Enforcement Push Targeting COVID-19 PPP Loan Fraud Continues: Entities Agree to Pay $12M+ to Settle False Claims Act Charges

By the Constantine Cannon Whistleblower Team

The emergency phase of COVID-19 might be over, but the government is still uncovering pandemic-related loan fraud as it continues to announce many enforcement actions. This week, the government announced two Paycheck Protection Program (PPP) loan fraud enforcement actions. One case was brought by a whistleblower and involved a Virginia-based non-profit. A separate case involved Massachusetts businessman Herbert G. Chambers, his entities, and one of the companies’ officers. In total, these entities agreed to settle charges and pay over $12 million.

In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and offered forgivable PPP loans to small businesses to help with applicable expenses during unprecedented times.

As we have been reporting, many businesses used this as an opportunity to defraud the government and not comply with all loan requirements. This took many forms such as falsely certifying eligibility in terms of employee numbers, providing their income, and additional documents, among other requirements.

Virginia-based non-profit, Lake Ridge Parks and Recreation Association, Inc. allegedly falsely certified its loan eligibility by failing to disclose its non-profit status. 501(c)(4) tax exempt organizations were ineligible for PPP loans. On April 7, 2025, the company agreed to settle allegations they violated the False Claims Act and will pay $695,000.

This case was filed under the qui tam provision (or the whistleblower provision) of the False Claims Act, allowing private parties to bring lawsuits on behalf of the government and receive a percentage of the government’s recovery. The whistleblower here will receive 10% of the settlement.

Another loan requirement was introduced in April 2020, intended to safeguard the PPP’s limited resources. According to the Interim Final Rule (IFR), businesses that were part of one corporate group could not receive over $20 million in PPP loans.

The government alleged that the Massachusetts-based individual Herbert G. Chambers, his companies, and one of the companies’ officers falsely certified their PPP loan eligibility by failing to disclose its corporate structure. On April 9, 2025, the government announced that they will pay roughly $11.8 million to settle the False Claims Act allegations.

Eight companies owned by Mr. Chambers were not eligible for the PPP loans because his other businesses already received over $20 million. Chambers admitted that his eight companies applied for but did not receive funding as of April 30, 2020, the day IFR was introduced. After a bank cancelled the unfunded loans because of the $20 million limit, a different bank funded the loans months later.

On this case, Jodi Cohen, Special Agent in Charge of the FBI Boston Division commented: “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.”

Constantine Cannon whistleblower partner Marlene Koury explained: “The COVID-19 pandemic led to unprecedented government relief efforts, but it also opened avenues for fraudulent activity. These two cases highlight the government’s determination to hold fraudsters accountable and protect taxpayer’s funds.”

The Role of Whistleblowers and COVID-19 Related Fraud

While the second case mentioned in our article did not mention a whistleblower, people like you play a crucial role in calling out fraud and sharing information about matters such as defrauding the government. This fraud can include COVID-19 era information related to falsely certifying requirements when applying for PPP loans, unauthorized use of funds, payment of kickbacks to obtain government contracts related to COVID-19, and more.

Our Firm Helps COVID-19 Fraud Whistleblowers

Our firm handles cases related to COVID-19 fraud. If you have details or questions regarding a possible case, please contact us to see how we can help.