Garber Management Group Settles PPP Fraud Lawsuit for $1.5 Million

Garber Management Group, a prominent automotive dealership organization, has agreed to a settlement exceeding $1.5 million to resolve allegations of fraud related to Paycheck Protection Program loans, according to court documents filed this week.

The Michigan-based dealership group, which operates more than 20 franchise locations across four states, was accused of improperly applying for and receiving multiple PPP loans during the height of the COVID-19 pandemic in 2020. Federal prosecutors alleged the company submitted overlapping applications through different subsidiaries, circumventing program rules that limited businesses to a single loan.

“This settlement represents our commitment to protecting the integrity of emergency relief programs established during unprecedented times,” said U.S. Attorney Sarah Johnson, who led the investigation. “When companies exploit these systems designed to help struggling businesses, they undermine public trust and divert resources from those truly in need.”

The PPP initiative, launched in April 2020 under the CARES Act, provided forgivable loans to small businesses to help maintain employee payroll during pandemic-related shutdowns. The program ultimately distributed more than $800 billion in federal aid, but has faced ongoing scrutiny over fraud and abuse concerns.

According to investigators, Garber’s various dealership entities received approximately $7 million in total PPP funding. The settlement does not constitute an admission of wrongdoing, but requires the company to return a portion of those funds plus penalties. The $1.53 million settlement represents about 22% of the total PPP loans received.

Richard Garber, president of Garber Management Group, issued a statement emphasizing the company’s cooperation throughout the investigation. “While we maintain that our applications followed guidance available at that time, we recognize the importance of resolving this matter and moving forward,” Garber said. “Our focus remains on serving our customers and communities.”

Industry analysts note that the auto retail sector faced particular scrutiny in PPP disbursements. Unlike many retail businesses forced to close entirely during lockdowns, most dealership service departments were classified as essential businesses and remained operational, though new vehicle sales departments faced significant restrictions in many states.

“The auto retail landscape during COVID created a complex situation,” explained Michelle Torres, automotive industry consultant with Deloitte. “Dealerships operated under a patchwork of state regulations, with some fully shut down and others partially operational. This created genuine confusion about eligibility, though the government’s position has consistently been that each business entity should have evaluated its specific circumstances.”

The settlement comes amid a broader Justice Department crackdown on alleged PPP fraud. Since 2020, federal prosecutors have brought charges against hundreds of individuals and businesses for fraudulently obtaining pandemic relief funds, with total recovery efforts exceeding $2 billion.

For the automotive retail sector, which has enjoyed record profits during the post-pandemic inventory shortage, such settlements bring additional scrutiny. The National Automobile Dealers Association had actively lobbied for dealer inclusion in the PPP program, arguing that the industry’s 1.1 million employees faced significant economic risk.

The settlement allows Garber to avoid potentially costlier litigation while continuing operations across its Michigan, Florida, Illinois and New York locations. The company, founded in 1907, represents 16 automotive brands including Chevrolet, Ford, Toyota, and Honda.

Legal experts suggest this case highlights the ongoing challenges businesses face regarding pandemic relief compliance. “Companies that participated in government assistance programs should anticipate continued review of their applications and fund usage,” said corporate attorney James Wilson of Baker McKenzie. “The statute of limitations for these investigations extends several years, meaning we’ll likely see more settlements of this nature through at least 2025.”

The Treasury Department continues to review thousands of PPP loans exceeding $2 million, with particular attention to businesses that showed strong financial performance despite the pandemic. Automotive retail, which rebounded quickly and has posted record profits in recent years, remains an area of focus for investigators.