PPP loans earned a Miami lender $680 million. Now it’s being sued by the Federal Reserve

Summary

Ben Wieder reports in this July 24, 2024 article that Benworth Capital, a Miami lender that earned more than $680 million in fees from Paycheck Protection Program loans, was sued by the Federal Reserve Bank of San Francisco, which had provided the money Benworth used for its PPP lending. The Federal Reserve bank says Benworth breached its contract and is demanding that it immediately repay nearly $67 million. The article says the suit names Bernie Navarro along with his wife, Claudia, and follows a May arbitration ruling that Benworth must pay $118 million to the technology company Womply. It also describes the Navarros as longtime financial supporters of U.S. Sen. Marco Rubio.

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PPP loans earned a Miami lender $680 million. Now it’s being sued by the Federal Reserve

Ben Wieder

July 24, 2024 5 min read

A Miami lender that was one of the biggest approvers of Paycheck Protection Program loans now finds itself in the crosshairs of a Federal Reserve bank in connection with its lending in the program.

Benworth Capital approved more than $4 billion of the forgivable federal loans designed to keep small businesses afloat during the COVID-19 pandemic, which earned Benworth more than $680 million in fees.

The lender was sued earlier this month by the Federal Reserve Bank of San Francisco, which provided Benworth with the money it used to make its PPP loans. The Federal Reserve bank said that Benworth is in breach of its contract with the bank and is demanding that Benworth immediately repay nearly $67 million the bank says it is still owed.

It appears to be the only lawsuit to date brought by a Federal Reserve bank against a lender in the program.

The lawsuit also says that Benworth fraudulently transferred funds from Florida to Puerto Rico and paid more than $49 million between 2021 and 2024 to the bank's founder and chief executive officer, Bernie Navarro, who is named in the lawsuit, along with his wife, Claudia.

The politically connected Navarros are longtime friends and financial supporters of U.S. Sen. Marco Rubio and hosted an event for Rubio at their Coral Gables home ahead of his failed bid for the Republican presidential nomination in the 2016 election cycle. The pair have also donated thousands of dollars to support other Florida Republicans, most notably U.S. Sen. Rick Scott.

Bernie Navarro has held numerous civic and professional leadership positions in the past — including as former chair of the Miami Dade College Board of Trustees and former president of the Latin Builders Association — and once even contemplated a run for Miami-Dade County mayor.

Latin Builders Association/Courtesy

The lawsuit comes in the wake of a May ruling by a California arbitrator that Benworth must pay $118 million to an upstart technology company called Womply that it had partnered with on its PPP lending. Benworth told the Federal Reserve bank that it might not be able to pay the technology company what it owes, which ultimately triggered the Federal Reserve's demand for immediate payment.

The Federal Reserve bank has also filed a motion to intervene in a related lawsuit between Womply and Benworth, arguing that it has a priority over Womply to collect what it is owed first.

In a statement, Benworth said "we categorically deny these allegations" and that the company "has always upheld its legal and ethical requirements under the law and in all its dealings."

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