IN THE UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF TEXAS 

FORT WORTH DIVISION 

ERIC GREATHOUSE, ERNESTO 

COVARRUBIAS, TIFFANY SUMRALL, 

BARBARA MYLES, CORI PERICHO, 

JOHN PINKNEY, JOSHUA SMITH and 

ALICIA MENA, individually and on behalf 

of all others similarly situated, 

Plaintiff, 

 

v. 

CAPITAL PLUS FINANCIAL, LLC, 

CROSSROADS IMPACT CORP., ERIC A. 

DONNELLY and ROBERT H. ALPERT, 

Defendants. 

Case No. 4:22-cv-686 

CLASS ACTION COMPLAINT 

JURY TRIAL DEMANDED 

Plaintiffs Eric Greathouse, Ernesto Covarrubias, Tiffany Sumrall, Barbara Myles, Cori 

Pericho, John Pinkney, Joshua Smith, and Alicia Mena (collectively, “Plaintiffs”), individually 

and on behalf of all others similarly situated, file this Class Action Complaint for damages, an 

accounting, and equitable relief against Capital Plus Financial, LLC (“CPF”), CPF’s corporate 

parent, Crossroads Impact Corp. (formerly known as Crossroads Systems, Inc.) (“Crossroads”), 

CPF’s and Crossroads’s former dual CEO and dual Director Eric A. Donnelly (“Donnelly”), and 

Crossroads Board Chairman Robert H. Alpert (“Alpert”) (collectively, the “Defendants”). 

Plaintiffs’ claims arise from CPF’s failure to fund U.S. Small Business Administration (the 

“SBA”)-approved Paycheck Protection Program (“PPP” or the “Program”) loans that CPF was 

contractually obligated to fund. In support, Plaintiffs allege the following based upon 

information and belief except as to the allegations pertaining to themselves which are based on 

personal knowledge. Plaintiffs’ information and belief is based on the applicable facts of which 

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Plaintiffs are aware and the ongoing investigation of their counsel which included, among other 

things, a review of applicable documents, information from other litigation against Defendants, 

publicly available information concerning the PPP and PPP loans, filings with the U.S. Securities 

and Exchange Commission (the “SEC”), and media and other reports including information 

available on the Internet. 

Summary of the Claims

1. Following the worldwide outbreak of COVID-19, Congress passed the 

Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) to, among other things, 

provide some relief to America’s small businesses and sole proprietors through the creation of 

the PPP. 

2. Administered by the SBA, the PPP was established to provide hundreds of 

billions of dollars of potentially forgivable loans to small businesses and sole proprietors in a 

quick and efficient manner using a standard form note and accompanying loan agreement 

documents that Plaintiffs and other PPP borrowers entered into with CPF. 

3. To ensure that small businesses and sole proprietors received PPP loan proceeds 

quickly, the applicable provisions of the PPP required lenders to fund PPP loans within ten days 

of SBA approval. 

4. Lenders that participated in the Program were entitled to fees payable by the SBA 

for each PPP loan the lenders processed. 

5. Defendant CPF was one of the SBA’s authorized PPP lenders. 

6. Before the PPP, CPF was a small lender in the Texas area with approximately 

$36.6 million in total revenue in fiscal year 2020. 

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7. At all times relevant in 2021, defendant CPF was wholly owned and operated by 

defendant Crossroads, and remains presently Crossroads’s wholly owned subsidiary. Crossroads 

is a publicly-traded for-profit holding company. CPF is, and at all times relevant in 2021 was, 

controlled and dominated by Crossroads; shared certain of the same senior executives, including 

defendant Donnelly who, until August 30, 2021, served simultaneously as both CPF’s and 

Crossroads’s dual CEO and was and continues to be Crossroads’s CEO and a Director of both 

CPF and Crossroads, as well as Farzana Giga (“Giga”), who also at all times relevant in 2021 

and continuing through today served simultaneously as CPF’s and Crossroads’s dual CFO and a 

Director of both CPF and Crossroads and executed the standard form PPP loan notes entered into 

by CPF and the Plaintiffs and other putative members of the proposed class; had a website that 

referenced and promoted Crossroads and provided links to Crossroads’s website; was referred to 

in Crossroads’s SEC filings and other public statements as one and the same company; and was 

operated by Crossroads as if they were one and the same company. 

8. In 2021, after the SBA substantially increased the fees lenders would receive for 

PPP loans made in 2021, Crossroads caused CPF to exploit that increased fee opportunity by 

dramatically ramping up CPF’s participation in PPP lending. Defendants were hugely successful 

in that respect. 

9. In particular, CPF reportedly processed 472,036 PPP loans totaling over $7.5 

billion through May 31, 2021 -- the second most PPP loans by any other lender in 2021, and 

more than the total number of PPP loans made in 2021 by Bank of America, PNC Bank, TD 

Bank and Wells Fargo combined. See Paycheck Protection Program (PPP) Report: Approvals 

through 05/31/2021 (sba.gov) (last visited July 25, 2022). 

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10. Although only CPF and not Crossroads was the qualified and approved SBA 

supervised PPP lender, Crossroads was the alter ego of CPF and, at the direction of defendants 

Donnelly and Alpert, caused CPF to upstream all or the vast bulk of its PPP lending fees directly 

to Crossroads. 

11. Accordingly, in its SEC filings, Crossroads reported that “the Company” received 

$970.5 million in total revenue of which $930 million was PPP loan fees in 2021 compared to 

just $27.5 million in total revenue the prior year. As stated in Crossroads’s quarterly report filed 

with the SEC for the period ending July 31, 2021: 

“Total revenue from operations for the nine months ended July 31, 2021, was 

$970.5 million compared to $27.5 million for the same period of 2020. The 

increase in revenue was the result of the Company participating in the Payment 

Protection Program (PPP) administered by the Small Business Administration 

(‘SBA’). The Company earned fees from the program totaling approximately 

$930.0 million.” 

See http://www.crossroads.com/wp-content/uploads/2021/09/CRSS_Q3-2021-OTC-DisclosureStatement.pdf (last visited Dec. 23, 2021) (emphasis added). 

12. In flagrant disregard of its contractual loan agreement obligations to Plaintiffs and 

the other eligible class member borrowers, however, CPF failed to actually fund those 

borrowers’ SBA-approved PPP loans. 

13. Plaintiffs and numerous other business owners across the country each timely 

applied for PPP loans with CPF, had their loans approved by the SBA and assigned PPP loan 

numbers, and yet never received their PPP loan funds. 

14. For its role in dominating and controlling CPF and in directing the conduct and 

exploiting CPF’s status as an SBA-approved and supervised PPP lender, Crossroads not only 

received hundreds of millions of dollars in PPP loan fees -- including loan fees on the backs of 

the PPP loans of Plaintiffs and other putative borrower members of the proposed class across the 

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country that CPF failed to fund. It also, less than two months from when the PPP lending 

window closed on May 31, 2021, announced that as a result of its “windfall associated with the 

PPP loan program” it was “now overcapitalized” and would pay out a special dividend of $40 

per share to shareholders of record as of July 19, 2021 totaling over $238 million, $157 million 

of which was rushed out and paid on or about July 26, 2021 to the handful of senior executives 

and directors of defendant Crossroads who collectively then owned approximately 66% of 

Crossroads’s equity, of which defendants Donnelly and Alpert collectively received nearly $150 

million, consisting specifically of $90,227,080 to Donnelly and $59,691,400 to Alpert. 

15. Additionally, according to Crossroads’s Annual Report for the fiscal year ending 

October 31, 2021, Donnelly and Giga received base salaries of $350,000 and $300,000, 

respectively, and bonuses of $8,899,474 each for fiscal year 2021 total compensation. See

https://crossroads.com/wp-content/uploads/2022/01/FY-2021-Annual-DisclosureStatement_CRSS.pdf (last visited July 26, 2022). 

16. In sum, while touting CPF’s professed status as a certified B-Corp purporting to 

“promote economic vitality and community development” and “’hav[ing] seen firsthand the 

impact that the pandemic has had on minority-owned businesses in low-to-moderate income 

tracts’” as Crossroads stated in its January 11, 2021 news release (see Capital Plus Financial 

Partners with Blueacorn to Expedite PPP Loan Relief to Small Businesses (prnewswire.com),

Defendants shamelessly enriched themselves off the backs of PPP loans to which Plaintiffs and 

other class member borrowers were contractually entitled but CPF failed to fund. 

Parties 

17. Plaintiff Eric Greathouse (“Greathouse”), a natural person residing in Russellville, 

Arkansas, is a sole proprietor of an insurance inspection business. 

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18. Plaintiff Ernesto Covarrubias (“Covarrubias”), a natural person residing in Santee, 

California, is a sole proprietor of an auto repair business. 

19. Plaintiff Tiffany Sumrall (“Sumrall”), a natural person residing in El Paso, Texas, 

is a sole proprietor of a landscape architectural business. 

20. Plaintiff Barbara Myles (“Myles”), a natural person residing in Raeford, North 

Carolina, is a sole proprietor of a business involving independent artists, writers and performers. 

21. Plaintiff Cori Pericho (“Pericho”), a natural person residing in Kamuela, Hawaii, 

is a sole proprietor of a messenger and delivery service business. 

22. Plaintiff John Pinkney (“Pinkney”), a natural person residing in Beaumont, Texas, 

is a sole proprietor of a cable communications business. 

23. Plaintiff Joshua Smith (“Smith”), a natural person residing in Sacramento, 

California, is an independent contractor involved in delivery service and human resource 

consulting. 

24. Plaintiff Alicia Mena (“Mena”), a natural person residing in Casa Grande, 

Arizona, operates a home housecleaning business. 

25. Defendant CPF is a limited liability company organized under the laws of the 

state of Texas with its principal place of business at 2247 Central Drive, Bedford, Texas 76021. 

According to Texas state records, defendant CPF’s registered agent is defendant Donnelly, and 

Donnelly and Giga also at all times relevant in 2021 served as CPF’s Directors and Managers. 

26. Defendant Crossroads is a publicly traded corporation organized under the laws of 

Delaware with its principal place of business at 4514 Cole Avenue, Suite 1600, Dallas, Texas 

75205. 

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27. Defendant Donnelly has served as a Director and as CEO of defendant Crossroads 

since December 2017. As noted previously, Donnelly also simultaneously served as CEO of 

defendant CPF from 2014 until August 30, 2021, after Crossroads had declared and paid out in 

July 2021 the special dividend based on PPP loan fees CPF obtained and upstreamed to 

Crossroads pursuant to which Donnelly personally received over $90 million, in addition to the 

over $9 million in other total cash compensation he received in 2021 as CEO of Crossroads and 

any other compensation he may have received for 2021 from CPF. 

28. Defendant Alpert has served as Chairman of Crossroads’s Board of Directors 

since October 2017. Alpert is also the Co-Chairman and Co-CEO of P10, Inc. (formerly P10 

Holdings, Inc.) (“P10”), a publicly traded investment firm that, itself or through its affiliates, 

including Enhanced Capital Group, provides investment advisory services to Crossroads. P10 is 

headquartered at the same corporate headquarters as Crossroads. See https://www.p10alts.com/ 

(last visited July 24, 2022). Defendant Alpert’s Co-CEO at P10 is C. Clark Webb (“Webb”), 

who also serves as a director of both P10 and, at all times applicable, Crossroads. According to 

Crossroads’s annual report for the fiscal year ending October 31, 2021, Crossroads reportedly 

has financed $7.5 million in loans for P10 or its affiliates, and CPF reportedly leases office space 

from an entity called 210 Capital whose principals are Alpert and Webb. 

Jurisdiction & Venue

29. This Court has subject matter jurisdiction under the Class Action Fairness Act 

because at least one member of the proposed class is a citizen of a different state than defendants 

CPF and Crossroads; there are more than 100 members of the proposed class; and the aggregate 

amount in controversy exceeds $5,000,000.00 exclusive of interest and costs. See 28 U.S.C. 

§ 1332(d)(2)(A). 

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30. This Court also has personal jurisdiction over each Defendant. 

31. The Court has personal jurisdiction over defendant CPF because CPF is organized 

under Texas law, its principal place of business is in the Fort Worth Division of the Northern 

District of Texas, and it undertook substantial and continuous business from this District 

concerning the claims at issue. 

32. The Court has personal jurisdiction over defendant Crossroads because 

Crossroads’s principal place of business is in this District, and it undertook substantial and 

continuous business from this District concerning the claims at issue. 

33. Plaintiff Greathouse originally filed this litigation against defendants CPF and 

Crossroads on December 29, 2021 in the U.S. District Court for the Eastern District of Arkansas, 

where plaintiff Greathouse resides and was approved by the SBA for his PPP loan. See 

Greathouse v. Capital Plus Financial LLC, Case No. 4:21-cv-01243-BRW (E.D. Ark.). 

Defendants CPF and Crossroads moved to dismiss under Fed. R. Civ. P. 12(b)(2), among other 

grounds, arguing that the Court there lacked personal jurisdiction. Defendants CPF and 

Crossroads contended in their motion that personal jurisdiction in this District is proper. Id. 

ECF 25 at 28-29 (“Apart from Plaintiff’s own choice to file this case in Arkansas, there is no 

reason to believe that maintaining suit in Arkansas (subject to Defendants’ 12(b)(1) and 12(b)(6) 

challenges set forth in this motion) would be more convenient or effective than doing so in, for 

example, Texas, where at least personal jurisdiction over Defendants could easily be 

established.”). By Order on July 19, 2022, the Court granted defendants CPF and Crossroads’s 

motion to dismiss for lack of personal jurisdiction “without prejudice.” See Greathouse v. 

Capital Plus Financial LLC, Case No. 4:21-cv-01243-BRW (ECF 53) (E.D. Ark. June 28, 2022). 

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As a result, defendants CPF and Crossroads are also estopped from disputing that this Court has 

personal jurisdiction over Plaintiffs’ claims against them. 

