Herb Chambers, one of the most prominent auto dealers in the United States, along with several affiliated companies and a corporate officer, has agreed to pay $11.8 million to resolve Paycheck Protection Program (PPP) loan fraud allegations. The settlement was announced on April 9 by the U.S. Attorney’s Office in Massachusetts.
The dispute centers on the companies’ participation in the PPP, a program created under the CARES Act to provide forgivable loans to small businesses during the COVID-19 pandemic. On April 30, 2020, the U.S. Small Business Administration (SBA) issued an Interim Final Rule (IFR) limiting PPP loans to $20 million per corporate group for loans not fully disbursed by that date.
According to federal prosecutors, eight of Chamber’s companies applied for PPP loans after other Chambers-owned businesses had already reached the $20 million threshold. Initial loan applications filed with Bank of America were canceled after exceeding the cap. However, the companies reapplied months later with another banking institution and were approved for new loans, a move that violated SBA eligibility rules.
During the dispute, Chambers and his companies admitted the eight businesses had not received PPP funding as of April 30, 2020, but proceeded with applications. The $11.8 million settlement includes $7.8 million in restitution and interest and recognizes the group’s cooperation with the Department of Justice under voluntary disclosure and remediation guidelines.
In a public statement, Nicolas Gennetti, CEO of Herb Chambers Companies, said the issue stemmed from “conflicting professional advice regarding vague and unclear language in the PPP loan eligibility requirements, which did not contain definitions of key terms when they issued and came out at a time when the SBA repeatedly revised the governing rules.”
Gennetti contends that all loan proceeds were used appropriately, and once the issue was identified, management worked cooperatively with federal authorities to resolve the issue.
