Harvard Club of Boston Agrees to $2.4M Settlement Over PPP Loan Fraud
The Harvard Club of Boston, a private membership club that is not formally affiliated with Harvard University, has agreed to pay roughly $2.4 million to settle allegations it improperly obtained and kept a federal COVID relief loan.
Federal prosecutors say the club violated the False Claims Act by applying for a Paycheck Protection Program loan despite long standing Small Business Administration rules that bar private clubs with restricted membership from eligibility.
The Paycheck Protection Program was created under the CARES Act in March 2020 to help small businesses retain workers during the pandemic. While billions flowed to eligible employers nationwide, SBA guidance clearly excluded private membership clubs that restrict access for reasons other than capacity.
According to the settlement, the Harvard Club applied for a first draw PPP loan on May 4, 2021 and certified that it met eligibility requirements. It later sought and received full forgiveness of the loan.
At the time, the club operated as a private membership organization with selective eligibility criteria. That status made it ineligible for PPP funds.
The case was brought under the whistleblower provisions of the False Claims Act. A private relator, identified as Foster in court filings, filed suit on behalf of the United States. As part of the settlement, the whistleblower will receive approximately $247,219.
Federal officials credited the Harvard Club for cooperating with investigators and voluntarily disclosing information under Department of Justice guidelines. The settlement resolves claims without an admission of liability beyond the eligibility facts laid out in the agreement.
The announcement was made by Leah B. Foley, U.S. Attorney for the District of Massachusetts, along with Small Business Administration leadership. The civil case was handled by prosecutors in the Department of Justice’s Affirmative Civil Enforcement Unit.
The message from federal officials was simple. Pandemic aid came with rules, and private clubs were not exempt.