34. The Court has personal jurisdiction over defendant Donnelly because Donnelly at 

all times relevant had substantial and continuous contacts with Texas concerning the claims at 

issue by virtue of his simultaneous and dual roles as CEO and Director of Crossroads and CPF 

and CPF’s Manager. This Court also has personal jurisdiction over Donnelly because Donnelly 

purposefully conducted substantial activities in Texas on behalf of Crossroads and CPF relating 

to the claims at issue; the causes of action herein arise from and relate to those activities in and 

contacts with Texas; and the exercise of personal jurisdiction by this Court over Donnelly does 

not offend traditional notions of fair play and substantial justice. 

35. The Court has personal jurisdiction over defendant Alpert because Alpert at all 

times relevant had substantial and continuous contacts with Texas concerning the claims at issue 

by virtue of his role as Chairman of Crossroads’s Board of Directors and as Co-CEO of P10 and 

the advisory services P10 directly or indirectly provided to Crossroads under Alpert’s control 

and direction. This Court also has personal jurisdiction over Alpert because Alpert purposefully 

conducted substantial activities in Texas on behalf of Crossroads and CPF relating to the claims 

at issue; the causes of action herein arise from and relate to those activities in and contacts with 

Texas; and the exercise of personal jurisdiction by this Court over Alpert does not offend 

traditional notions of fair play and substantial justice. 

36. Venue is proper in this judicial District under 28 U.S.C. § 1391(b)(2) because a 

substantial part of the events giving rise to the claims occurred in this District. Defendant CPF’s 

principal place of business is in the city of Bedford, Tarrant County, Texas, which is in the Fort 

Worth Division of the Northern District of Texas. 

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Additional Factual Allegations 

Background Concerning the 

COVID-19 Pandemic and the PPP 

37. On March 11, 2020, the World Health Organization declared the COVID-19 

outbreak a “pandemic.” Two days later, on March 13, 2020, the United States declared a national 

emergency due to the COVID-19 pandemic. 

38. In response, on March 27, 2020, the United States Congress passed the largest 

economic stimulus package in the nation’s history -- the CARES Act. The CARES Act 

amounted to over $2 trillion in aid, equivalent to roughly $6,000 per American, or 45% of all 

federal government spending for 2019. 

39. The CARES Act was enacted to provide immediate assistance to individuals, 

families, and businesses affected by the COVID-19 emergency. 

40. One facet of the CARES Act’s approach to economic relief was the PPP. 

Recognizing the huge strain that the COVID-19 pandemic would likely impose on American 

small businesses, the PPP initially allocated $349 billion for loans to small businesses, sole 

proprietors, and nonprofit organizations, among others. These loans were intended to pay up to 

eight weeks of payroll costs (including benefits) and could also be used to pay interest on 

mortgages, rent, and utilities. 

41. PPP loans are guaranteed by the SBA, and the PPP provides for loan forgiveness 

if the borrower demonstrates that the funds were used in compliance with PPP regulations. 

42. The PPP has received several legislative renewals, modifications, and extensions. 

On April 24, 2020, the President signed the Paycheck Protection Program and Health Care 

Enhancement Act, which provided additional funding and authority for the PPP. On June 5, 

2020, the Paycheck Protection Program Flexibility Act of 2020 was enacted, extending the 

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deferral period for PPP loans, among other provisions. On July 4, 2020, the PPP was further 

amended to guarantee PPP loans to August 8, 2020. On December 27, 2020, the Economic Aid 

to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “Economic Aid Act”) was 

enacted, which further extended the PPP and allowed for the SBA to authorize second-draw PPP 

loans through March 31, 2021, available to borrowers who already used their previous PPP loan 

proceeds for permitted expenditures. On March 11, 2021, the American Rescue Plan Act was 

signed into law, adding an additional $7.25 billion for PPP loans, bringing total appropriations 

for the program to $813.7 billion. Finally, on March 30, 2021, the PPP Extension Act was 

enacted, which extended the PPP application deadline to May 31, 2021, and gave the SBA until 

June 30, 2021 to process loan applications. 

43. PPP loans are generally available to businesses in operation as of February 15, 

2020 that had paid employees, as well as self-employed individuals. Businesses receiving PPP 

loans cannot have more than 500 employees and cannot be in bankruptcy. Further, applicants are 

required to certify that the “current economic uncertainty makes this loan request necessary to 

support the ongoing operations of the Applicant.” Currently, at least 60% of the proceeds must 

be used for payroll costs. The entire amount of any PPP loan is subject to forgiveness so long as 

the proceeds are used for eligible expenses. 

44. Under the Economic Aid Act, a PPP borrower is entitled to a second draw under 

narrower conditions than its first draw. For example, a second draw borrower must have 300 or 

fewer employees, must demonstrate that it sustained a certain percentage reduction in its gross 

receipts compared to 2019, and must have used its entire first draw proceeds prior to 

disbursement of its second draw proceeds. Second draw loans -- like first draw loans -- are also 

subject to forgiveness. 

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45. Given the anticipated volume of PPP loan applications, Congress provided for 

PPP loan processing and funding through private lenders, with the SBA paying these lenders a 

fee for each processed PPP loan. 

46. For their participation, the PPP originally provided that lenders would receive fees 

at a rate of five percent for loans $350,000.00 or less, three percent for loans between 

$350,000.00 and $2,000,000.00, and one percent for loans over $2,000,000.00. See SBA 

Procedural Notice, Control No. 5000-20091 (Feb. 8, 2021), available at 

https://www.sba.gov/sites/default/files/2021-02/Procedural%20Notice%205000-20091%20-

%202nd%20Updated%20PPP%20Processing%20Fee%20and%201502%20Reporting-508.pdf

(last visited Sept. 17, 2021). 

47. To address institutional lenders’ neglecting of PPP loan applications from many 

small businesses -- especially minority, underserved, veteran, and women-owned businesses -- in 

favor of larger PPP loans, the Economic Aid Act added that lenders processing loans of up to 

$50,000.00 would receive an increased fee of fifty percent or $2,500.00, whichever is less, per 

PPP loan beginning December 27, 2020. 

48. As a result, PPP lenders received a flat fee of $2,500 for virtually every PPP loan 

less than $50,000.00. 

49. On February 8, 2021, the SBA issued a new notice setting forth the procedure for 

how lenders would be paid PPP loan fees by the SBA. Id. 

50. To apply for a PPP loan, a prospective borrower would have to submit a 

standardized Borrower Application Form issued by the SBA (SBA Form 2483 for first time 

borrowers and SBA Form 2483-SD for second draw borrowers), together with relevant payroll 

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documentation, to a lender. Once the lender reviewed and approved the loan application, the 

lender would submit the application to the SBA for approval. 

51. Following SBA approval of an application, the SBA would issue a ten-digit loan 

identification number (known as a “GP [General Program] number”) for the borrower’s loan. 

52. Provided that the borrower had executed the loan documents, the lender was 

required to disburse the PPP funds within ten days of SBA approval and assignment of the loan 

number. In particular, the SBA rule regarding PPP loan funding states, in relevant part, as 

follows: “The lender must make a one-time, full disbursement of the PPP loan within 10 

calendar days of loan approval; for the purposes of this rule, a loan is considered approved when 

the loan is assigned a loan number by SBA.” 86 Fed. Reg. 3692, 3710 (emphasis added). 

53. If the PPP borrower did not sign and submit all of the required documents to the 

lender, then the PPP lender was required to report the loan and corresponding loan number as 

cancelled no later than twenty days from the SBA approval and assignment of the loan number. 

Id. 

54. Lenders’ compliance with the above PPP funding requirement was of paramount 

importance to applicants and borrowers for reasons beyond their need to get the PPP loan 

proceeds in a timely manner. 

55. Once the SBA approved a PPP loan and assigned it a loan number, the applicant 

could not apply for a PPP loan with any other lender because the applicant could not make all of 

the required certifications on another PPP loan application. Thus, once approved, the borrower 

was essentially “stuck” with the lender to whom it applied for the PPP loan, meaning that the 

borrower had to rely exclusively on the good faith of the lender to actually fund the loan. 

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56. For both first draw and second draw PPP loans, a PPP loan applicant had to 

certify that they had not and would not receive another first draw or second draw loan, 

respectively. 

57. Since the lender’s obligation to fund a PPP loan ran from the date the SBA 

approved and assigned a loan number, an applicant could not certify to another lender that they 

would not receive the first loan even if the first lender had failed to timely fund the loan. 

58. Once a PPP loan was purportedly funded, the lender had ten days to submit an 

SBA Form 1502 to report to the SBA that the loan proceeds had been disbursed. After the lender 

submitted a Form 1502, the SBA would initiate payment of the processing fee to the lender. 

59. By submitting a Form 1502, the lender represented to the SBA that the PPP loan 

had been fully funded. Further, a lender was required to update the SBA with monthly Form 

1502 reports detailing each PPP loan’s status. 

60. The PPP was designed to make eligible PPP loans completely forgivable. To be 

eligible to obtain forgiveness, however, PPP borrowers had to certify that the PPP proceeds were 

used only for qualified expenses consistent with the PPP. Ironically, Crossroads itself obtained a 

PPP loan in the amount of $376,800. As Crossroads stated in its own discussion of PPP loan 

forgiveness in its quarterly report for the period ending July 31, 2021: “The principal amount of 

the PPP loan is subject to forgiveness under the Paycheck Protection Program upon the 

Company’s request to the extent that the PPP Loan proceeds are used to pay expenses permitted 

by the Paycheck Protection Program, including payroll costs, covered rent, and mortgage 

obligations, and covered utility payments incurred by the Company. The Company has applied 

for forgiveness of the PPP Loan for these covered expenses.” See https://crossroads.com/wpCase 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 14 of 68 PageID 14
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content/uploads/2021/12/CRSS_Q3-2021-OTC-Disclosure-Statement.pdf (at p. 22) (last visited 

July 26, 2022). 

61. Unlike Crossroads, however, Plaintiffs and other putative members of the class 

could not obtain forgiveness on their PPP loans because they could not represent that they had 

properly used PPP loan proceeds that they in fact never received from CPF. Furthermore, and in 

addition to being unable to have their loans forgiven, Plaintiffs and other putative class members 

are and remain nevertheless bound under the PPP loan notes they and CPF entered into to pay 

back to CPF, with interest, PPP loan proceeds they never received. 

Background Concerning Defendants 

62. CPF is a certified community development financial institution (“CDFI”). 

63. CDFIs were established as part of the Riegle Community Development and 

Regulatory Improvement Act of 1994. See What Are CDFIs, available at 

https://www.cdfifund.gov/sites/cdfi/files/documents/cdfi_infographic_v08a.pdf (last visited 

Sept. 17, 2021). There are reportedly 1,000 CDFIs operating nationwide. Id.

64. CPF was acquired by the for-profit, publicly-traded company Crossroads in 2017 

(OTCQX: CRSS ). 

65. Crossroads states in media releases and on its website that it is a holding company 

that focuses on investing in businesses that promote economic vitality and community 

development. See, e.g., https://crossroads.com/ (last visited July 25, 2022). 

66. Since many sole proprietors’ PPP loans were in amounts less than $10,000.00, 

PPP lenders were generating processing fees of only several hundred dollars for making those 

loans in 2020. 

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67. Pursuant to the new 2021 increased fee schedule, however, lenders like CPF could 

count on collecting a $2,500.00 flat fee for virtually every PPP loan less than $50,000.00. 

68. Taking into consideration the incredible demand for PPP loans less than 

$50,000.00 by sole proprietors, independent contractors, self-employed individuals and other 

underserved small businesses together with the more lucrative fee schedule, CPF and its 

corporate parent Crossroads, at the direction of defendants Donnelly and Alpert, saw an 

opportunity to generate enormous amounts of lender fees by booking a high volume of PPP loans 

under $50,000.00. 

69. CPF and/or Crossroads reportedly contracted with loan service providers in 2021 

such as Blueacorn PPP, LLC (and/or its affiliates and predecessors) (“Blueacorn”) who helped 

identify borrowers to whom CPF could make PPP loans and assist in the PPP paperwork process. 

70. CPF also obtained referrals of PPP borrowers from what Donnelly referred to in 

his letter to shareholders that accompanied Crossroads’s shareholder report for the fiscal quarter 

ended July 31, 2021 as “our community bank referral partners[.]” 

71. In general, only SBA section 7(a)-approved lenders were approved to make PPP 

loans, together with any additional lenders determined by the Administrator of the SBA and the 

Secretary of the U.S. Treasury to also be qualified to make such loans. See 86 Fed. Reg. 3692 

(Jan. 14, 2021), available at https://www.federalregister.gov/documents/2021/01/14/2021-

00451/business-loan-program-temporary-changes-paycheck-protection-program-as-amended-byeconomic-aid-act (last visited July 27, 2022). 

72. Plaintiffs and other similarly situated class member borrowers contracted with 

CPF as the SBA-approved lender obligated to make the PPP loans. 

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73. By virtue as their positions and status within CPF and Crossroads, defendants 

Donnelly and Alpert had the power and authority to exercise substantial control over, and did in 

fact exercise substantial control over, the business affairs of defendants CPF and Crossroads at 

all times relevant, including concerning the PPP lending at issue. Defendants Donnelly and 

Alpert helped lead in establishing corporate policy regarding CPF’s and Crossroads’s PPP 

lending activities; had and continue to have access to material nonpublic information regarding 

those PPP lending activities; and caused CPF and Crossroads to engage in the breaches of legal 

duty to Plaintiffs and the other similarly situated SBA-approved but unfunded putative members 

of the class.

Defendants’ Exploit PPP Lending 

74. Before becoming a PPP lender, CPF was a small, regional lender whose total 

revenue from operations for the fiscal year ending October 31, 2020 was $36.6 million. 

75. At the direction and under the control of defendants Donnelly, Alpert and its 

corporate parent Crossroads, CPF exploited the increased fees to be paid by the SBA on smaller 

PPP loans in 2021 by reportedly agreeing to fund 472,036 PPP loans totaling over $7.5 billion in 

loan proceeds -- again, the second highest number of loans by any lender in 2021, and more 

loans than Bank of America, PNC Bank, TD Bank and Wells Fargo combined. See SBA, 

Paycheck Protection Program (PPP) Report, Approvals through 5/31/2021, p. 7, available at 

https://www.sba.gov/sites/default/files/2021-06/PPP_Report_Public_210531-508.pdf (last 

visited July 25, 2022). 

