MONTCLAIR, NJ—Spiro Harrison & Nelson, through partner Eric H. Jaso, successfully represented a whistleblower uncovering COVID Paycheck Protection Program (“PPP”) loan fraud resulting in the recovery of $11.8 million from a Boston based auto dealership group.

Whistleblower Aidan Forsyth, an entrepreneur from New York, developed datasets and used machine learning algorithms to detect suspicious patterns and anomalies indicative of potential fraud. In this case, Forsyth’s software demonstrated that the Herb Chambers Auto Group consisting of nearly 30 auto dealerships and associated entities had obtained PPP loans in excess of the Small Business Administration’s (“SBA”)’s $20 million cap by re-applying for previously rejected loans through another lender. These fraudulent loans were later forgiven, costing taxpayers approximately $7.7 million.

“These emergency programs were established to assist small businesses to make payroll during the pandemic by quickly providing billions in forgivable loans,” said Eric H. Jaso, himself a former Justice Department prosecutor.  “Unfortunately, many businesses took advantage of the circumstances by obtaining forgivable loans at taxpayer expense to which they were never entitled.”

On behalf of Forsyth, Spiro Harisson & Nelson filed a qui tam lawsuit under the federal False Claims Act to report the suspected fraud.  After investigating, the U.S. Attorney’s Office intervened in the case and the defendant companies settled for $11.8 million, along with owner Herb Chambers and the group’s chief financial officer personally.  As the plaintiff (known as a “relator” in qui tam cases) Mr. Forsyth was awarded a percentage of the government’s recovery.

Additional details can be found in the following statement from the U.S. Attorney’s Office for the District of Massachusetts:  https://www.justice.gov/usao-ma/pr/herb-chambers-agrees-pay-118-million-resolve-allegations-ppp-loan-fraud.