Herbert G. Chambers, a well-known figure in the automotive industry, along with several companies he owns and James Duchesneau, one of the company's officers, agreed to a settlement of approximately $11.8 million. This resolves allegations related to the False Claims Act suggesting that the businesses falsely certified their eligibility for Paycheck Protection Program (PPP) loans.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 29, 2020, aimed to provide timely financial support to businesses impacted economically by the COVID-19 pandemic. The CARES Act approved forgivable loans for small businesses to maintain staff and cover approved expenses through the PPP. An Interim Final Rule (IFR) from the Small Business Administration (SBA) established on April 30, 2020, restricted businesses within a single corporate group from receiving over $20 million in PPP loans. It was applicable for loans not fully disbursed by this date.
The U.S. government asserts that this restriction under the IFR applied to Chambers' companies. They further contend that eight of Mr. Chambers' companies were ineligible for the funding because SBA had already allocated over $20 million to other Chambers-affiliated businesses. The settlement reveals that Chambers and the companies admit that they applied for, but had not secured, loans prior to the April 30 regulation. A bank later canceled these unfunded loans due to the financial cap. However, months later, another bank approved the loans after these companies reapplied.
Mr. Chambers and his companies collaborated with the investigation following the Department of Justice’s guidelines on voluntary disclosure, cooperation, and remediation in False Claims Act matters.
United States Attorney Leah B. Foley commented, “The Paycheck Protection Program was created to provide a financial lifeline to small businesses struggling to stay afloat during the unprecedented COVID crisis – not to serve as a funding mechanism for companies that sought to evade program limits.” She added, “Today’s resolution demonstrates our office’s unwavering commitment to protecting taxpayer-funded relief programs and holding accountable those who misuse them.”
Jodi Cohen, Special Agent in Charge of the Federal Bureau of Investigation, Boston Division, remarked, “Today’s settlement resolves allegations that Herb Chambers and his companies tried to game the system that was set up to keep struggling businesses afloat.” She emphasized that fraudulent applications impact those genuinely in need and assured that “The FBI will continue to work with our partners to identify and investigate anyone who tries to defraud federal government programs in this way.”
The announcement was made by U.S. Attorney Foley, FBI SAC Cohen, and the U.S. Small Business Administration. The case was managed by Assistant U.S. Attorneys Charles B. Weinograd and Alexandra Brazier of the Affirmative Civil Enforcement Unit.