76. As a result, Crossroads (not CPF) publicly reported that it “earned fees from the 

[PPP] totaling approximately $930 million” according to its quarterly report filed with the SEC 

Case 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 17 of 68 PageID 17
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for the period ending July 31, 2021. See Microsoft Word - Q2-2022 OTC Disclosure Statement 

v5.docx (crossroads.com) (last visited July 25, 2022). 

77. On June 14, 2021, Crossroads released its consolidated financial results for the 

fiscal quarter ending April 30, 2021. Crossroads disclosed that its “[g]ross origination fees 

associated with PPP loans totaled $464.1 million for the quarter,” and that Crossroads “[e]xpects 

to accrue a total of $1.1 billion in deferred gross origination fees from the [PPP].” It also 

disclosed that, as of April 30, 2021, Crossroads “held a cash balance of $213.1 million compared 

to $2.6 million as of October 31, 2020.” 

78. Crossroads also stated in its June 14, 2021 financial report as follows (emphasis 

added): 

“In the last several months, Capital Plus has transformed from a regional singlefamily mortgage-based lending institution into one of the country’s largest 

providers of small business loans,” said Eric A. Donnelly, Chief Executive 

Officer of Crossroads Systems. When the SBA announced its reopening of the 

program in January, we immediately identified strong synergies between the 

program’s focus on small businesses and Capital Plus’s core mission as a CDFI. 

Together with our loan service providers, we established early incumbency as the 

go-to institution for small business owners, independent contractors, and sole 

proprietors. Financially, our success in the program has put us into the best 

position we have ever been in, netting us more than $150 million in operating 

income for the quarter. At a record cash position, we are well-capitalized to 

support the future growth initiatives that will drive our double bottom line. We 

will provide a more detailed review of the quarter and these growth initiatives in 

the near future upon the completion of PPP.” (emphasis added). 

79. In a July 8, 2021 letter to Crossroads’ shareholders, Donnelly again touted “our” 

success in PPP lending, stating as follows: 

“Within just five months, we have approved 472,036 loans at an average amount 

of $16,062. In total, this amounts to .... As a result of our early dominance in PPP 

lending, Capital Plus was ranked the fourth largest PPP lender by net dollar 

amount and the second largest by the number of loans approved.” 

Case 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 18 of 68 PageID 18
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80. According to a July 2021 investor presentation, corporate insiders of Crossroads 

then owned approximately 66% of Crossroads’ equity, including specifically as follows: Alpert, 

1,492,285 shares, or 25% of Crossroad’s total outstanding shares; Donnelly, 2,255,677 shares, or 

37.8% of Crossroad’s total outstanding shares; and Giga and Crossroads Board members James 

Perez Foster, Claire Gogel, Ray Kembel and Webb collectively, 194,440 shares, or 3.3% of 

Crossroad’s total outstanding shares. See Providing Affordable Housing and Financing for 

Families (wpengine.com) at p. 20 (last visited July 27, 2022). 

81. Thus, in sum, the corporate insiders and directors of Crossroads owned 3,942,402 

shares, or approximately 66%, of Crossroads’s 6,171,984 total outstanding shares as of July 

2021, with defendants Alpert and Donnelly together owning approximately 62.8%. Id. 

82. On July 8, 2021 -- following its receipt of hundreds of millions of dollars in PPP 

loan fees, including for Plaintiffs and numerous other class member PPP loans CPF failed to 

actually fund -- Crossroads announced in a letter to shareholders signed jointly by defendants 

Alpert and Donnelly that, based on its “windfall associated with the PPP loan program” it was 

“now overcapitalized” and would pay out a special dividend of $40 per share to its shareholders 

on July 26, 2021. See Microsoft Word - CRSS FQ2 2021 Shareholder Letter NO Enhanced - 

Final Draftdts.docx (crossroads.com) (at pp. 3-4). 

83. On July 15, 2021, Crossroads issued a news release stating the special dividend of 

$40 per share will be payable on July 26, 2021 to stockholders of record at the close of business 

on July 19, 2021, and that the total amount of the dividend would be approximately $238.9 

million based on the number of Crossroads shares outstanding. See

https://crossroads.mediaroom.com/2021-07-15-Crossroads-Systems-Provides-AdditionalInformation-on-Special-Dividend?pagetemplate=widgetpopup&printable. 

Case 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 19 of 68 PageID 19
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84. As a result, and based on the respective equity interests in Crossroads, Alpert 

received $59,691,400 in cash from the special dividend; Donnelly received $90,227,080; and 

Alpert, Donnelly, Giga and other corporate insiders and directors collectively received 

$157,696,080 of the approximately $238.9 million in total special dividend cash proceeds. 

85. According to Crossroads’s quarterly report for the period ending July 31, 2021, 

“[t]otal revenue from operations for the nine months ended July 31, 2021, was $970.5 million 

compared to $27.5 million for the same period of 2020”; “[t]he increase in revenue was the result 

of the Company participating in the Payment [sic] Protection Program (PPP) administered by 

the” SBA (emphasis added); “[n]et operating income before taxes and non-controlling interest 

for the nine months ended July 31, 2021, was $320.2 million compared to $3.5 million for the 

same period of 2020”); “[n]et earnings per share from operations before taxes and after noncontrolling interest for the nine months ended July 31, 2021, was $53.54 compared to $0.51 for 

the nine months ended July 31, 2020”; and “[t]he increase in the earnings per share was 

primarily due to the Company’s participation in the PPP lending program” (emphasis added). 

86. Crossroads’s quarterly report for the period ending July 31, 2021 also stated that 

“[t]he Company earned fees from the program totaling approximately $465.6 million for the 

quarter”; that “[t]he Company funded approximately $6.1 billion in PPP loans generating an 

annual interest rate of 1%” (emphasis added); that “[t]he Company funded approximately 

400,000 loans during the period” (emphasis added); and that “[n]o such fees were earned during 

the quarter ended July 31, 2020.” 

87. Although that July 31, 2021 quarterly report stated that “the Company” funded 

approximately 400,000 PPP loans for approximately $6.1 billion, SBA data indicates that CPF 

obtained over $7.5 billion from the federal government in total PPP loan advances to fund 

Case 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 20 of 68 PageID 20
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472,036 PPP loans. See SBA, Paycheck Protection Program (PPP) Report, Approvals through 

5/31/2021, p. 7, available at https://www.sba.gov/sites/default/files/2021-

06/PPP_Report_Public_210531-508.pdf (last visited July 25, 2022). 

88. In a letter to shareholders that accompanied Crossroads’s shareholder report for 

the three months ended April 30, 2021, defendants Alpert and Donnelly corroborated the SBA’s 

publicly available data of 472,036 PPP loans for over $7.5 billion specifically as follows: 

“Within just five months, we have approved 472,036 loans at an average amount 

of $16,062. In total, this amounts to $7.6 billion in funding, more than 80% of 

which went directly to companies and independent contractors of color. As a 

result of our early dominance in PPP lending, Capital Plus was ranked the fourth 

largest PPP lender by net dollar amount and the second largest by the number of 

loans approved.”1

89. On December 14, 2021, Crossroads issued a news release reporting its fiscal year 

2021 financial results. In that news release, Crossroads stated that its total fiscal year “revenues 

increased 2,446% to $932.7 million, up from $36.6 million in the comparative 2020 period”; that 

“[r]emoving PPP impact from the year’s operations, total revenues were $34.9 million compared 

to $36.6 million in 2020”; that “[o]perating income increased 4,127% to $243.4 million, up from 

$5.8 million in 2020”; that “[t]he substantial increase in operating income was primarily due to 

origination fees associated with the Company’s participation in the PPP loan program”; and that 

“[c]ash EPS (operating income less income to non-controlling interests) was $36.19, which was 

a 4,820% increase compared to $0.74 during the same period in 2020.” See 

1

 Although previously posted on its website, Crossroads has now apparently deleted that 

shareholder letter from its website. See http://crossroads.mediaroom.com/2021-07-08-

Crossroads-Systems-Releases-Fiscal-Second-Quarter-2021-Shareholder-Letter. Instead, 

Crossroads’s website presently contains only the 2021 Q1 shareholder letter signed by 

defendants Alpert and Donnelly jointly, and the 2021 Q3 and 2021 Q4 and fiscal year end 

shareholder letters signed by defendant Donnelly alone. See https://crossroads.com/for-investors/ 

(visited July 26, 2022). See also Microsoft Word - CRSS FQ2 2021 Shareholder Letter NO 

Enhanced - Final Draftdts.docx (crossroads.com) (last visited December 29, 2021). 

Case 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 21 of 68 PageID 21
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https://www.prnewswire.com/news-releases/crossroads-systems-reports-fiscal-fourth-quarterand-fiscal-year-2021-financial-results-301443835.html (last visited December 29, 2021). 

90. Crossroad’s management referred to itself and CPF as if they were one also 

specifically in public communications to shareholders concerning the PPP, among other things. 

For example, the joint letter to shareholders of Alpert and Donnelly that accompanied 

Crossroads’s report to shareholders for the three months ended April 30, 2021 stated that “the 

Company” had engaged in the PPP lending; that “[w]e were well equipped to lead the charge for 

the program’s second draw as a result of our CDFI status” (emphasis added); that “[l]ast quarter 

we highlighted our intention to participate in the second federal PPP program” (emphasis 

added); that “we were able to issue and approve loan applications at an unprecedently rapid 

pace” (emphasis added); and, as noted, that “we have approved 472,036 loans” and that “this 

amounts to $7.6 billion in funding ...” (emphasis added). See Microsoft Word - CRSS FQ2 2021 

Shareholder Letter NO Enhanced - Final Draftdts.docx (crossroads.com) (last visited 

December 29, 2021). 

91. Defendants’ exploitation of PPP lending for themselves and other insiders to the 

detriment of Plaintiffs and other SBA-approved but unfunded class members also enriched other 

Crossroads officials. For example, whereas defendants Donnelly and Alpert owned 37.8% and 

25%, respectively, of Crossroads’s equity as of the July 2021 payment to them of over $149 

million via the special dividend as alleged above, Donnelly and Alpert had reduced their equity 

stakes in Crossroads by the end of Crossroads’s fiscal year on October 31, 2021 to, respectively, 

12% and 9.1%, with Giga’s equity position increased from less (and perhaps substantially less) 

than 3.3% as of July 2021, to 10.4% as of October 31, 2021. 

Case 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 22 of 68 PageID 22
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92. Adding insult to injury for the Plaintiffs and numerous other unfunded putative 

members of the class, Defendants also apparently now view their PPP lending as “nearly 

complete” -- meaning that CPF does not intend to even belatedly fund their loans, although the 

present whereabouts, or even potential disposition, of the PPPLF and other advances CPF 

obtained to fund the PPP loans of Plaintiffs and other class members remains presently unknown 

to Plaintiffs (and defendants CPF and Crossroads resisted producing, and in fact did not produce, 

any discovery when this litigation was pending in the Eastern District of Arkansas, including 

regarding the status of the unfunded PPP loan proceeds CPF obtained from the Federal Reserve). 

According to Donnelly’s letter to shareholders accompanying Crossroads’s report to 

shareholders for the fourth quarter and fiscal year ending October 31, 2021: 

“Today, our work within the PPP is nearly complete. We’re continuing to work 

closely with the SBA to address the remaining loan forgiveness applications as 

efficiently as we can, not only to let us move forward, but also to let our loan 

recipients close this chapter in their lives as well. As of the end of the fourth 

quarter, we have completed about 62% or approximately 230,000 loan 

forgiveness applications, and we anticipate processing the remaining requests 

over the next few quarters. The process has been quite painless for the borrowers, 

and we are most appreciative of the SBA’s direct forgiveness portal and 

incredible customer service team.” 

93. In sum, at the direction and control of defendants Donnelly and Alpert, 

Crossroads participated directly and indirectly in the PPP loan processing through its common 

management and control and 100% ownership of CPF; exploited CPF’s status as an SBAapproved CDFI PPP lender to enrich itself and defendants Donnelly and Alpert and other 

Crossroads corporate insiders to obtain fees on PPP loans CPF never funded, including the PPP 

loans of Plaintiffs and the other putative members of the proposed class; obtained millions of 

dollars in PPP lender processing fees including on the backs of the unfunded loans of Plaintiffs 

and the other putative members of the proposed class; and, in turn, improperly enriched itself and 

Case 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 23 of 68 PageID 23
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its senior leadership from a federally-backed program Congress actually designed to assist the 

very members of the class here whose businesses were adversely impacted by the COVID-19 

pandemic. 

CPF’s Direct Participation in the 

PPP Liquidity Facility 

94. To facilitate lending under the SBA’s PPP, the Federal Reserve supplied liquidity 

to CPF and other participating financial institutions through term financing to be secured by the 

PPP loans. See Board of Governors of the Federal Reserve System, Paycheck Protection 

Program Liquidity Facility (PPPLF), available at 

https://www.federalreserve.gov/monetarypolicy/ppplf.htm (last visited Sept. 17, 2021).

95. In particular, the Paycheck Protection Program Liquidity Facility (“PPPLF”) was 

authorized under § 13(3) of the Federal Reserve Act “to facilitate lending by eligible borrowers 

[i.e., PPP lenders] to small businesses under the [PPP]. ... Under the Facility, the Federal 

Reserve Banks (‘Reserve Banks’) will lend to eligible borrowers [i.e., PPP lenders] on a nonrecourse basis, taking PPP Loans as collateral.” See Paycheck Protection Program Liquidity 

Facility Term Sheet, available at 

https://www.federalreserve.gov/newsevents/pressreleases/files/monetary20210625a1.pdf (last 

visited Sept. 17, 2021). 

96. Further, “[a]ll lenders that are eligible to originate PPP Loans are eligible to 

borrow under the Facility.” Id. 

97. For CPF and other qualified CDFI PPP lenders, the lending Federal Reserve Bank 

was the Federal Reserve Bank of Cleveland. Id.

Case 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 24 of 68 PageID 24
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98. Only SBA-guaranteed PPP loans are eligible to serve as collateral for PPPLF 

advances, and the principal amount advanced under the PPPLF was to be equal to the principal 

amount of the PPP loan pledged to secure the extension of credit. Id.

