KeyBank Settles PPP Case for $7.7 Million After Branch Manager Loan Fraud Scheme

January 9, 2025

by Bob Coleman
Founder & Publisher

Fraud Friday: KeyBank Settles PPP Case for $7.7 Million After Branch Manager Loan Fraud Scheme

KeyBank has agreed to pay $7.7 million to settle allegations tied to a PPP loan fraud scheme involving a rogue branch manager. The fraud centered on Tommy Hawkins, a branch manager who was sentenced to 65 months in prison. During the pandemic, Hawkins had access to Key Bank’s systems and the SBA portal used to approve loans. He processed 48 PPP loans totaling over $5 million, and each loan was fraudulent.

According to the case, Hawkins’ motivation was simple: kickbacks. He received $5,000 for each loan he approved through the group, collecting roughly $190,000 in exchange for a banking career and a prison sentence.

The fraud was not a one-person operation. Hawkins was connected to a coordinated group described as a well-organized gang. The alleged ringleader was Eric Rivera, portrayed as having a charming demeanor and persuasive skills that helped him recruit participants and expand the scheme. Rivera is awaiting trial and is presumed innocent unless proven guilty.

Another participant, James Wessels, allegedly produced fraudulent tax returns. He is accused of creating the supporting documentation needed to make the applications appear legitimate, and tax returns could be obtained for $300 to $500.

Federal investigators recovered communications illustrating the tone of the operation. In one example, Rivera allegedly encouraged a recruit, writing: “Go get that bread, bro. You know what to do with it.” When the recruit said he did not have tax returns for several businesses, Rivera replied that it was not a problem and pointed to a system for generating the returns.

The key issue in the settlement was not only the rogue employee’s conduct, but what happened later in the forgiveness process. KeyBank detected suspicious patterns in Hawkins’ activity and disclosed concerns to the SBA. However, the alleged issue was that KeyBank later submitted documentation that resulted in the fraudulent loans being forgiven, effectively representing that the funds had been used properly and supported by appropriate documentation.

The fraud ring did not use the money as intended. Rivera allegedly spent much of the proceeds at jewelry stores, clothing retailers, and through cash withdrawals, along with spending at hotels and casinos.

KeyBank ultimately chose to settle rather than fight the allegation, resulting in the $7.7 million payment — an amount designed to make the government whole for the fraudulent loans, plus additional cost.

Watch Fraud Friday on YouTube here