Plaintiff in CRHA fraud case responds to motion to stay default

The Charlottesville Redevelopment and Housing Authority is challenging a lawsuit filed by a Utah attorney who claims the government organization unlawfully applied for two federal payment protection loans.

In March 2024, J. Bryan Quesenberry filed a lawsuit in the United States Western District Court against CRHA and several other Virginia-based groups that he alleges took the PPP loans intended for nonprofits and small businesses. The case is being made under the False Claims Act and was sealed for over a year until after the federal government opted not to join the suit.

CRHA had been served a summons on February 17 but did not respond with the required answer. As such, the court found the agency in default and Quesenberry has filed a motion seeking a default judgement of $1.5 million in fines. Quesenberry is playing a role known as a “relator” and is eligible for a share of any damages.

After notice of this motion was served on CRHA on June 11, CRHA hired the firm Holland & Knight to challenge both the default and the underlying claim. A motion was filed on June 18 asking for the default to be set aside to allow for a response.

For the Virginia cases, Quesenberry is working with Virginia-based attorney Bruce Ellis Fein. On July 2, Fein responded in opposition stating that CRHA has shown no cause pointing out discrepancies in their request.

“CRHA depicts itself as acting with promptness,” Fein wrote. “It says it ‘first learned’ of the default on June 11, 2026 and moved to set it aside a week later. The portrait omits the preceding four months.”

CRHA has claimed that it was waiting for notice from the Virginia Risk Sharing Association about whether insurance would cover the cost of defense. In a sworn statement, Executive Director John Sales stated he learned on February 17 that coverage had been denied that day.

“By its own telling. CRHA thereafter did only two things; it appealed the coverage denial, and it called one law firm, which declined the engagement for a conflict,” Fein wrote. “It filed nothing. It sought no extension. It neither contacted Relator nor the Court. For months it did not stir, until a process server delivered the Clerk’s entry of default and Relator’s motion for entry of default judgment.”

Take a look at the latest filing here.

Other defendants in the case include the Breaks Interstate Park Commission, the Rockbridge Regional Library, and the Rappahannock Rapidan Community Services Board. The case had originally included the Crossroads Community Services Board but that has been separated into a different docket because that entity has later been found to not even be a non-profit.

Previous coverage:

• CRHA defaults in lawsuit seeking $1.5 million over ineligible PPP loans, judgment still pending, June 14, 2026
• CHRA files first motion to challenge default in $1.5 million federal lawsuit over PPP loans, June 24, 2026

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