99. By borrowing from the PPPLF, CPF received PPP loan advances exclusively for 

the purpose of funding SBA-approved PPP loans, and CPF pledged those loans, in turn, as 

collateral to secure those PPPLF loan proceeds. The PPP provided that the funding for the PPP 

loans would only be advanced by the Federal Reserve after the SBA had approved the PPP loan 

and the PPP note and accompanying loan documents were signed. To pledge a PPP loan as 

collateral and request a PPPLF loan advance, CPF had to complete and submit a Paycheck 

Protection Program Liquidity Facility PPP Pledge and Advance Request form (the “Advance 

Request Form”). See

https://www.frbdiscountwindow.org/generalpages/ppplf_historical_documentation. The Advance 

Request Form required CPF to provide information about each loan, and the PPP rules were 

incorporated into and a binding part of each PPP loan agreement. See 15 U.S.C. § 9008(g) 

(requiring PPP lenders to make loans “under the criteria, terms, and conditions” set by the SBA 

and other applicable rules). 

100. CPF also repeatedly although falsely made numerous representations confirming 

its agreement to fund the loans of Plaintiffs and other SBA-approved but unfunded PPP 

borrowers. For example, CPF obtained PPP loan processing fees by falsely representing to the 

SBA that CPF had funded Plaintiffs’ and the other SBA-approved PPP loans CPF committed to 

fund but failed to fund. 

101. CPF received billions of dollars of advances through the PPPLF as specified more 

fully below, in addition to other PPP advances. 

Case 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 25 of 68 PageID 25
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102. In fact, although the PPP application period ended on May 31, 2021 and the life 

cycle of a PPP loan application should only take a few business days, CPF continued to receive 

substantial advances through the PPPLF between June 30, 2021 and July 30, 2021, after the 

deadline for processing loan applications. 

103. For example, between July 1, 2021 and July 30, 2021, CPF received at least three 

PPPLF cash advances each exceeding $30,000,000.00, and also received a total of 

$134,119,585.79 in PPP loan advances for the month of July 2021 alone. 

104. In particular, according to a report by the Federal Reserve to the U.S. Congress 

dated December 13, 2021 “PPPLF Transaction-specific Disclosures (XLSX),” CPF received the 

following specific cash advances from the PPPLF among other PPP funding: 

Date of Advance Amount 

2021-02-02 $2,178,040.41 

2021-02-02 $627,622.00 

2021-02-11 $5,708,115.06 

2021-02-11 $273,968.00 

2021-02-11 $2,710,413.00 

2021-02-11 $273,579.59 

2021-02-11 $2,129,648.45 

2021-02-11 $3,693,488.60 

2021-02-11 $5,512,672.14 

2021-02-25 $1,191,862.00 

2021-02-25 $1,906,418.00 

2021-02-25 $34,357.00 

2021-02-25 $1,291,742.00 

2021-02-25 $2,976,057.35 

2021-02-25 $541,239.00 

2021-02-25 $372,863.50 

2021-02-25 $57,626.00 

2021-03-01 $354,159.11 

2021-03-01 $5,647,969.98 

2021-03-02 $325,669.00 

2021-03-02 $4,378,004.32 

2021-03-02 $1,460,686.27 

2021-03-02 $182,176.50 

Case 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 26 of 68 PageID 26
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Date of Advance Amount 

2021-03-02 $215,785.00 

2021-03-02 $10,184,988.00 

2021-03-02 $586,175.75 

2021-03-03 $452,683.05 

2021-03-03 $2,161,402.00 

2021-03-04 $5,273,526.10 

2021-03-09 $5,825,425.32 

2021-03-09 $5,502,974.02 

2021-03-09 $791,045.97 

2021-03-09 $7,966,408.33 

2021-03-10 $4,144,182.85 

2021-03-11 $3,279,707.66 

2021-03-15 $22,298,842.23 

2021-03-16 $764,647.00 

2021-03-16 $17,845,001.09 

2021-03-16 $902,196.50 

2021-03-16 $1,794,125.60 

2021-03-17 $19,604,711.14 

2021-03-18 $14,608,755.33 

2021-03-18 $1,091,038.95 

2021-03-19 $12,415,131.15 

2021-03-22 $82,131,881.16 

2021-03-23 $54,386,988.50 

2021-03-23 $ 16,861,162.00 

2021-03-23 $27,003,647.85 

2021-03-24 $98,770,508.82 

2021-03-25 $10,147,992.90 

2021-03-29 $479,593.40 

2021-03-29 $6,760,457.63 

2021-03-29 $11,671,507.38 

2021-03-29 $11,310,627.52 

2021-03-29 $8,987,367.00 

2021-03-29 $8,840,001.43 

2021-03-29 $8,036,480.35 

2021-03-29 $7,579,378.00 

2021-03-29 $7,687,847.70 

2021-03-29 $5,476,010.00 

2021-03-29 $3,022,105.50 

2021-03-29 $2,097,367.75 

2021-03-29 $7,343,229.25 

2021-03-29 $5,352,732.72 

Case 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 27 of 68 PageID 27
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Date of Advance Amount 

2021-03-29 $3,907,229.00 

2021-03-29 $3,074,780.48 

2021-03-29 $2,324,503.09 

2021-03-29 $947,087.00 

2021-03-29 $2,505,979.50 

2021-03-29 $1,170,854.10 

2021-03-29 $4,357,560.50 

2021-03-30 $79,562,983.00 

2021-03-30 $102,496,216.00 

2021-03-30 $72,574,056.00 

2021-03-30 $84,507,665.00 

2021-03-31 $75,764,259.00 

2021-04-01 $9,549,671.89 

2021-04-01 $39,612,141.00 

2021-04-02 $243,075,429.00 

2021-04-06 $257,472,124.33 

2021-04-06 $132,444,399.00 

2021-04-07 $10,927,697.00 

2021-04-07 $62,021,483.00 

2021-04-08 $85,339,435.12 

2021-04-08 $259,374,000.00 

2021-04-16 $126,501,443.00 

2021-04-16 $181,211,831.00 

2021-04-16 $162,256,760.73 

2021-04-16 $16,005,416.00 

2021-04-16 $176,063,638.00 

2021-04-20 $15,295,725.00 

2021-04-21 $12,171,969.60 

2021-04-21 $5,953,438.16 

2021-04-21 $38,643,341.00 

2021-04-21 $96,987,237.00 

2021-04-21 $48,105,810.00 

2021-04-23 $58,507,134.00 

2021-04-23 $368,780,681.00 

2021-04-23 $327,135,009.82 

2021-04-23 $70,865,658.00 

2021-04-26 $114,086,044.00 

2021-04-30 $5,717,971.00 

2021-05-03 $1,765,216.00 

2021-05-03 $2,944,483.47 

2021-05-03 $2,096,650.00 

Case 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 28 of 68 PageID 28
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Date of Advance Amount 

2021-05-04 $2,293,625.00 

2021-05-04 $34,802,766.00 

2021-05-06 $2,125,832.00 

2021-05-06 $1,070,106.00 

2021-05-06 $616,115.00 

2021-05-06 $835,290.00 

2021-05-07 $365,435.00 

2021-05-12 $263,080,394.00 

2021-05-12 $33,579,305.00 

2021-05-12 $16,088,836.00 

2021-05-12 $5,443,630.00 

2021-05-12 $890,741.00 

2021-05-12 $1,413,197.00 

2021-05-17 $1,851,188.00 

2021-05-17 $1,577,688.00 

2021-05-17 $1,581,021.00 

2021-05-17 $8,630,450.25 

2021-05-18 $1,101,950.00 

2021-05-18 $577,710.00 

2021-05-18 $535,369,687.12 

2021-05-20 $33,419,154.94 

2021-05-20 $46,027,570.00 

2021-05-24 $11,859,766.00 

2021-05-25 $9,886,972.00 

2021-05-25 $2,365,516.00 

2021-05-25 $600,024.00 

2021-05-25 $1,831,023.00 

2021-05-28 $1,902,346.00 

2021-05-28 $5,249,415.00 

2021-05-28 $1,677,600.00 

2021-06-02 $2,478,525.99 

2021-06-02 $395,067.00 

2021-06-02 $574,919.00 

2021-06-04 $2,086,894.92 

2021-06-04 $834,823.00 

2021-06-04 $1,120,999.32 

2021-06-04 $80,299,469.78 

2021-06-04 $147,886,129.00 

2021-06-10 $1,805,560.00 

2021-06-10 $700,921.00 

2021-06-10 $1,143,936.00 

Case 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 29 of 68 PageID 29
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Date of Advance Amount 

2021-06-10 $12,226,237.00 

2021-06-10 $968,115.00 

2021-06-16 $1,729,026.00 

2021-06-16 $933,469.00 

2021-06-16 $46,130,527.00 

2021-06-17 $484,266.07 

2021-06-17 $542,102.00 

2021-06-17 $807,337.00 

2021-06-18 $49,044,789.00 

2021-06-22 $16,783,373.00 

2021-06-23 $515,136,782.00 

2021-06-23 $312,406,138.00 

2021-06-24 $8,087,276.00 

2021-06-24 $15,750,200.00 

2021-06-24 $23,444,948.00 

2021-06-25 $1,627,318.00 

2021-06-25 $1,400,035.00 

2021-06-25 $2,004,933.00 

2021-06-25 $1,331,199.00 

2021-06-25 $1,303,819.32 

2021-06-25 $149,773.00 

2021-06-29 $2,496,951.63 

2021-06-29 $538,849.00 

2021-06-29 $41,636.00 

2021-06-29 $126,344.00 

2021-06-29 $1,119,986.00 

2021-06-29 $179,504.00 

2021-06-29 $244,511.00 

2021-06-29 $26,324.00 

2021-06-29 $127,795.00 

2021-06-29 $144,425.00 

2021-06-29 $39,294.00 

2021-06-29 $114,014.00 

2021-06-29 $5,000.00 

2021-06-29 $1,140,000.00 

2021-06-29 $7,642,798.00 

2021-06-29 $101,233,693.33 

2021-06-30 $194,761.00 

2021-07-01 $35,891,616.00 

2021-07-01 $217,926.00 

2021-07-01 $436,360.00 

Case 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 30 of 68 PageID 30
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Date of Advance Amount 

2021-07-06 $38,610,016.00 

2021-07-06 $1,025,508.00 

2021-07-06 $62,496.00 

2021-07-07 $7,098,589.00 

2021-07-13 $1,219,924.00 

2021-07-13 $452,164.00 

2021-07-14 $385,525.00 

2021-07-14 $41,193,415.00 

2021-07-29 $239,725.00 

2021-07-30 $72,735.00 

2021-07-30 $6,304,677.00 

2021-07-30 $858,609.79 

2021-07-30 $32,930.00 

2021-07-30 $17,370.00 

Total $6,458,857,759.43 

See Board of Governors of the Federal Reserve System, Paycheck Protection Program Liquidity 

Facility (PPPLF), available at https://www.federalreserve.gov/monetarypolicy/ppplf.htm (last 

visited Dec. 23, 2021). 

105. While CPF reportedly received over $6.4 billion in the specific PPPLF advances 

as noted above and $7.6 billion total per SBA data and Crossroads’s SEC filings, CPF failed to 

actually fund PPP loans approved by the SBA for Plaintiffs and numerous other SBA-approved 

borrower members of the proposed class. CPF failed to fund class member approved loans, 

moreover, despite having actually received the unfunded PPP loan proceeds via advances from 

the PPPLF secured by the PPP loans, including the PPP loans it failed to fund. 

106. Emails from Donnelly and other CPF officials reflect that Defendants knew of 

CPF’s failure to fund SBA-approved PPP loans. For example, one such unfunded borrower 

wrote an email to Christopher Dalton (“Dalton”) of the SBA on June 24, 2021 and stated as 

follows: 

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“Hi Christopher, This is Minority women own small business for 14 years Covid 

19 destroyed my business . SBA approved ppp loan . I email to Ms .Faranza giga 

capital plus , I got respond from Greg Jacobson i give him my information still no 

respond . ‘I NEED HELP.’ My lender is Capital Plus My loan no is . First draw 

ppp loan . Amount of loan is not big but for me is really helpful to restart my 

business . Thank you,” 

Dalton forwarded that email to Donnelly and CPF employee Greg Jacobson on June 25, 2021. 

107. Further, CPF also had the opportunity and benefited from any interest or other 

income it obtained on the unfunded PPP principal proceeds it received from the PPPLF and 

otherwise from the Federal Reserve, while nevertheless failing to fund the SBA-approved PPP 

loans of Plaintiffs and the other SBA-approved putative borrower members of the proposed 

class. 

108. In moving to dismiss in this case in Arkansas defendants CPF and Crossroads 

glibly and callously cited other unrelated PPP litigation that has nothing to do with SBAapproved but unfunded PPP borrowers and asserted that “Plaintiff’s misleading claim in this 

case, that CPF ‘failed to fund’ a loan it agreed to make, suggests that litigants seeking to exploit 

the PPP for private gain are simply running out of ideas.” See Greathouse v. Capital Plus 

Financial, LLC, Case No. 4:21-cv-01243-BRW (E.D. Ark.) ECF 25 at 11. In truth, Plaintiffs -- 

who are small business owners involved, respectively, in insurance inspection, auto repair, 

landscaping, support for artists and writers, delivery services, cable services, and housekeeping -- 

are among the very intended beneficiaries that Congress designed the PPP to assist and CPF was 

contractually obligated but failed to fund. 

CPF’s Failure to Fund 

Plaintiff Greathouse’s PPP Loan 

109. When the pandemic began, Plaintiff Greathouse was, and continues to be, in the 

business of providing insurance inspection services in the Russellville, Arkansas area. 

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110. Due to the pandemic, Plaintiff was not able to provide these services with the 

same frequency and, as a result, lost significant income. 

111. On or about April 8, 2021, Greathouse applied for a PPP loan with CPF. 

Greathouse submitted all requested documentation and information. 

112. On or about April 9, 2021, the SBA approved Greathouse’s PPP loan application 

and assigned it a loan number (SBA Loan Number 9988328700). 

113. Greathouse was approved for a PPP loan in the amount of $15,665.00. 

114. On April 18, 2021, Greathouse received the standard form PPP promissory note 

(the “Note”) and accompanying documents for him to sign. 

