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Vivint CEO Todd Pedersen speaks during the Utah Valley Entrepreneurial Forum's event at Zions Bank in Provo on Thursday, May 9, 2013. Several start up companies were invited to present their business models to Pedersen and fellow businesspeople. JAMES ROH/Daily Herald

The Provo-based company Vivint agreed to pay $3.2 million to the United States as part of a settlement agreement in a federal case alleging that Vivint employees made false and misleading statements to a federally-insured bank.

The settlement between Vivint, a smart home company that “frequently obtains new customers through door-to-door sales by Vivint sales representatives,” and U.S. Department of Justice was reached following an investigation by the U.S. Attorney’s Office for the District of Utah and Department of Justice Civil Division’s Commercial Litigation Branch as well as “investigative assistance” from the FBI, according to a press release issued Wednesday.

The investigation into Vivint focused on “certain Vivint sales practices from April 2017 through December 31, 2020.”

The settlement agreement stated that “the United States contends that certain Vivint sales representatives used their personal funds, through credit cards, debit cards, or cash, to cover the cost of initial financing payments on behalf of Vivint customers who sought to purchase Vivint’s products.”

“In so doing, the United States contends that certain Vivint sales representatives made false and misleading statements to a federally insured financial institution in connection with such financing that made it appear as if the borrower had funded, and had sufficient funds for, the initial payment,” wrote Joel Ferre, an assistant U.S. attorney for the district of Utah, and Zach Williams, a trial attorney for the department of justice civil division.

The $3.2 million settlement agreement, which was signed on Monday by Vivint CFO Dale Gerard and counsel for Vivint, noted that the agreement “is neither an admission of liability by Vivint, nor a concession by the United States that its claims are not well founded.”

The allegations resolved by the settlement were submitted under the Financial Institutions Anti-Fraud Enforcement Act, which “provides rewards to eligible declarants who provide information about potential FIRREA violations,” the Department of Justice wrote in the press release.

U.S. Attorney for the District of Utah John Huber said “American business should be based on truthful disclosures, and false and misleading statements should never be part of dealings with federally insured financial institutions.”

“This resolution should send a strong message to corporations that using fraudulent tactics to secure consumer sales will not be tolerated,” Huber said in the press release.

“Making false statements about the creditworthiness of borrowers undermines the integrity of our banking system and puts at risk the taxpayer dollars that help to support it,” added Jeffery Bossert Clark, acting assistant attorney general of the justice department’s civil division. “We will pursue those who fail to provide truthful information needed by federally insured financial institutions to make appropriate lending decisions.”

On Thursday, in a written statement, a company spokesperson said Vivint is “pleased to have reached this resolution related to certain past sales practices by some of our sales representatives.”

“In addition to cooperating with the DOJ, we have addressed the issues and continue to strengthen our compliance policies, practices and procedures,” the spokesperson said.

Connor Richards covers government, the environment and south Utah County for the Daily Herald. He can be reached at crichards@heraldextra.com and 801-344-2599.

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