A small business lender once targeted by David Einhorn agreed today to settle fraud charges by the Justice Department for $26.3 million. The settlement, from Ciena Capital (once part of Allied Capital Corp.,) also resolves a whistleblower lawsuit by Einhorn’s Greenlight Capital.
Greenlight, and co-plaintiff James Brickman, will receive $4.3 million as part of the settlement. The feds charged Ciena with defrauding the Small Business Administration when they sought payments on federally-backed loans they made and serviced. The loans, which eventually defaulted, violated SBA rules and underwriting standards.
"The United States will not tolerate fraud in lending programs designed to assist small businesses," Assistant Attorney General Tony West said in a statement.
One former Business Loan Center executive vice president has pleaded guilty to conspiring to defraud the United States and was sentenced to 10 years in prison, the department said.
Allied was acquired on April 1 by Ares Capital Corp.