115. The Note identified the SBA loan number and amount, Defendant CPF as the 

lender and Plaintiff Greathouse as the borrower; set forth payment terms, potential events of 

default, CPF’s rights in the event of default, and other terms and conditions; and provided the 

terms for Plaintiff Greathouse to repay the loan to CPF if it was not forgiven. 

116. The Note also included a standard form Additional and Correction Documents 

Agreement (Errors and Omissions Agreement) between CPF and Plaintiff Greathouse; a 

Business Purpose Statement; a Notice - No Oral Agreements bearing the signature CPF Chief 

Financial Officer Giga and Plaintiff Greathouse; a Written Consent of Governing Body form for 

Greathouse to represent that he is authorized to receive the loan and on which CPF may rely; an 

IRS W-9 Request for Taxpayer Identification Number and Certification; and an Information and 

Bank Account Certification and Authorization form identifying the bank or other account to 

which CPF was obligated to send the funds (collectively, the “Loan Documents”). 

117. On April 18, 2021, Greathouse signed and returned the Loan Documents in order 

to obtain the $15,665.00 PPP loan. 

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118. Also on April 18, 2021, Greathouse was advised by email that his loan was 

approved and is being funded. 

119. Despite properly and timely completing, signing and submitting the Loan 

Documents and additional attempts to obtain the loan proceeds, however, Greathouse never 

received the proceeds of his SBA-approved PPP loan. 

120. For example, Greathouse contacted and consulted with his local SBA office about 

CPF’s failure to fund his PPP loan, and sent emails and made numerous telephone calls to CPF 

and Blueacorn to try to follow-up and get funded, all to no avail. 

121. On July 19, 2021, and following his complaints to the local SBA office and 

telephone calls again seeking funding, Greathouse was advised on July 19, 2021 that his PPP 

loan was being funded within an estimated three to six days. 

122. Although the SBA’s records reported that Greathouse’s PPP loan had actually 

been funded, Greathouse never received any PPP loan proceeds. 

123. The SBA’s record of the alleged disbursement of Greathouse’s loan proceeds was 

based on data CPF provided to the SBA. 

124. CPF’s failure to fund Greathouse’s SBA-approved PPP loan deprived Greathouse 

of funds that would have directly assisted in the operation of his business and resulted in lost 

opportunities and other consequential damages. 

CPF’s Failure to Fund 

Plaintiff Covarrubias’s PPP Loan 

125. When the pandemic began, plaintiff Covarrubias was, and continues to be, in the 

business of providing auto repair services in the Santee, California area. 

126. Due to the pandemic, plaintiff Covarrubias’s business lost significant income. 

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127. In or about May 2021, Covarrubias applied for a PPP loan with CPF. Covarrubias 

submitted all requested documentation and information. 

128. In May 2021, the SBA approved Covarrubias’s PPP loan application and assigned 

it a loan number (SBA Loan Number 4713608906). 

129. Covarrubias was approved for a PPP loan in the amount of $8,332.00. 

130. On May 21, 2021, Covarrubias received the same standard form PPP promissory 

Note and accompanying standard form Loan Documents for him to sign that plaintiff Greathouse 

also received and signed. 

131. On May 21, 2021, Covarrubias signed and returned the Loan Documents in order 

to obtain the $8,332.00 PPP loan. 

132. Also on May 21, 2021, Covarrubias was advised by email that his loan was 

approved and is being funded. 

133. Despite properly and timely completing, signing and submitting the Loan 

Documents and additional attempts to obtain the loan proceeds, however, Covarrubias never 

received the proceeds of his SBA-approved PPP loan. Covarrubias attempted to contact CPF 

directly to get his loan funded, but was unable to reach anyone live with whom to speak. As he 

stated in a December 8, 2021 email to an SBA representative, there was a “lack of customer 

service and being able to get ahold of a live person being nonexistent made things worse.” 

134. Covarrubias also contacted the SBA directly about CPF’s failure to fund his PPP 

loan, and sent emails and made numerous telephone calls to CPF and SBA to try to follow-up 

and get funded, all to no avail. 

135. For example, Covarrubias sent an email to a SBA representative on November 29, 

2021 stating “If the loan had been canceled and return why was I able to get approved for my 

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loan to be forgiven. Someone kept that money knowing that if I didn’t get my loan forgiven I 

would be on the hook for paying it back. I would’ve been out of time to apply for the loan to be 

forgiven [] I would’ve been responsible for paying loan back if the loan was still in limbo.” The 

SBA representative replied to him that same day by email stating “I understand this has 

happened to a lot of individuals, but therefore the SBA is program -- the bank utilize [sic] just 

like a mortgage done by Fanny/Freddie. Yes, it is backed by a Government program, but it is 

managed and held with a bank or lending institution. We don’t approve, deny, or withdraw any 

requests, because they are not our loans.” 

136. Similarly, in a September 29, 2021 email Covarrubias sent to the Blueacorn portal 

after Blueacorn refused to assist in getting CPF to fund his loan, Covarrubias sought further 

information regarding the whereabouts of the PPP loan proceeds he was approved by the SBA to 

receive, and which SBA records falsely showed were disbursed to him and as to which he was be 

obligated to repay plus interest: 

“First and foremost those documents I originally sent in where prove enough for 

the SBA to approve my loan and give me a loan number. Second had my loan 

been denied I wouldn’t of received an email reminding me about the loan 

forgiveness. Why haven’t I received an email from you or my lender telling me to 

get my loan forgiven. I know why because than you would be committing a fraud. 

What your trying to do is wait everyone out until the very last minute who has 

$8332 just laying around to pay the loan back when it could all just go away with 

the loan forgiveness, oh but wait what happens to the $8332 dollars of mine that 

the SBA approved who gets that money. Well that money who knows where it 

went it just disappeared it vanished along with thousands of other people’s PPP 

loans that BLUE ACORN AND CAPITAL PLUS FINANCIAL HAVE STOLEN 

LIED ABOUT BEING DISBURSED. I NEVER RECEIVED NOT ONE PHONE 

CALL FROM EITHER BLUE ACORN OR CAPITAL PLUS FINANCIAL.” 

(emphasis in original) 

137. Covarrubias still persisted in his efforts to actually get his SBA-approved loan 

funded. 

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138. Although the SBA’s records reported that Covarrubias’s PPP loan had actually 

been funded, Covarrubias never received any PPP loan proceeds. 

139. The SBA’s record of the alleged disbursement of Covarrubias’s loan proceeds 

was based on data CPF provided to the SBA. 

140. CPF’s failure to fund Covarrubias’s SBA-approved PPP loan deprived 

Covarrubias of funds that would have directly assisted in the operation of his business and 

resulted in lost opportunities and other consequential damages. 

CPF’s Failure to Fund 

Plaintiff Sumrall’s PPP Loan 

141. When the pandemic began, plaintiff Sumrall was, and continues to be, in the 

business of providing landscape architectural services in the El Paso, Texas area. 

142. Due to the pandemic, plaintiff Sumrall was not able to provide these services with 

the same frequency and, as a result, lost significant income. 

143. On or about May 18, 2021, Sumrall applied for a PPP loan with CPF. Sumrall 

submitted all requested documentation and information. 

144. In May 2021, the SBA approved Sumrall’s PPP loan application and assigned it a 

loan number (SBA Loan Number 5126489010). 

145. Sumrall was approved for a PPP loan in the amount of $4,095.00. 

146. Also in May 2021, Sumrall received the same standard form Note and 

accompanying Loan Documents for her to sign that plaintiff Greathouse received, and Sumrall 

signed and returned the Loan Documents in order to obtain the $4,095.00 PPP loan. 

147. Despite properly and timely completing, signing and submitting the Loan 

Documents and additional attempts to obtain the loan proceeds, however, Sumrall never received 

the proceeds of her SBA-approved PPP loan. 

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148. For example, Sumrall contacted Blueacorn for any information it had about CPF’s 

obligation to fund her loan and, by email on May 29, 2021, was told that “[i]f your application is 

SBA approved, you can be rest assured that your funds are secure and they will be transferred to 

your account.” Sumrall replied as follows: 

“I understand you may be very busy but I have lost 2 people to COVID my 

business home and family a on the brink. There has been no light in sight. I have 

passed every identity verification process. I never once stated anything about 

fraud. Please explain why I was approved and signed your promissory note and 

have no money and now this. Please explain.” 

149. Although the SBA’s records reported that Sumrall’s PPP loan had actually been 

funded, Sumrall never received any PPP loan proceeds. 

150. The SBA’s record of the alleged disbursement of Sumrall’s loan proceeds was 

based on data CPF provided to the SBA. 

151. CPF’s failure to fund Sumrall’s SBA-approved PPP loan deprived Sumrall of 

funds that would have directly assisted in the operation of her business and resulted in lost 

opportunities and other consequential damages. 

CPF’s Failure to Fund 

Plaintiff Myles’s PPP Loan 

152. When the pandemic began, plaintiff Myles was, and continues to be, in the 

business of providing services to independent artists, writers and performers in the Raeford, 

North Carolina area. 

153. Due to the pandemic, plaintiff Myles’s business was damaged and, as a result, lost 

significant income. 

154. In or about May 2021, Myles applied for a PPP loan with CPF. 

155. Also in May 2021, the SBA approved Myles’s PPP loan application and assigned 

it a loan number (SBA Loan Number 5742309006). 

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156. Myles was approved for a PPP loan in the amount of $11,497.00. 

157. In May 2021, Myles received and properly signed and returned the same standard 

form Note and accompanying Loan Documents that plaintiff Greathouse received. 

158. Despite properly and timely completing, signing and submitting the Loan 

Documents and additional attempts to obtain the loan proceeds, however, Myles never received 

the proceeds of her SBA-approved PPP loan. 

159. For example, in an email on August 11, 2021, Myles summarized her experience 

as follows: 

“I also can show text messages beginning in 10/2019 until this year. I began 

proceedings for this singing competition in October 2019, communicated with the 

Director at Cole Auditorium in February 2020. I have the messages. Also, if you 

requested all of the information that you stated I did not present to you, I would 

like to know when, how, and a completed copy of what you were requesting. I 

was never to start the business because of the pandemic so there wasn’t any taxes 

to file, no revenue, nothing. And finally, if you needed all of the documentation 

that you claim I did not submit, why was I ever approved and sent a check to my 

bank account? 

I will expect answers, I will not allow you all to treat me this way, and I will fight 

for my right to have the check that was sent to me, returned. My account had not 

been negative for a long time, but because I was informed that I had been 

approved, I went in debt to open a business bank account, pay over $2000 for a 

website, and many meetings. 

I want the funds I was approved for returned to me or we will be in the news. And 

don’t say I am threatening you because I am not.... this is a promise. You will not 

give and then take back, and think you’re going to get away with it.” 

160. Although the SBA’s records reported that Myles’s PPP loan had actually been 

funded, Myles never received any PPP loan proceeds. 

161. The SBA’s record of the alleged disbursement of Myles’s loan proceeds was 

based on data CPF provided to the SBA. 

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162. CPF’s failure to fund Myles’s SBA-approved PPP loan deprived Myles of funds 

that would have directly assisted in the operation of her business and resulted in lost 

opportunities and other consequential damages. 

CPF’s Failure to Fund 

Plaintiff Pericho’s PPP Loan 

163. When the pandemic began, plaintiff Pericho was, and continues to be, in the 

business of providing delivery services, including of exotic tropical fruit to the market and for 

export, in the Kamuela, Hawaii area. 

164. Due to the pandemic, Pericho was not able to provide these services with the 

same frequency and, as a result, lost significant income. 

165. In or about March 2021, Pericho applied for a PPP loan with CPF. Pericho 

submitted all requested documentation and information. 

166. On or about April 1, 2021, the SBA approved Pericho’s PPP loan application and 

assigned it a loan number (SBA Loan Number 4624888700). 

167. Pericho was approved for a PPP loan in the amount of $20,832.00. 

168. On April 7, 2021, Pericho received the standard form PPP promissory note and 

accompanying Loan Documents for her to sign. 

169. Also on or about April 7, 2021, Pericho signed and returned the Loan Documents 

in order to obtain the $20,832.00 PPP loan. 

170. Subsequently in April 2021, Pericho was advised by email that her loan was 

approved and is being funded. 

171. Despite properly and timely completing, signing and submitting the Loan 

Documents and additional attempts to obtain the loan proceeds, however, Pericho never received 

the proceeds of her SBA-approved PPP loan. 

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172. Although the SBA’s records reported that Pericho’s PPP loan had actually been 

funded, Pericho never received any PPP loan proceeds. 

173. The SBA’s record of the alleged disbursement of Pericho’s loan proceeds was 

based on data CPF provided to the SBA. 

174. CPF’s failure to fund Pericho’s SBA-approved PPP loan deprived Pericho of 

funds that would have directly assisted in the operation of her business and resulted in lost 

opportunities and other consequential damages. 

CPF’s Failure to Fund 

Plaintiff Pinkney’s PPP Loan 

175. When the pandemic began, plaintiff Pinkney was, and continues to be, in the 

business of providing cable communication services in the Beaumont, Texas area. 

176. Due to the pandemic, Pinkney was not able to provide these services with the 

same frequency and, as a result, lost significant income. 

177. In April 2021, Pinkney applied for a PPP loan with CPF. Pinkney submitted all 

requested documentation and information. 

178. Also in April 2021, the SBA approved Pinkney’s PPP loan application and 

assigned it a loan number (SBA Loan Number 5588248703). 

179. Subsequently in April 2021, Pinkney was approved for a PPP loan in the amount 

of $20,832.00. 

180. On April 8, 2021, Pinkney received the standard form PPP promissory note (the 

“Note”) and accompanying Loan Documents for him to sign. 

181. On or about April 8, 2021, Pinkney signed and returned the Loan Documents in 

order to obtain the $20,832.00 PPP loan. 

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182. Subsequently in April 2021, Pinkney was advised by email that his loan was 

approved and is being funded. 

183. Despite properly and timely completing, signing and submitting the Loan 

Documents and additional attempts to obtain the loan proceeds, however, Pinkney never received 

the proceeds of his SBA-approved PPP loan. 

