Harvard Club of Boston Settles for $2.4 Million in PPP Loan Fraud Case

The Harvard Club of Boston has agreed to pay approximately $2.4 million to settle allegations that it improperly obtained a Paycheck Protection Program (PPP) loan for which it was ineligible, according to an announcement from U.S. Attorney Leah B. Foley and Small Business Administration (SBA) General Counsel Wendell Davis.

The exclusive private club, which operates independently from Harvard University despite its name, has admitted to applying for and receiving a first-draw PPP loan on May 4, 2021. The club subsequently sought and received complete forgiveness of the loan amount.

Federal authorities contend that the Harvard Club violated the False Claims Act by certifying its eligibility for PPP assistance when, as a private membership organization with selective admission criteria, it was explicitly excluded from the program under SBA guidelines.

The PPP was established as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which Congress passed on March 29, 2020, to provide emergency financial assistance during the COVID-19 pandemic. The program offered forgivable loans to eligible small businesses to support job retention and cover approved expenses during the economic downturn.

However, longstanding SBA regulations specifically exclude “private clubs and businesses which limit the number of memberships for reasons other than capacity” from loan eligibility. These restrictions were explicitly applied to the PPP program, according to the settlement agreement.

“The PPP was designed to be a lifeline for legitimate small businesses struggling to stay afloat during an unprecedented economic crisis,” said a source familiar with the case. “When organizations that don’t qualify receive these funds, it diverts critical resources away from eligible businesses that desperately needed assistance.”

The case emerged through the whistleblower provisions of the False Claims Act, which allows private individuals to file actions on behalf of the federal government and receive a portion of any recovery. The whistleblower, identified as Mr. Foster, will receive approximately $247,219 from the settlement. The case was filed as United States ex rel. Foster v. Harvard Club of Boston, No. 25-cv-11530, in the U.S. District Court for the District of Massachusetts.

The settlement agreement acknowledges the Harvard Club’s cooperation throughout the investigation, crediting the organization under the Department of Justice’s Guidelines for Taking Voluntary Disclosure, Cooperation and Remediation into Account in False Claims Act Matters.

This case highlights ongoing scrutiny of PPP funds, which distributed nearly $800 billion in loans to businesses nationwide. Government watchdogs and prosecutors have been aggressively pursuing cases of fraud and improper loan applications since the program’s inception.

The Harvard Club of Boston represents one of the most prestigious private clubs in New England, with a long history dating back to its founding in the late 19th century. While not formally affiliated with Harvard University, the club maintains close ties with the institution and has traditionally catered to Harvard alumni, though membership has expanded over time.

The club provides dining, accommodation, athletic facilities, and social gathering spaces across its properties in Boston’s Back Bay neighborhood. Like many exclusive clubs, it operates on a membership model with an application process and selection criteria – precisely the type of restrictive admission practices that made it ineligible for PPP funding.

Assistant U.S. Attorney Lindsey Ross of the Affirmative Civil Enforcement Unit handled the case for the government.

This settlement is part of broader efforts by federal authorities to recover misappropriated pandemic relief funds and ensure accountability in government assistance programs implemented during the COVID-19 crisis.