ALEXANDRIA — Three Virginia homeowners’ associations and a private club paid a combined amount to settle allegations that they violated the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 by knowingly making false statements and certifications in their applications for Paycheck Protection Program loans. The settlements resolve civil claims without a determination of civil liability.

The Commonwealth Club, Inc. a private club located in Richmond that restricted its membership, paid an amount including restitution to settle allegations of false certifications about its eligibility to receive a Paycheck Protection Program loan. Under Small Business Administration regulations, private clubs that limit the number of memberships for reasons other than capacity were ineligible for Paycheck Protection Program loans.

Villages of Kiln Creek Owners’ Association, a community in Newport News, paid an amount including restitution to settle allegations of falsely stating its North American Industry Classification System (NAICS) code. The United States alleged Villages of Kiln Creek falsely stated in its Paycheck Protection Program application that its applicable NAICS code was 722511, the industry code for full-service restaurants.

Lake Caroline Property Owners Association, a homeowners’ association in Ruther Glen organized as a 501(c)(7) tax-exempt organization when it applied for a Paycheck Protection Program loan, paid $225,000, including $178,932.81 in restitution, to settle allegations of false certifications about eligibility and economic necessity for a Paycheck Protection Program loan. Under the CARES Act, certain entities organized under Section 501(c) of the Internal Revenue Code were not eligible for Paycheck Protection Program loans.

A whistleblower received 10% of the government’s recovery from the settlement arising from a lawsuit filed under the False Claims Act. The settlement arises in connection with a lawsuit filed under the whistleblower provision of the False Claims Act, United States ex rel. Riner v. Lake of the Woods Ass’n et al.

Assistant U.S. Attorney Tanya Kapoor and Forensic Auditor Peter Melaragni investigated the matter. Related court documents can be accessed on PACER by searching for Case No. 1:23-cv-1558.

Why It Matters

Congress created the Paycheck Protection Program as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide forgivable loans to qualified businesses to maintain payroll and operations during the COVID-19 pandemic. The program issued over $800 billion in total loans to small businesses and nonprofits during the pandemic.

The U.S. Attorney’s Office for the Eastern District of Virginia investigated multiple cases involving fraudulent PPP loan applications, including the Heritage Hunt Homeowners Association, and coordinated with the Small Business Administration to resolve these matters. The civil claims settled are allegations only; there has been no determination of civil liability.

Timeline

On Jan. 1, 2026, Heritage Hunt Homeowners Association approved a one-time special assessment per resident, payable in six monthly installments beginning Jan. 1, 2026, to cover the settlement costs. On Sept. 30, 2026, three homeowners’ associations and a private club paid a combined amount to settle allegations that they violated the False Claims Act and the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 by knowingly making false statements and certifications in their applications for Paycheck Protection Program loans.

Also on Sept. 30, 2026, The Commonwealth Club, Inc. paid an amount including restitution to settle allegations of false certifications about its eligibility to receive a Paycheck Protection Program loan. Lake Caroline Property Owners Association paid $225,000, including $178,932.81 in restitution, to settle allegations of false certifications about eligibility and economic necessity for a Paycheck Protection Program loan. Heritage Hunt Homeowners Association, Inc. paid $425,000, including $255,000 in restitution, to settle allegations regarding false statements about employee count, payroll, use of loan proceeds, and eligibility. Villages of Kiln Creek Owners’ Association paid an amount including restitution to settle allegations of falsely stating its North American Industry Classification System (NAICS) code. The resolution was the result of a coordinated effort between the U.S. Attorney’s Office for the Eastern District of Virginia and the Small Business Administration.

What's New

Later reporting indicates that the Heritage Hunt Homeowners Association’s PPP loan was forgiven in June 2021, but the association later agreed to a $425,000 settlement with the DOJ, including $255,000 in restitution, to resolve allegations of false statements in its application. Additional details show that the Villages of Kiln Creek Owners’ Association is a residential community in Newport News, Virginia, that was subject to a False Claims Act lawsuit alleging it falsely reported its North American Industry Classification System (NAICS) code as 722511, the code for full-service restaurants, to qualify for a PPP loan.

Further context establishes that the Paycheck Protection Program (PPP) was established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act of March 2020, with over $800 billion in total loans issued to small businesses and nonprofits during the pandemic.

Additional information notes that Heritage Hunt Homeowners Association, Inc. is an age-restricted community governed by a Declaration of Covenants, Conditions, and Restrictions (CC&Rs), which includes a clause limiting the Board of Directors' authority to borrow more than 4% of annual expenditures without resident approval. The Lake Caroline Property Owners Association, a 501(c)(7) tax-exempt organization, applied for a PPP loan in May 2020 and later settled allegations of false certifications about its eligibility and economic necessity for the loan.