184. Although the SBA’s records reported that Pinkney’s PPP loan had actually been 

funded, Pinkney never received any PPP loan proceeds. 

185. The SBA’s record of the alleged disbursement of Pinkney’s loan proceeds was 

based on data CPF provided to the SBA. 

186. CPF’s failure to fund Pinkney’s SBA-approved PPP loan deprived Pinkney of 

funds that would have directly assisted in the operation of his business and resulted in lost 

opportunities and other consequential damages. 

CPF’s Failure to Fund 

Plaintiff Smith’s PPP Loan 

187. When the pandemic began, plaintiff Smith was, and continues to be, in the 

business of providing services as a driver for Uber and Lyft, and also doing human resource 

consulting in the Sacramento, California area. 

188. Due to the pandemic, Smith was not able to provide these services with the same 

frequency and, as a result, lost significant income. 

189. In or about April 2021, Smith applied for a PPP loan with CPF. Smith submitted 

all requested documentation and information. 

190. Also in April 2021, the SBA approved Smith’s PPP loan application and assigned 

it a loan number (SBA Loan Number 8472138707). 

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191. Subsequently in April 2021, Smith was approved for a PPP loan in the amount of 

$19,582.00. 

192. On or about April 17, 2021, Smith received the standard form PPP promissory 

note and accompanying Loan Documents for him to sign. 

193. Also on or about April 17, 2021, Smith signed and returned the Loan Documents 

in order to obtain the $19,582.00 PPP loan. 

194. Subsequently in April 2021, Smith was advised by email that his loan was 

approved and is being funded. 

195. Despite properly and timely completing, signing and submitting the Loan 

Documents and additional attempts to obtain the loan proceeds, however, Smith never received 

the proceeds of his SBA-approved PPP loan. 

196. Although the SBA’s records reported that Smith’s PPP loan had actually been 

funded, Smith never received any PPP loan proceeds. 

197. The SBA’s record of the alleged disbursement of Smith’s loan proceeds was 

based on data CPF provided to the SBA. 

198. CPF’s failure to fund Smith’s SBA-approved PPP loan deprived Smith of funds 

that would have directly assisted in the operation of his business and resulted in lost 

opportunities and other consequential damages. 

CPF’s Failure to Fund 

Plaintiff Mena’s PPP Loan 

199. When the pandemic began, plaintiff Mena was, and continues to be, in the 

business of providing house cleaning services in the Casa Grande, Arizona area. 

200. Due to the pandemic, Mena was not able to provide these services with the same 

frequency and, as a result, lost significant income. 

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201. On or about April 5, 2021, Mena applied for a PPP loan with CPF. Mena 

submitted all requested documentation and information. 

202. On or about April 10, 2021, the SBA approved Mena’s PPP loan application and 

assigned it a loan number (SBA Loan Number 8311138706). 

203. Mena was approved for a PPP loan in the amount of $3,750.00. 

204. On or about April 9, 2021, Mena received the standard form PPP promissory note 

and accompanying Loan Documents for her to sign. 

205. Also on or about April 9, 2021, Mena signed and returned the Loan Documents in 

order to obtain the $3,750.00 PPP loan. 

206. Subsequently in April 2021, Mena was advised by email that her loan was 

approved and is being funded. Mena received multiple emails stating that her PPP loan was 

approved for funding and actually being funded. For example, an email on April 9, 2021 said 

“Congratulations – Your Loan is Being Funded by the SBA!” 

207. Mena took additional steps to actually obtain funding of her PPP loan including 

by contacting the SBA. Among other things, Mena was told in emails on April 27, 2021 and 

again on April 29, 2021 that her PPP loan “application status is approved by the SBA and in the 

process of being funded. This can take up to 10 business days from the date you signed your 

loan agreement while the money is being transferred.” 

208. Mena persisted in her efforts to obtain funding and was actually advised by the 

SBA that CPF was aware of “a large number of loans” that were SBA-approved but unfunded[.]” 

In particular, by email on May 7, 2021, Kim Voss, Lender Relations Specialist, West Texas 

District Office of the SBA, replied to Mena and stated as follows: “Good morning, Farzana Giga 

is your lender and she can be contacted at fgiga@capitalplusfin.com and her phone number is 

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214-558 .... Just this week they have added additional employees to focus on this issue as they 

have had a large number of loans and are trying to get these funded as soon as possible.” 

209. Despite properly and timely completing, signing and submitting the Loan 

Documents and additional attempts to obtain the loan proceeds, however, Mena never received 

the proceeds of her SBA-approved PPP loan. 

210. Although the SBA’s records reported that Mena’s PPP loan had actually been 

funded, Mena never received any PPP loan proceeds. 

211. The SBA’s record of the alleged disbursement of Mena’s loan proceeds was based 

on data CPF provided to the SBA. 

212. In fact, by email on September 21, 2021, the SBA sent Mena an email stating that 

she was eligible to apply for forgiveness on her PPP loan. Like all Plaintiffs and other putative 

members of the class, however, Mena, could not properly apply for forgiveness because she 

never received the PPP loan proceeds and thus could not certify she used those proceeds 

consistent with the PPP. 

213. CPF’s failure to fund Mena’s SBA-approved PPP loan deprived Mena of funds 

that would have directly assisted in the operation of her business and resulted in lost 

opportunities and other consequential damages. 

CPF’s Failure to Fund Other 

SBA-Approved Class Member 

Borrower PPP Loans 

214. While defendants Crossroads and CPF also contended in their motion to dismiss 

plaintiff Greathouse’s original complaint that “CPF is committed to its borrowers’ satisfaction” 

and that “the vast majority of CPF’s borrowers have reported no issues receiving their loans” 

(see Greathouse v. Capital Plus Financial, LLC, Case No. 4:21-cv-1243-BRW (E.D. Ark.); ECF 

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25 at ECF 9), the truth is that, in addition to Plaintiffs’ experiences, numerous other PPP 

borrowers across the United States have complained publicly about CPF’s failure to fund their 

PPP loans, examples of which include the following: 

a. “Capital Plus Financial has kept hundreds of people’s PPP loans that were already 

approved by the SBA.” (Consumer Financial Protection Bureau Complaint 

Database, Complaint No. 4409176, May 26, 2021, 

https://www.consumerfinance.gov/data-research/consumer-complaints/, last 

accessed Dec. 23, 2021); 

b. “I hope capital plus financial is shut down after this, and that’s on god. They 

deserve to lose all of their financial accreditations and business licenses. I have 

never in my life been in a situation like this with a financial institution that cuts 

off all methods of contact/communication for months at a time with zero 

explanation.” (Consumer complaint, June 2020, 

https://www.reddit.com/r/Blueacorn/comments/nci8lm/just_got_off_the_phone_w

ith_an_sba_rep_in_tx/, last accessed Dec. 23, 2021); 

c. “[T] they don’t have a ETA on when my funds will be sent to my account. They 

do not have a phone to contact them, the lender Capital Plus Financial doesn’t 

have a way for me to contact. I have emailed the CEO of capital plus financial 

every single day which is the lender and I have not heard anything from them at 

all.” (Consumer Financial Protection Bureau Complaint Database, Complaint No. 

4348481, May 4, 2021, https://www.consumerfinance.gov/dataresearch/consumer-complaints/, last accessed Dec. 23, 2021); 

d. “I signed on April 8th and it says that my friends have been transferred or 

deposited and I have not seen a dime has anybody reported this to the SBA?” 

(June 2021 Consumer Complaint, 

https://www.reddit.com/r/PPPLoans/comments/ms0pzr/anybody_been_funded_by

_capital_plus_financial/gz92tah/?utm_source=reddit&utm_medium=web2x&cont

ext=3, last accessed Dec. 23, 2021); 

e. “If they broke they really need to just say that and send me to another lender or 

something because at this point they owe me.” (Consumer complaint, May 2021, 

Facebook Group PPP Funding Group, 

https://www.facebook.com/groups/442306946857529/posts/456065148815042, 

last accessed Dec. 23, 2021); 

f. “They are making up the rules as they go, holding money that doesn’t belong to 

them. This is not what SBA intended.” (Consumer complaint June 2021, 

change.org, https://www.change.org/p/ppp-fraud-by-blueacorn-and-capital-plusfinancial-failure-to-deliver-sbaCase 4:22-cv-00686-P Document 1 Filed 08/09/22 Page 46 of 68 PageID 46
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funds?utm_source=share_petition&utm_medium=custom_url&recruited_by_id=9

da43a80-c0d6-012f-2f2f-4040496dcccb, last accessed Dec. 23, 2021); and 

g. “Other delay tactics are mistakes on bank account information you didn’t make, 

an inability to correct mistakes you did make and an inability to reach anyone at 

both companies. They are holding funds and not delivering money to borrowers. 

SBA tells you to resolve with a lender you can’t reach directly and never returns 

calls.” (Change.org Petition: Report PPP fraud by Blueacorn and Capital Plus 

Financial Failure to Deliver SBA Funds, 147 supporters, last accessed Dec. 23, 

2021). 

h. Cody Crane 

“Please need assistance.” 

Rodricus Hammonds 

“You get your assistance?” 

 Rodricus Hammonds 

“I need help with understanding why my ppp funds hasn’t been deposited into my 

account I signed my loan contract on the 18th of this month I received a email 

from my lender Capital Plus Financial stating that it would be disbursed into my 

account in 10 business days and its been over that period I have emailed and 

called and got no kind of response so can you please tell me what’s going on” 

Malik fuller 

“You have no heard anything back have you??? Just think about it for a 

second. You have the CFO on this particular platform and she still will not 

help you or me??? 

Rodricus Hammonds 

“Malik fuller The Giga person is a he? And how could the sba agree with 

this lender it’s a true lende4r the sba told me this that they is one of their 

lenders” 

Malik fuller 

“No it’s a female” 

 Malik fuller 

“This company is a scam!!! Many people like myself have been contacting this 

company with no assistance available.” 

 Rodricus Hammonds 

 “So this company is a Scam” 

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 Rodricus Hammonds 

“Why is it so difficult to get answers from Capital Plus Financial or Blueacorn 

about our ppp loan funds being deposited” 

 Rodricus Hammonds 

 “Farzana Giga 

 Capital Plus Financial has not funded my ppp loan yet I’ve signed all my 

loan contract documents on the 18th of April what’s going on” 

 Mel Bonner 

“Farzana Giga you are my loan officer for my Ppp loan. I was approved on 

April 8th 2021 signed my papers on the 19th of April. I have not received my 

deposit. I’ve got messages from blue acorn stating that my funds was sent to the 

federal reserve to be deposited but I called and the federal reserve said it is a lie. I 

keep getting messages says 7-10 business days and still nothing. What is going 

on. I’ve also contacted the sba, the ftc and the attorney general in your state. If I 

don’t hear anything back by the end of today then I will be taking legal action. 

Not to mention my address was publicly published and I did receive any money. 

So disappointed. Your company could at least address your customers that you 

have completely ignored.” 

 Tavon Hughes 

“I’m in the same boat, this is crazy” 

See https://www.linkedin.com/in/farzana-giga-090064a/recent-activity/shares/. 

215. Indeed, defendants CPF and Crossroads have reportedly received so many 

complaints about CPF’s failure to fund SBA-approved PPP loans that they actually had to add a 

warning to CPF’s website about communications to CPF regarding PPP lending which stated as 

follows: 

NOTICE CONCERNING THREATENING OR HARASSING 

COMMUNICATIONS 

The partnership of Capital Plus Financial and Blue Acorn has successfully served 

hundreds of thousands of individuals and small businesses through the funding of 

Paycheck Protection Program (PPP) loans. 

Feedback from customers is always appreciated. Customer service remains our 

top priority. 

However, we will not tolerate any threatening or harassing actions or 

communications from customers in any form. 

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Any communication from an applicant we deem threatening, harassing or 

intimidating will result in the immediate withdrawal of the loan. 

Additionally, we will pursue all available criminal and civil legal avenues to 

defend and protect our companies and our associates. Our team includes former 

federal agents and prosecutors. We are working closely with federal, state, and 

local law enforcement to identify and prosecute those who would make threats 

against our companies or our associates. We will pursue these options to the 

fullest extent of the law. 

See https://capitalplusfin.com/home/ (visited Dec. 26, 2021). 

216. CPF failed to fund the SBA-approved PPP loans of Plaintiffs and other Class 

member borrowers despite the fact that CPF itself participated in the Program directly also as a 

beneficiary, having received the PPP loan on April 13, 2020 of reportedly $376,800 as noted 

above. See, e.g., Capital Plus Financial LLC in Bedford, TX - SBA PPP Loan Data (Paycheck 

Protection Program) (federalpay.org) (accessed on Dec. 28, 2021). 

Class Action Allegations 

217. Plaintiffs bring this action individually and on behalf of the following national 

class (the “Class”): 

National Class: All persons and entities in the United States who, in 2021, 

applied for PPP loans with defendant CPF as the lender for whom the SBA 

provided an SBA loan number, and who executed and submitted their Loan 

Documents but did not receive the PPP loan proceeds. 

218. Plaintiffs Covarrubias and Smith bring this action individually and also on behalf 

of the following California Subclass: 

California Subclass: All persons and entities in California who, in 2021, applied 

for PPP loans with defendant CPF as the lender for whom the SBA provided an 

SBA loan number, and who executed and submitted their Loan Documents but 

did not receive the PPP loan proceeds. 

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219. Plaintiff Myles brings this action individually and also on behalf of the following 

North Carolina Subclass: 

North Carolina Subclass: All persons and entities in North Carolina who, in 

2021, applied for PPP loans with defendant CPF as the lender for whom the SBA 

provided an SBA loan number, and who executed and submitted their Loan 

Documents but did not receive the PPP loan proceeds. 

220. Excluded from the Class and Subclasses are Defendants, any entities in which 

Defendants have a controlling interest, Defendants’ agents and employees, any Judge to whom 

this action is assigned, and any member of such Judge’s staff and immediate family. 

221. There is a well-defined community of interest among members of the Class and 

Subclasses, and the disposition of their claims in a single action will benefit the parties and the 

Court. 

222. The proposed Class and Subclasses meet each applicable requirement of Fed. R. 

Civ. P. 23. 

