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Historic Buffalo Club Settles for $1.5 Million in COVID Loan Dispute
A prestigious private club in Buffalo with ties to former President Millard Fillmore has agreed to pay $1.5 million to resolve allegations that it improperly obtained pandemic relief funds, federal officials announced Friday.
The Buffalo Club, which has operated for more than 150 years, was accused of misrepresenting its eligibility when applying for a Paycheck Protection Program (PPP) loan during the COVID-19 pandemic, according to the U.S. Attorney’s Office.
Federal prosecutors said the club applied for the PPP loan in March 2021, more than a year after the program was established at the onset of the pandemic. The club subsequently requested and received complete forgiveness of the loan amount.
The settlement addresses a significant oversight in the club’s loan application. The Small Business Administration (SBA), which administered the PPP program, has long maintained that private clubs and businesses that restrict membership for reasons other than capacity are ineligible for SBA-backed loans, including those offered through the PPP initiative.
Despite the substantial settlement, the agreement does not include a determination or admission of liability by the Buffalo Club.
Financial records from ProPublica’s nonprofit explorer reveal the economic challenges that may have prompted the club’s loan application. The organization’s revenue dropped considerably in 2020 to $6.2 million, down from $8.5 million the previous year, representing approximately a 27% decline as the pandemic devastated the hospitality industry nationwide.
The club’s finances began recovering in 2021, reaching just under $7 million in revenue before rebounding more fully in 2022 when revenue again exceeded $8 million. The organization has maintained its nonprofit status for more than eight decades, operating as a 501(c) organization.
Founded in 1867 by Millard Fillmore, who had served as the 13th President of the United States from 1850 to 1853, the Buffalo Club has long been a fixture in the city’s social and business landscape. Located on Delaware Avenue in a historic building, the club describes its mission as working to “cultivate a sense of belonging, inclusion and community like no other in the area.”
The case highlights the ongoing scrutiny of PPP loans, which were designed to help small businesses retain workers during pandemic-related closures and disruptions. The program disbursed nearly $800 billion nationwide but has faced criticism for oversight issues and questions about which entities truly qualified for assistance.
Private clubs across the country have faced similar scrutiny. The SBA’s longstanding policy excluding private clubs from loan eligibility was maintained during the PPP program, though some clubs may have misunderstood or overlooked these restrictions during the chaotic early phases of pandemic relief.
The $1.5 million settlement represents a significant financial penalty for the club but also brings resolution to what could have been a more protracted legal battle. Federal authorities have been actively investigating and pursuing cases of alleged PPP fraud since the program’s inception, with settlements and prosecutions continuing well after the program ended.
The Buffalo Club case stands out as one involving a historic institution with deep roots in the community rather than the more common cases of shell companies or businesses created specifically to access relief funds fraudulently.
Neither the Buffalo Club nor its representatives have issued public comments regarding the settlement as of press time.
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12 Comments
Private clubs and restricted membership businesses raise interesting questions around eligibility for pandemic relief funds. This case highlights the need for clear guidelines and enforcement.
It will be important for the details of this settlement to be made public so there is a clear understanding of the issues involved.
The COVID-19 pandemic created a complex situation for many businesses and organizations. It’s good to see the authorities investigating potential misuse of relief programs.
A $1.5 million settlement is a significant amount. I wonder what the full scope of the alleged violations was and if there were any other penalties or repercussions.
The pandemic created many challenges, but it’s crucial that relief efforts are not abused. This case illustrates the importance of oversight and accountability.
A $1.5 million settlement is substantial. I wonder how this compares to the total amount of the PPP loan the club received and if there were any other factors considered in determining the settlement.
It’s good to see the authorities taking action against alleged misuse of pandemic relief funds. Maintaining the integrity of these programs is crucial.
I hope this case serves as a deterrent to others who may be tempted to misrepresent their eligibility for pandemic relief. Transparency and accountability are key.
Allegations of false claims in pandemic relief programs are concerning. Settlements like this one help maintain public trust in the proper use of taxpayer funds.
I’m curious to know if there were any other penalties or repercussions beyond the monetary settlement, such as changes to the club’s operations or leadership.
Interesting to see a prestigious private club facing allegations of improper pandemic loan applications. Curious to learn more about the specifics and the settlement details.
It’s important that any relief funds are distributed fairly and used as intended. Transparency around these cases helps ensure accountability.