A growing number of large companies have found themselves in the crosshairs of the U.S. Department of Justice (DOJ) over alleged misuse of Paycheck Protection Program (PPP) funds. Most recently, Boston-based Herb Chambers and several of his affiliated companies agreed to pay approximately $11.8 million to resolve allegations that they violated the False Claims Act by misrepresenting their eligibility for PPP loans.
These allegations revolve around how the companies navigated the rules outlined by the Small Business Administration (SBA), particularly under the CARES Act — the legislation that created the PPP to help small businesses stay afloat during the COVID-19 pandemic.
On April 30, 2020, the SBA issued an Interim Final Rule (IFR) aimed at preserving PPP resources. The IFR specifically limited entities that were part of a single corporate group from receiving more than $20 million in total PPP loans. This cap applied to any loans not fully disbursed by the time the rule went into effect.
According to the government, eight companies owned by Herb Chambers had applied for loans that exceeded this $20 million limit. Although a bank canceled those loans after the IFR was published, the companies reapplied later through a different financial institution — and the new loans were funded. The DOJ alleges that Herb Chambers violated PPP eligibility requirements under the IFR.
Cooperation Can Be Key to Favorable Outcomes
Mr. Chambers and his companies cooperated fully with the investigation under the Department of Justice’s Guidelines for Taking Voluntary Disclosure, Cooperation and Remediation into Account in False Claims Act Matters. The case demonstrates that while violations of federal loan programs can carry serious consequences, companies that engage proactively with investigators and demonstrate voluntary disclosure, cooperation, and remediation can reduce their risk exposure. Seeking a settlement can allow companies to resolve allegations while preserving business continuity and helping to safeguard their executives and brand reputation.
Legal Guidance is Critical in PPP and Pandemic Loan Fraud Investigations
For companies facing scrutiny over pandemic-era financial relief programs, time is of the essence. These investigations can quickly escalate, and the legal and financial stakes are high. Working with a skilled PPP Loan and Pandemic Fraud attorney can make all the difference. From navigating complex SBA rules to managing communications with federal investigators, experienced counsel helps protect not just the legal interests of the company, but also the privacy and professional standing of its executives. An attorney can guide companies through the settlement process, helping them mitigate penalties, avoid litigation, and move forward with a clean slate. Please contact a member of our award-winning PPP Loan Fraud Defense team at 617-880-6155 to learn more about your options.
