Saratoga Springs Bank Sues Golden Corral Restaurant Operators Over Paycheck Protection Loans

A Saratoga Springs bank is suing 10 companies and two of their shareholders to recover nearly $ 2 million granted through PPP loans.

Adirondack Trust Company accuses the two of embezzling the proceeds from funds loaned through the federal payroll protection program to 10 of their companies. They operate the Saratoga Springs Comfort Inn and Suites and, as franchisees, operate eight Golden Corral restaurants in New York and New Jersey, including those in Colony, Queensbury and Wilton.

The P3 was one of the key elements of the emergency federal aid and stimulus plans approved last spring, as the COVID-19 pandemic crippled the economy and pushed some business owners to the brink of collapse. failure. The program offered eligible businesses low-interest loans that would be completely canceled if borrowers met conditions, including job retention.

The pair are Niral A. Patel and Nirmala A. Patel, residents of Saratoga County and Schenectady County respectively. Legal documents identify Nirmala as Niral’s mother, and indicate that the two are shareholders of the 10 legal entities that received the loans. The lawsuit names the 10 corporate defendants and also states that Niral is an officer in each.

Adirondack is seeking to recover the nearly $ 2 million it paid the defendants, plus interest, attorney fees and legal fees.

The lawsuit was filed Monday in the state Supreme Court in Saratoga County. He makes the following statements and allegations:

  • The corporate defendants applied for PPP loans in April. Niral has certified that the product will be used in accordance with PPP rules. Between April 10 and April 13, Adirondack entered into 10 promissory notes with the defendant companies and paid them $ 1,979,600.
  • The loans ranged from $ 25,100 to $ 357,900; they carried an annual interest rate of 1% and were to be repaid in 17 monthly installments starting November 10.
  • The defendant companies did not use the proceeds of the PPP loan for qualifying expenses such as labor costs, mortgage interest, lease payments, and utility payments.
  • The Patels used the proceeds for personal expenses and attempted to cover up this use and protect the proceeds from being collected by Adirondack through a series of transfers between their different accounts.
  • Niral controls Nirmala’s personal current account under a power of attorney granted in 2014.
  • Niral signed each of the PPP notes on behalf of each of the companies and deposited the checks into the Adirondack chequing accounts of the defendant companies as of April 17.
  • Niral then forced nine of the corporate defendants to transfer $ 1.924 million to Nirmala’s personal Adirondack checking account on May 7; on May 5, his balance in that account was only $ 5,926.15.
  • Nirmala then paid over $ 17,000 on her residential mortgage (also via Adirondack), transferred $ 26,000 to Niral’s personal checking account and transferred $ 102,000 to the tenth defendant company, which had received the smaller one. PPP loan – $ 25,100.
  • From May 7 to October 5, $ 493,500 was transferred from one company’s accounts to Nirmala’s personal checking account and $ 649,550 from Nirmala’s account to the same company’s accounts, constituting an inappropriate money transfer to that company. defendant.
  • The corporate defendants and / or the Patels have known liabilities of over $ 20 million. This includes a $ 10 million mortgage foreclosure action in Saratoga County; 80 federal and state tax liens and warrants totaling over $ 6.6 million; and a January lawsuit brought by another bank in Suffolk County court asking for $ 2.53 million overdue on a $ 2.85 million promissory note.
  • Defendant companies’ PPP loans are not eligible for forgiveness because the funds were not used for payroll or other authorized purposes. Therefore, every loan is in default.
  • The Golden Corrals were closed on March 18 along with most other public places to slow the spread of COVID-19. The restaurants are no longer a running business – Niral has said in an affidavit in the Suffolk County action that he has no plans to reopen the restaurants as Golden Corral franchises.
  • Because of all this, Adirondack believes the prospect of loan repayment is in jeopardy.

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Categories: Business, New, Saratoga County, Schenectady County

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