KeyBank lawsuits in recent years have ranged from a $7.77 million federal settlement over Paycheck Protection Program fraud to a $6 million class action tied to a mortgage-customer data breach, plus a shareholder securities suit over liquidity disclosures and older wage and student-loan cases. Here is what each involved and where it stands.
The $7.77 Million PPP Fraud Settlement
On January 7, 2026, KeyBank agreed to pay $7,770,595.25 to settle civil allegations that it violated the False Claims Act and the CARES Act by submitting fraudulent forgiveness applications for PPP loans.1U.S. Department of Justice. Key Bank Agrees to Pay $7.7 Million to Resolve Branch Manager’s Fraud The U.S. Attorney’s Office for the District of New Jersey announced the agreement. About $6.2 million of the payment is restitution.2Yahoo Finance. KeyCorp Unit to Pay $7.77 Million
KeyBank did not admit wrongdoing, and prosecutors credited the bank’s cooperation with the investigation.2Yahoo Finance. KeyCorp Unit to Pay $7.77 Million
What the Branch Manager Did
The conduct traced to Tommy Hawkins, a branch manager at KeyBank’s Conshohocken, Pennsylvania office. Prosecutors said Hawkins recruited business owners in 2020 and early 2021 to overstate payroll expenses and employee counts on roughly four dozen PPP applications, producing nearly $6 million in SBA-backed loans.2Yahoo Finance. KeyCorp Unit to Pay $7.77 Million KeyBank reportedly paid Hawkins incentive compensation for opening the accounts before it caught the fraud. According to the government, the bank then submitted forgiveness applications to the SBA for all of the tainted loans even after identifying suspicious patterns.
Hawkins pleaded guilty to bank fraud conspiracy on May 28, 2024. On October 18, 2024, U.S. District Judge Karen M. Williams in Camden, New Jersey, sentenced him to 65 months in prison, three years of supervised release, and $5.3 million in restitution.3SSA Office of the Inspector General. Bank Manager Sentenced to 65 Months in Prison4U.S. Department of Justice. Tommy Hawkins Sentencing Press Release Six other people were charged in the conspiracy; four have pleaded guilty and two, Eric Rivera and James Wessels, were indicted on April 17, 2024, and are presumed innocent while their cases remain pending.5U.S. Department of Labor Office of Inspector General. Bank Manager Sentenced to 65 Months in Prison
Mortgage Customer Data Breach Class Action
In July 2022, an unauthorized party accessed the network of Overby-Seawell Company, a vendor that tracks insurance policies for KeyBank mortgage clients.6Times Union. KeyBank Mortgages Hit With Data Breach The exposed information included names, addresses, phone numbers, mortgage account numbers, property details, home insurance policy numbers, and the first eight digits of Social Security numbers. KeyBank said its own internal systems were not affected.
Borrowers sued in Bozin v. KeyBank, N.A. et al. (Case No. 1:22-cv-01536), filed in August 2022. The litigation was consolidated as multidistrict litigation before U.S. District Judge Steven D. Grimberg in the Northern District of Georgia, with both KeyBank and Overby-Seawell named as defendants.7U.S. District Court, Northern District of Georgia. In Re: Overby-Seawell Company Customer Data Security Breach Litigation
Judge Grimberg gave preliminary approval to a $6 million settlement on June 13, 2024.8Law360. KeyBank Borrowers’ $6M Data Breach Deal Gets Initial OK The class covers roughly 620,815 affected mortgage clients. Under the proposed terms, class members can choose between three years of identity theft protection and credit monitoring or a pro-rated cash payment. They can also seek reimbursement of up to $6,000 in documented out-of-pocket losses tied to the breach and $25 per hour for time spent responding, capped at $125. California residents during the relevant period are eligible for an additional $100.9ClassAction.org. $6 Million Overby-Seawell Settlement Resolves Data Breach Lawsuit
The claims deadline was October 21, 2024, and a final approval hearing was scheduled for December 9, 2024. The available research does not confirm whether the court granted final approval at that hearing.