223. Numerosity: While the exact number of members of the Class and Subclasses are 

unknown at this time and can be determined by appropriate discovery, the Class and each 

Subclass includes numerous members such that joinder of all members is impracticable within 

the meaning of Rule 23(a)(1). 

224. Ascertainability: Names and addresses of members of the Class and Subclasses 

are available from Defendant CPF’s records and potentially other sources including publicly 

available databases. Notice can be provided to the members of the Class and Subclasses through 

direct mailing, publication, or otherwise using techniques and a form of notice similar to those 

customarily used in class action litigation. 

225. Typicality: Plaintiffs’ claims are based on the same facts and legal theories as 

those of the other members of the Class and Subclasses which Plaintiffs seek to represent. 

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Plaintiffs and the members of the Class and Subclasses all similarly applied for PPP loans, had 

their loans approved by the SBA, but did not receive their PPP loan proceeds from CPF despite 

the parties’ loan contracts. 

226. Adequacy: Plaintiffs will fairly and adequately represent the interests of the 

members of the Class and respective Subclasses. Plaintiffs are adequate representatives of the 

Class and respective Subclasses as their interests align with the interests of the members of the 

Class and respective Subclasses, and Plaintiffs are represented by counsel skilled and 

experienced in class actions, including financial consumer and other class action litigation. 

227. Superiority: A class action is superior to all other available methods of the fair 

and efficient adjudication of the claims asserted in this action because the expense and burden of 

individual litigation makes it economically unfeasible for members of the Class and Subclasses 

to seek to redress their claims other than through a class action; if separate actions were brought 

by individual members of the Class and Subclasses, the resulting duplicity of lawsuits could lead 

to differing and inconsistent adjudications; and, absent a class action, Defendants are unlikely to 

be held accountable for CPF’s failure to actually fund all applicable SBA-approved PPP loans. 

228. Predominance and Commonality: Common questions of law and fact exist and 

predominate over any questions which affect individual members of the Class and Subclasses. 

Common questions of fact and law include, but are not limited to: 

a. whether defendant CPF failed to fund SBA-approved PPP loans to 

Plaintiffs and other members of the Class and Subclasses in breach of its 

obligations to actually fund such loans; 

b. whether CPF and Crossroads obtained fees for PPP loans that CPF did not 

make; 

c. whether CPF’s corporate parent, Crossroads, controlled CPF and was 

unjustly enriched by obtaining fees for PPP loans; 

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d. whether CPF’s failure to fund SBA-approved PPP loans violated the Loan 

Documents it entered into with Plaintiffs and other members of the Class 

and Subclasses; 

e. whether defendants Donnelly and Alpert were unjustly enriched by CPF’s 

PPP lending and CPF’s failure to fund the SBA-approved PPP loans of 

Plaintiffs and the other members of the class; and 

f. whether defendant CPF’s failure to fund SBA-approved PPP loans and 

Crossroads’s receipt of PPP loan fees damaged Plaintiffs and the members 

of the Class and Subclasses. 

229. Plaintiffs reserve the right to amend the definition of the Class and Subclasses if 

discovery or further investigation reveals that the definition of the Class or Subclasses should be 

amended. 

COUNT ONE 

Breach of Contract 

(Against CPF) 

230. Plaintiffs incorporate the allegations from all previous paragraphs as if fully set 

forth herein. 

231. This Count is alleged by all Plaintiffs against only defendant CPF. 

232. The standard form promissory Note and accompanying Loan Documents that CPF 

and the members of the proposed Class entered into are binding, enforceable agreements. Among 

other provisions, the Note identifies the specific PPP loan, loan number and amount of the loan; 

specifies that the parties to the Note are, respectively, the Class member borrower and the 

“Lender” CPF; provides that, “[t]his loan is made pursuant to the PPP”; requires the borrower to 

pay back the principal of the loan plus interest if the PPP loan is not forgiven; contains other PPP 

loan repayment terms and events of default and the lender’s rights in the event of the borrower’s 

default; and contains general provisions, including specifically that “[a]ll individuals and entities 

signing this Note are jointly and severally liable[.]” 

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233. In addition, the Additional and Correction Documents Agreement (Errors and 

Omissions Agreement) that accompanies the promissory Note between the Plaintiff class 

member borrowers and CPF provides additional terms and states, at the outset, explicitly as 

follows: 

“In consideration of Capital Plus Financial, LLC, located at 2247 Central Drive, 

Bedford, Texas 76021 (hereinafter called ‘Lender’) making the above loan, each 

of the undersigned, jointly and severally, do hereby agree as follows ....” 

234. The Loan Document contracts entered into by CPF and the putative members of 

the alleged borrower Class also include a “Notice - No Oral Agreements” document that governs 

the “Loan by Lender, Capital Plus Financial, LLC to Borrower”; identifies each Class member 

borrower; and is executed by both CPF via its CFO Giga, and each putative Class member 

borrower. 

235. A complete copy of the Loan Document plaintiff Greathouse agreed to is attached 

to this Complaint as Exhibit A (with only plaintiff Greathouse’s Social Security and bank 

account numbers redacted). 

236. Through its agreement to make PPP loans via the Loan Documents and as the 

counterparty to the Loan Documents and by virtue of the PPP and other applicable regulations 

that were a part of and incorporated into the Loan Documents, CPF entered into binding 

agreements with Plaintiffs and the members of the proposed Class to fund their respective PPP 

loans. 

237. Further, CPF had an implied duty to act in good faith and in accordance with fair 

dealing to take all steps necessary to fund Plaintiffs’ and the Class members’ PPP loans pursuant 

to the Loan Documents. 

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238. In addition, CPF and its corporate parent Crossroads also acted consistent with, 

reaped the benefits of and made numerous representations confirming CPF’s agreement to fund 

Plaintiffs’ loans. For example, defendant Crossroads reported that “the Company” made $930 

million in PPP loan fees by representing to the SBA that it had funded Plaintiffs’ and other PPP 

loans. Defendant CPF also obtained billions of dollars from the PPPFL by pledging Plaintiffs’ 

and other borrowers’ loans as collateral. Defendant CPF could not properly secure PPPLF 

advances on loans it would not fund. Defendant CPF also consistently reported to the SBA that it 

had funded class members’ loans. 

239. Defendant CPF breached its obligations to fund Plaintiffs’ and the Class 

members’ PPP loans under the Loan Documents by failing to fund their loans. 

240. Moreover, all PPP loan applications require applicants to certify that they have 

not, and will not, receive other PPP loans. 

241. As a result, once Plaintiffs and the other members of the Class applied for PPP 

loans and their loan applications were approved by the SBA and assigned PPP loan numbers 

pursuant to the Loan Documents, Plaintiffs and the Class members were no longer able to apply 

for PPP loans with other PPP lenders as they would not be able to certify that they would not 

receive another PPP loan. 

242. Plaintiffs and the Class members were therefore effectively bound to, and had to 

rely exclusively on, CPF to actually abide by their Loan Document commitments to provide 

them with the PPP loan funds that the SBA had already approved. 

243. As a result, CPF harmed Plaintiffs and the members of the Class in an amount to 

be determined at trial, but not less than the amount of the wrongfully withheld PPP loan proceeds 

plus all other applicable damages to the full extent permissible by law. 

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COUNT TWO 

Breach of Contract 

(Against Crossroads) 

244. Plaintiffs incorporate the allegations from all previous paragraphs as if fully set 

forth herein. 

245. This Count is alleged by all Plaintiffs against only defendant Crossroads. 

246. As more fully described above, Crossroads exercised control over CPF, operated 

with CPF as a single enterprise, held out in its SEC filings and other public statements that it was 

one and the same companies, controlled and participated in CPF’s PPP loan processing practices, 

and exploited CPF’s status as an SBA-approved CDFI lender to enrich itself, defendants 

Donnelly and Alpert and other corporate insiders through improperly obtained funds. 

247. Crossroads also exercised its control over CPF to cause CPF to “upstream” to 

Crossroads hundreds of millions of dollars in PPP-related loan processing fees and PPPLF loan 

advances, notwithstanding that CPF had not funded Plaintiffs’ and Class members’ loans on 

account of which CPF received those funds. 

248. Accordingly, Crossroads also breached the Loan Agreement contracts Plaintiffs 

entered into with CPF because Crossroads controlled the conduct of, and is thus also liable for, 

CPF’s breaches of those contracts which is also imputed to Crossroads. 

249. As a result of the foregoing, Crossroads is liable to Plaintiffs and the putative 

members of the Class as CPF’s alter ego, for the amount of the wrongfully withheld PPP loan 

proceeds plus all other applicable damages to the full extent permissible by law. 

250. Also as a result of the foregoing, the corporate veil of CPF should be pierced, and 

Crossroads is liable to Plaintiff and the putative members of the Class for the amount of the 

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wrongfully withheld PPP loan proceeds plus all other applicable damages to the full extent 

permissible by law. 

COUNT THREE 

Unjust Enrichment 

(Against Defendants Crossroads and CPF) 

251. Plaintiffs incorporate the allegations from all previous paragraphs as if fully set 

forth herein except all previous paragraphs that allege the existence of a contract between 

Plaintiffs and defendants CPF and Crossroads, including without limitation ¶¶ 12, 72, 216, 

228(a) & (d), 230-50. Defendants Crossroads and CPF have argued that there is no contractual 

obligation for CPF to fund Plaintiffs’ PPP loans, and some courts have held that “a party may not 

incorporate by reference allegations of the existence of a contract between the parties in the 

unjust enrichment count.” Gociman v. Loyola University of Chicago, No. 21-1304, 2022 WL 

2913751, at *8 (7th Cir. July 25, 2022). Accordingly, for purposes of this Count only, Plaintiffs 

do not incorporate by reference their contract claims. 

252. This Count is alleged by all Plaintiffs against only defendants CPF and 

Crossroads. Plaintiffs allege this Count only in the alternative, to the extent that Plaintiffs’ 

breach of contract claims fail to adequately compensate Plaintiffs and Class members for CPF’s 

and Crossroads’s violations as alleged herein. 

253. Plaintiffs and Class members conferred a monetary benefit on defendants CPF 

and Crossroads. Specifically, CPF used Plaintiffs’ participation in the PPP and Plaintiffs’ efforts 

to have CPF process and fund their PPP loans to obtain hundreds of millions of dollars in PPP 

loan processing fees, including from the PPP loans of Plaintiffs and other putative members of 

the proposed Class that never received their PPP loan proceeds. Plaintiffs and Class members 

should have received those PPP loan proceeds but never did. 

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254. Defendant Crossroads controlled and dominated defendant CPF and caused CPF 

to upstream to Crossroads the PPP loan processing fees CPF obtained even though CPF and not 

Crossroads was the SBA-approved PPP lender, including without limitation on the unfunded 

loans of the Plaintiffs and Class members. 

255. Defendants Crossroads and CPF understood the benefits they directly and 

indirectly received as a result of the Plaintiffs’ and Class members’ SBA-approved PPP loans 

and they accepted and retained those benefits. Defendants CPF and Crossroads profited from 

Plaintiffs’ and Class members’ PPP loans and used the funds resulting therefrom for the 

respective personal gain of themselves and certain of their senior executives including without 

limitation defendants Donnelly and Alpert as alleged more fully above. 

256. Under the principles of equity and good conscience, defendants CPF and 

Crossroads should not be permitted to retain any of the funds they received as a result of 

Plaintiffs’ and Class members’ unfunded loans, without having caused CPF to disburse those or 

other funds to fund the loans to which Plaintiffs and Class members were entitled. 

257. CPF did not fund those loans, and therefore did not provide full compensation for 

the benefit Plaintiffs and Class members provided. 

258. As a direct and proximate result of defendant CPF’s and Crossroads’s conduct, 

Plaintiffs and Class members have suffered and will suffer injury. 

259. Defendants CPF and Crossroads should not be permitted to unjustly enrich 

themselves at the expense of Plaintiffs and Class members, but in equity and good conscience 

should be required to make restitution for all funds acquired as a result of defendants’ improper 

conduct. 

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260. Defendants Crossroads and CPF should be compelled to provide an accounting of, 

and disgorge into a common fund or constructive trust for the benefit of Plaintiffs and Class 

members, all proceeds that they unjustly received as a result of Plaintiffs’ and Class members’ 

PPP loans. 

COUNT FOUR 

Unjust Enrichment 

(Against Defendants Donnelly and Alpert) 

261. Plaintiffs incorporate the allegations from all previous paragraphs as if fully set 

forth herein. 

262. This Count is alleged by all Plaintiffs against only defendants Donnelly and 

Alpert. 

263. Plaintiffs and Class members conferred a monetary benefit on defendants 

Donnelly and Alpert. Specifically, via the special dividend declared by defendant Crossroads 

from the “windfall” it received from CPF’s PPP lending, defendants Donnelly and Alpert 

received, respectively, $90,227,080 and $59,691,400 in cash, including for PPP loans of 

Plaintiffs and other putative members of the Class. Defendant Donnelly also received over $9 

million in separate compensation from Crossroads in 2021; and defendants Donnelly and Alpert 

also received compensation for their roles as members of Crossroads’s Board of Directors, in 

addition to any other compensation they may have received from CPF. 

264. Defendants Donnelly and Alpert appreciated and knew of the benefits they 

received as a result of these PPP lending activities and approved, accepted and retained those 

benefits. 

265. Defendants Donnelly and Alpert controlled both Crossroads and CPF. 

266. Defendants Donnelly and Alpert also controlled and directed Crossroads’s and 

CPF’s PPP lending activities. 

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267. Defendants Donnelly and Alpert were unjustly enriched by receiving in July 2021 

via Crossroads’s special dividend millions of dollars in cash that came directly to CPF and was 

upstreamed to Crossroads from CPF’s PPP loan processing fees, including for Plaintiffs’ and 

other Class members’ PPP loans that CPF failed to fund but which had to be pledged for CPF to 

receive the PPPLF advances and used by CPF to represent the loans were funded in order to 

obtain the loan processing fees, all as also alleged more fully above. 

268. Defendants Donnelly and Alpert profited from Plaintiffs’ and Class members’ 

PPP loan transactions and used the funds resulting therefrom for their personal gain, although 

Plaintiffs and Class members were injured because their loans were never funded. 

