Miami Lender Benworth Capital Sued by Federal Reserve: $67 Million Breach of Contract, CEO Bernie Navarro and Wife Claudia made Over $4 Billion in PPP Loans and made $680 Million in Fees

Benworth Capital Faces Federal Reserve Scrutiny Over PPP Loans

Background and Overview
Benworth Capital, a Miami-based lender, is under investigation by the Federal Reserve Bank of San Francisco regarding its participation in the Paycheck Protection Program (PPP). Benworth approved over $4 billion in PPP loans, earning more than $680 million in fees. These loans were intended to help small businesses survive the economic impact of the COVID-19 pandemic.

Federal Reserve Lawsuit
The Federal Reserve Bank of San Francisco has filed a lawsuit against Benworth, claiming the lender breached its contract and demanding immediate repayment of nearly $67 million. The lawsuit alleges that Benworth fraudulently transferred funds from Florida to Puerto Rico and paid over $49 million to Bernie Navarro, the company’s founder and CEO, and his wife, Claudia.

Political Connections
The Navarros are notable political figures, having supported U.S. Senator Marco Rubio and other Florida Republicans. Bernie Navarro has held various civic and professional leadership roles, including chairing the Miami Dade College Board of Trustees and serving as president of the Latin Builders Association.

Arbitration with Womply
In May, a California arbitrator ruled that Benworth must pay $118 million to Womply, a technology company it partnered with for PPP lending. Womply automated the PPP approval process, enabling Benworth to handle a large volume of applications swiftly. However, Benworth and other lenders have criticized Womply’s vetting process, linking it to widespread fraud in the program.

Benworth’s Response
Benworth has denied the allegations, stating that the company has always complied with legal and ethical standards. They attribute their financial difficulties to Womply’s failures, including not providing necessary documentation for loan reimbursements from the U.S. Small Business Administration.

Impact and Fraud Concerns
The PPP, part of the 2020 CARES Act, distributed $800 billion in loans but faced significant fraud issues. The Small Business Administration’s Office of the Inspector General estimated $64 billion in potentially fraudulent loans were issued. Womply and other fintech companies were heavily criticized for their lax anti-fraud measures, with Womply being barred from working with the SBA and settling a complaint with the Federal Trade Commission for $26 million.

Conclusion
Benworth’s case highlights ongoing issues within the PPP, including fraud and financial mismanagement. The outcome of the Federal Reserve’s lawsuit and Benworth’s financial obligations to Womply will likely set precedents for other lenders involved in similar disputes.

FEDERAL RESERVE BANK OF SAN
FRANCISCO,
Plaintiff,
v.
BENWORTH CAPITAL PARTNERS PR LLC,
BENWORTH CAPITAL PARTNERS LLC,
BERNARDO NAVARRO and CLAUDIA
NAVARRO,
Defendants.

https://storage.courtlistener.com/recap/gov.uscourts.prd.183139/gov.uscourts.prd.183139.1.0.pdf