Herbert G. Chambers, along with several of his companies and James Duchesneau, a company officer, have agreed to a settlement of approximately $11.8 million to resolve False Claims Act allegations. These allegations involved false certifications to the United States Small Business Administration (SBA) regarding eligibility for Paycheck Protection Program (PPP) loans.
The PPP loans were part of the financial relief under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), enacted on March 29, 2020, to assist small businesses impacted by the COVID-19 pandemic. The SBA issued an Interim Final Rule (IFR) on April 30, 2020, setting a limit of $20 million in PPP loans to businesses under a single corporate group. This rule was applicable to loans not fully disbursed by that date.
The United States alleges that Chambers' companies were ineligible for further PPP loans due to the $20 million threshold being surpassed by previously funded loans to other Chambers-owned entities. According to the settlement, Chambers and his companies acknowledged that the eight companies applied for, but had not yet received, PPP funds as of April 30, 2020. When a bank canceled the unfunded loans, due to the cap, the companies reapplied at a different bank, which then funded the loans.
Chambers and the entities cooperated with the authorities following the Department of Justice's guidelines regarding voluntary disclosure in False Claims Act cases.
"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," stated United States Attorney Leah B. Foley. "Today’s resolution demonstrates our office’s unwavering commitment to protecting taxpayer-funded relief programs and holding accountable those who misuse them."
Special Agent in Charge Jodi Cohen of the FBI 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. When fraudulent applications wrongly drain a program set up to offset economic upheaval, it’s a blow to the folks who truly need help. 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. Assistant U.S. Attorneys Charles B. Weinograd and Alexandra Brazier from the Affirmative Civil Enforcement Unit managed the case.