269. Under principles of equity and good conscience, defendants Donnelly and Alpert 

should not be permitted to retain the funds they received as a result of Plaintiffs’ and Class 

members’ unfunded loans. 

270. As a direct and proximate result of Plaintiffs’ and the Class’s PPP loan activities, 

defendants Donnelly and Alpert unjustly and personally profited, while Plaintiffs and the 

putative members of the Class were injured by being deprived of their PPP loan funding, all as 

alleged more fully above. 

271. Defendants Donnelly and Alpert should not be permitted to unjustly enrich 

themselves at the expense of Plaintiffs and Class members, but in equity and good conscience 

should be required to make restitution for all proceeds or funds they personally acquired or 

obtained as a result of the PPP loans of Plaintiffs and other SBA-approved but unfunded PPP 

borrowers of CPF. 

272. As a direct and proximate result of defendants Donnelly’s and Alpert’s conduct,

Plaintiffs and the Class have suffered and continue to suffer injury. 

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273. Defendants should be compelled to provide an accounting of all funds they 

personally acquired or obtained as a result of the PPP loans of Plaintiffs and other SBA-approved 

but unfunded PPP borrowers of CPF. 

274. Defendants should also be compelled to disgorge into a common or constructive 

trust, for the benefit of Plaintiffs and Class members, all proceeds or funds they personally 

acquired or obtained as a result of the PPP loans of Plaintiffs and other SBA-approved but 

unfunded Class member PPP borrowers of CPF. 

COUNT FIVE 

Violation of California’s Unfair Competition Law 

Cal. Bus. & Prof. Code § 17200, et seq.

(Against All Defendants ) 

275. Plaintiffs incorporate the allegations from all previous paragraphs as if fully set 

forth herein. 

276. The California Unfair Competition Law (“UCL”) defines unfair business 

competition to include any “unlawful, unfair, or fraudulent” act or practice. Cal. Bus. & Prof. 

Code § 17200. 

277. A business act or practice is “unlawful” under the UCL if it violates any other law 

or regulation. 

278. Plaintiffs Covarrubias and Smith bring this claim individually and on behalf of the 

California Subclass against all Defendants. 

279. Plaintiffs Covarrubias and Smith have standing to bring this claim because they 

are, and at all times relevant were, residents of California and subject to the protection of the 

UCL. 

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280. CPF’s failure to fund SBA-approved PPP loans breached the Loan Documents 

and accompanying legal duties it owed plaintiffs Covarrubias and Smith and the other members 

of the California Subclass. 

281. As a result of its failure to fund the SBA-approved PPP loans, CPF obtained fees 

and other compensation to which it was not entitled, including fees on loans it never funded and 

loan proceeds rightfully belonging to plaintiffs Covarrubias and Smith and members of the 

California Subclass, and wrongfully deprived plaintiffs Covarrubias and Smith and the members 

of the California Subclass of PPP loan proceeds. 

282. When the PPP loans of plaintiffs Covarrubias and Smith and the California 

Subclass were approved by the SBA, these SBA-approved borrowers had a vested interest in the 

PPP loan proceeds which CPF wrongfully withheld. 

283. CPF’s failures to fund these PPP loans thereby constitute a violation under the 

“unlawful” prong of the UCL. 

284. Similarly, CPF’s failure to fund SBA-approved loans also constitutes “unfair” 

acts and practices under the UCL because CPF’s acts and practices as alleged offend public 

policy and are immoral, unethical, oppressive, unscrupulous and substantially injurious to 

plaintiffs Covarrubias and Smith and the members of the California Subclass. 

285. CPF’s breaches of contract -- including not disbursing SBA-approved loan funds 

and “locking” these borrowers into CPF -- constitute an unfair practice because those breaches 

are immoral, unethical, oppressive, unscrupulous, or substantially injurious. 

286. Once the loan applications of plaintiffs Covarrubias and Smith and other similarly 

situated members of the California Subclass were approved by the SBA, these subclass member 

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borrowers had to rely exclusively on CPF to actually fund their PPP loans and were thereby 

precluded from seeking PPP loans from other lenders, also as alleged above. 

287. CPF’s failure to fund PPP loans of plaintiffs Covarrubias and Smith and the other 

members of the California Subclass constitute unlawful and unfair business acts or practices 

within the meaning of Cal. Bus. & Prof. Code § 17200. 

288. As a result of CPF’s violations of the UCL, plaintiffs Covarrubias and Smith and 

the members of the California Subclass are, in the alternative and to the extent that their breach 

of contract claim fails to adequately award their damages for CPF’s violations as alleged herein, 

entitled to equitable relief, including specifically injunctive relief directing CPF to fund their 

SBA-approved loans in full with applicable interest from the date the loans should have been 

funded, or restitution for the amount of the wrongfully withheld PPP loan proceeds plus interest. 

289. Defendant Crossroads is liable to plaintiffs Covarrubias and Smith and the 

members of the California Subclass by virtue of its control of CPF and it being CPF’s alter ego 

and by virtue of its direct participation in PPP lending and both its and CPF’s violations and 

CPF’s failure to fund the SBA-approved PPP loans at issue, all as also alleged more fully above. 

290. Defendants Donnelly and Alpert are liable to plaintiffs Covarrubias and Smith 

and the members of the California Subclass because they controlled and directed Crossroads’s 

and CPF’s PPP lending activities and directly participated in in CPF’s and Crossroads’s 

violations and failure to fund the SBA-approved PPP loans at issue and personally profited 

therefore, all as also alleged more fully above. 

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COUNT SIX 

North Carolina Unfair and Deceptive Trade Practices Act 

N.C. Gen. Stat. Ann. §§ 75-1.1, et seq. 

(Against All Defendants) 

291. Plaintiffs incorporate the allegations from all previous paragraphs as if fully set 

forth herein. 

292. Plaintiff Myles brings this claim individually and on behalf of the North Carolina 

Subclass against all Defendants. 

293. Plaintiff Myles has standing to bring this claim because she is, and at all times 

relevant was, a resident of North Carolina subject to the protection of the North Carolina Unfair 

and Deceptive Acts and Practices Act (the “NCUDTPA”). 

294. The NCUDTPA broadly prohibits “unfair or deceptive acts or practices in or 

affecting commerce.” 

295. Defendant CPF advertised, offered, or sold goods or services in North Carolina 

and engaged in trade or commerce directly or indirectly affecting the people of North Carolina, 

as defined by the NCUDPTA. See N.C. Gen. Stat. Ann. § 75-1.1(b). 

296. Defendant CPF engaged in unfair and deceptive acts and practices in or affecting 

commerce, in violation of N.C. Gen. Stat. Ann. § 75-1.1, including: 

a. Representing to plaintiff Myles and members of the North Carolina 

Subclass their willingness to disburse SBA-approved loans by delivering 

to plaintiff Myles and members of the North Carolina Subclass copies of 

the Note for their signatures, and accepting the signed Notes; and 

b. Omitting, suppressing, and concealing the reasons why loans to plaintiff 

Myles and members of the North Carolina Subclass had not been 

disbursed. 

297. Defendant CPF’s conduct constitutes “deceptive acts” in violation of the 

NCUDTPA. 

298. Defendant CPF’s conduct constitutes “unfair acts” in violation of the NCUDTPA. 

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299. Defendant CPF’s representations and omissions and acts and omissions were 

material because they were likely to deceive reasonable consumers about their ability to secure 

SBA-approved loans from defendant CPF, and to preclude plaintiff Myles and other members of 

the North Carolina Subclass from seeking PPP loans from other lenders. 

300. Defendant CPF intended to mislead plaintiff Myles and members of the North 

Carolina Subclass and induce them to rely on their misrepresentations and omissions. 

301. Had CPF which was controlled and dominated at all material times by defendant 

Crossroads disclosed its intention to withhold the loan proceeds due to plaintiff Myles and 

members of the North Carolina Subclass, plaintiff Myles and the members of the North Carolina 

Subclass would not have done business with CPF. 

302. Plaintiff Myles and members of the North Carolina Subclass acted reasonably in 

relying on CPF’s misrepresentations and omissions and acts and omissions in failing to fund 

their PPP loans, the truth of which they could not have discovered before they were contractually 

bound to CPF, and thereby exclusively reliant upon CPF’s good faith in actually funding their 

SBA-approved PPP loans. 

303. Defendant CPF acted intentionally, knowingly, and maliciously to violate the 

NDUDTPA, and recklessly disregarded plaintiff Myles’ and North Carolina Subclass members’ 

rights. 

304. Plaintiff Myles and members of the North Carolina Subclass have suffered 

ascertainable losses of money or property, and monetary and non-monetary damages as a direct 

and proximate result of CPF’s misrepresentations and their concealment of and failure to 

disclose material information. 

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305. Defendant Crossroads is liable to plaintiff Myles and the members of the North 

Carolina Subclass by virtue of its control of CPF and it being CPF’s alter ego and by virtue of its 

direct participation in PPP lending and both its and CPF’s violations and CPF’s failure to fund 

the SBA-approved PPP loans at issue, all as also alleged more fully above. 

306. Defendants Donnelly and Alpert are liable to plaintiff Myles and the members of 

the North Carolina Subclass because they controlled and directed Crossroads’s and CPF’s PPP 

lending activities and directly participated in in CPF’s and Crossroads’s violations and failure to 

fund the SBA-approved PPP loans at issue and personally profited therefore, all as also alleged 

more fully above. 

307. Plaintiff Myles and members of the North Carolina Subclass seek all monetary 

and non-monetary relief allowed by law against each Defendant under the NCUDTPA, including 

actual damages, treble damages, restitution, and attorneys’ fees and costs. 

Prayer for Relief

Plaintiffs, individually and on behalf of the proposed Class and Subclasses as applicable, 

respectfully request the following relief: 

A. an order certifying the Class and Subclasses under Rule 23 of the Federal Rules of 

Civil Procedure; naming Plaintiffs as representative of the proposed national Class; naming 

plaintiffs Covarrubias and Smith as representatives of the proposed California Subclass; naming 

plaintiff Myles as the representative of the proposed North Carolina Subclass; and naming 

Plaintiffs’ attorneys as counsel for the Class and California and North Carolina Subclasses; 

B. judgment in favor of Plaintiffs and the Class and Subclasses on all applicable 

counts asserted herein; 

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C. an award of compensatory, consequential and other damages to Plaintiffs and 

members of the Class and Subclasses in amounts to be determined at trial to the maximum extent 

permissible by law, plus prejudgment interest; 

D. an accounting of all PPPLF advances CPF obtained for PPP lending and any other 

federally-guaranteed proceeds CPF obtained for PPP lending, including the whereabouts of any 

such proceeds they were not disbursed to SBA-approved borrowers, whether any such proceeds 

were paid by CPF to Crossroads and/or any other person or entity, the amounts of such 

payments, the identities of the recipients, and the date such proceeds were paid; 

E. an accounting of all PPP lender processing fees CPF and/or Crossroads obtained, 

including for PPP loans CPF ultimately funded and for PPP loans CPF did not fund; 

F. an accounting of all PPP lender processing fees defendants Donnelly and Alpert 

obtained on the PPP loans of Plaintiffs and any other SBA-approved but unfunded Class member 

borrower; 

G. an order of all other forms of monetary relief to the maximum extent permissible 

by law, including payment to Plaintiffs and the Class and Subclasses of all PPP loan proceeds 

owed and due to Plaintiffs and the members of the Class and Subclasses with interest, as well as 

disgorgement of all loan processing fees obtained by Defendants that are attributable to the 

unfunded but SBA-approved loans of Plaintiffs and other Class members to the maximum extent 

permissible by law; 

H. an award of punitive damages based on Defendants’ intentional, wanton and 

malicious conduct, or their reckless disregard of Plaintiffs’ and the Class members’ rights, in 

amounts to be determined at trial to the maximum extent permissible by law; 

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I. an order awarding Plaintiffs and the Class and California and North Carolina 

Subclasses their reasonable attorneys’ fees and expenses and costs of this lawsuit, including but 

not limited to expert fees and costs, to the maximum extent permissible by law; and 

J. such other relief as the Court may deem just and proper. 

DEMAND FOR JURY TRIAL 

Pursuant to Federal Rule of Civil Procedure 38(b), Plaintiffs demand a trial by jury of any 

and all issues in this action so triable of right. 

Dated: August 9, 2022 Respectfully submitted, 

KENDALL LAW GROUP, PLLC 

By: /s/ Joe Kendall 

Joe Kendall 

Texas Bar No. 11260700 

3811 Turtle Creek Blvd., Suite 1450 

Dallas, TX 75219 

T: (214) 744-3000 

F: (214) 744-3015 

jkendall@kendalllawgroup.com

BAILEY & GLASSER LLP 

Lawrence J. Lederer (to seek pro hac vice admission) 

Bart D. Cohen (to seek pro hac vice admission) 

1622 Locust Street 

Philadelphia, PA 19103 

T: (202) 463-2101 

F: (202) 463-2103 

llederer@baileyglasser.com 

bcohen@baileyglasser.com 

BAILEY & GLASSER LLP 

Michael L. Murphy (to seek pro hac vice admission) 

209 Capital Street 

Charleston, WV 25301 

T: (304) 345-6555 

F: (304) 342-1110 

mmurphy@baileyglasser.com 

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NOLAN HELLER KAUFFMAN LLP 

Justin A. Heller (to seek pro hac vice admission) 

Matthew M. Zapala (to seek pro hac vice admission) 

80 State Street, 11th Floor 

Albany, NY 12207 

T: (518) 449-3300 

F: (518) 432-3123 

jheller@nhkllp.com

mzapala@nhkllp.com 

and

 

FRIDAY, ELDREDGE & CLARK, LLP 

Katherine C. Campbell (to seek pro hac vice admission) 

Marshall S. Ney (to seek pro hac vice admission) 

3350 S Pinnacle Hills Pkwy, Suite 301 

Rogers, AR 72758 

T: (479) 695-6049 

F: (501) 244-5389 

kcampbell@fridayfirm.com

mney@fridayfirm.com

Attorneys for Plaintiffs and the 

Proposed Class and Subclasses 

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