-00177 Document 1 Filed 04/17/20 Page 7 of 11 PageID #: 7

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. ..

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

7
Case 1:20-cv-00177 Document 1 Filed 04/17/20 Page 8 of 11 PageID #: 8

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.

8
Case 1:20-cv-00177 Document 1 Filed 04/17/20 Page 9 of 11 PageID #: 9

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

9
Case 1:20-cv-00177 Document 1 Filed 04/17/20 Page 10 of 11 PageID #: 10

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

10
Case 1:20-cv-00177 Document 1 Filed 04/17/20 Page 11 of 11 PageID #: 11

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

File and source

File: 1.pdf
Size: 186,979 bytes
SHA-256: 9489282e5d683031aa52c0a27b33cd8df3df630bf16eba5b67ba6548fc6912df
Our copy: 1.pdf
Original: No public link identified.