The 2025 Wong Fleming Breach
In January 2025, KeyBank disclosed a separate breach at another third-party vendor, Wong Fleming, P.C., which provides asset recovery services for the bank. Wong Fleming reported discovering unauthorized remote access to its network on January 16, 2025, and KeyBank began sending notification letters the following month. The compromised data included names, addresses, birthdates, Social Security numbers, driver’s license numbers, and account numbers. Law firms were investigating as of early 2025, but no class action had been filed on that incident at the time of the available research.
Shareholder Securities Class Action
In August 2023, shareholder Menachem Gurevitch filed a securities class action against KeyCorp in the U.S. District Court for the Northern District of Ohio on behalf of investors who bought KeyCorp stock between February 2020 and June 2023.10Bloomberg Law. KeyCorp Sued for Downplaying Liquidity Issues Amid SVB Collapse
The complaint alleges that KeyCorp and executives including CEO Christopher Gorman, CFO Clark Khayat, former CEO Beth Mooney, and former CFO Donald Kimble misled investors about the bank’s liquidity position and net interest income projections.11Legal Dive. KeyBank Investors Liquidity Lawsuit The suit says the bank repeatedly assured investors that its deposit base and liquid assets could weather adverse conditions while downplaying the impact of rising interest rates and funding costs. In March 2023, KeyCorp revised its net interest income forecast from a projected 6%–9% increase to just 1%–4%, and its stock fell amid the regional banking turmoil that followed the collapse of Silicon Valley Bank.
The case was filed under Sections 10(b) and 20(a) of the Securities Exchange Act and Rule 10b-5.12D&O Diary. Liquidity and Interest Income Concerns Draw Securities Suit Against Bank No publicly reported ruling or resolution appears in the available research.
Wage and Hour Settlements
KeyBank has resolved two employee overtime cases. In 2013, the bank paid $3.5 million in a New York federal court to settle claims that it intentionally misclassified client service managers as exempt from overtime under the Fair Labor Standards Act and state law. The class covered managers who worked at KeyBank across multiple states from 2007 through 2013, with individual payments tied to length of employment.13OvertimePayLaws.org. Customer Service Managers Settle Overtime Lawsuit
In Habenicht v. KeyCorp, mortgage loan officers alleged the bank pressured them to work off the clock without overtime and failed to reimburse business expenses, pushing effective pay below the minimum wage. U.S. District Judge Dan Aaron Polster in the Northern District of Ohio granted final approval on October 19, 2012, covering 313 claimants.14Getman Sweeney. KeyCorp and KeyBank N.A.
Other Notable Cases
PPP Agent Fee Dismissal
In Fruci & Associates v. A10 Capital LLC, et al. (W.D. Wash., No. 2-20-cv-00864), a putative class action sought payment of agent fees on PPP loans. KeyBank obtained a dismissal of the claims against it, reported in January 2021.15Jones Day. KeyBank Obtains Dismissal of Class Action Involving Agent Fees
Kilgore v. KeyBank
Former students of Silver State Helicopters, a failed flight-training school, sued KeyBank and loan servicer Great Lakes Educational Loan Services under California’s Unfair Competition Law. They argued their promissory notes lacked a required Federal Trade Commission notice that would have shielded them from repayment despite the school’s fraud. In 2013, the Ninth Circuit, sitting en banc, held that the students’ arbitration agreements were enforceable under the Federal Arbitration Act and ordered the case into arbitration, applying the Supreme Court’s decision in AT&T Mobility v. Concepcion.16FindLaw. Kilgore v. KeyBank National Association
Redlining Allegations
A November 2022 report from the National Community Reinvestment Coalition alleged that KeyBank engaged in “systemic redlining” by limiting mortgage lending in predominantly Black neighborhoods in several cities.17NCRC. Redlined: KeyBank Continues to Fail Black America The report said KeyBank ranked last among the 50 largest mortgage lenders in the share of originations to Black borrowers in 2021, and that home purchase loans to low- and moderate-income borrowers fell from 35% in 2018 to 17% in 2021. The NCRC said those trends contradicted commitments KeyBank made in a 2016 Community Benefits Agreement tied to its acquisition of First Niagara Financial Group. KeyBank has not been formally charged with redlining by a federal agency based on the report, and no such federal lawsuit against the bank appears in the available research.