Herb Chambers paying $11.8 million after PPP fraud allegations

Local News

“All PPP loan proceeds were used for proper purposes, and there is no allegation otherwise.”

Massachusetts car magnate Herb Chambers has agreed to pay $11.8 million to the federal government to resolve allegations that his companies fraudulently applied for and received pandemic small business relief loans. 

Chambers, several of his companies, and James Duchesneau, an officer in one of the businesses, agreed to the settlement, the U.S. Attorney’s office said in a statement on Wednesday.

In 2020, the Paycheck Protection Program was started to assist small businesses struggling during the COVID-19 pandemic. On April 30, 2020, the Small Business Administration established a new rule for the program that businesses part of a single corporate group could not receive more than $20 million in PPP loans. 

According to prosecutors, when the rule went into effect on April 30, eight of Chambers’s companies had applied for, but yet received funding for PPP loans. Prosecutors allege that a few months after a bank cancelled those unfunded loans because of the $20 million cap, the eight companies reapplied for the PPP loans with a different bank, which funded the applications. 

“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,” U.S. Attorney Leah Foley said in a statement. 

Nicolas Gennetti, CEO of The Herb Chambers Companies, said in a statement to Boston.com that the settlement is the “the result of conflicting professional advice regarding vague and unclear language in the PPP loan eligibility requirements.”

“Once the issue had been identified, Mr. Chambers directed that management work cooperatively and diligently with federal authorities to rectify and to resolve the situation,” Gennetti said. “The settlement acknowledges this cooperation. All PPP loan proceeds were used for proper purposes, and there is no allegation otherwise.”

Chambers and his associated companies cooperated with the federal investigation, the U.S. Attorney’s office said.