Harvard Club of Boston to Pay $2.4 Million to Settle Loan Fraud Lawsuit

The Harvard Club of Boston will pay $2.4 million to settle a U.S. Department of Justice investigation into allegations that it unlawfully applied for a small business loan during the Covid-19 pandemic.

The case dates back to 2021, when the club applied for and received a Paycheck Protection Program loan, made available under the Coronavirus Aid, Relief, and the Economic Security Act for small businesses facing economic hardship as a result of the pandemic. The club’s loan was later forgiven by the Small Business Administration.

But under blanket SBA rules — which were extended to the PPP program — private clubs with membership requirements are ineligible for loans. The Harvard Club of Boston, which requires a Harvard affiliation to become a member, fits that definition. The club is not directly associated with the University.

The rule violation did not emerge until May 2025, when Daniel Foster sued the club as a whistleblower under the False Claims Act. Foster will receive approximately $247,219 from the settlement, according to the agreement, as well as $25,000 in legal fees.

In an email to members, club president Susan L. Kendall ’81 admitted to submitting an ineligible application for a PPP loan. She maintained, however, that the club did so “unintentionally” and called the eligibility requirements “confusing.” Kendall also confirmed that the club cooperated with the Justice Department’s investigation.

She did not specify how much the club would pay, calling the sum only “significant.”

According to Kendall, the club sought guidance from “banking, industry, and other private club colleagues” before submitting an application. She also said that the application was reviewed by other entities and that the funds were “used for their intended purpose.”

In a Thursday press release, the Justice Department called the SBA guidance “longstanding” and said the department “made clear” it extended to the PPP program.

At the time, the legal status of SBA eligibility restrictions was unsettled. In May 2020, a district court ruled the restrictions were inconsistent with Congress’ intention in passing the CARES Act — namely, to make financial assistance available to address “any business concern.” The ruling was later affirmed by the Sixth Circuit, but because it was not a nationwide injunction, it applied only to the businesses directly involved in the case.

In her email, Kendall called the pandemic period “an unusual moment in the Harvard Club’s history” but said the club took the settlement seriously.

“We are using the opportunity to review how we assess future participation in government programs and strengthen our compliance protocols,” Kendall added.

—Staff writer Hugo C. Chiasson can be reached at [email protected]. Follow him on X @HugoChiassonn or on Signal at hcc.35.

—Staff writer Elise A. Spenner can be reached at [email protected]. Follow her on X @EliseSpenner.