Two Individuals Charged with Fraudulently Seeking CARES Act Paycheck Protection Loans
Two businessmen have been charged with allegedly filing bank loan applications fraudulently seeking more than a half-million dollars in forgivable loans from the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). David Staveley, aka Kurt Sanborn, and David Butziger claimed to have dozens of employees earning wages at four different business entities when there were no employees working for any of the businesses.
According to a Department of Justice release, Staveley and Butziger are charged by way of a federal criminal complaint with conspiracy to make false statements to influence the SBA and conspiracy to commit bank fraud. Additionally, Staveley is charged with aggravated identity theft. Butziger is charged with bank fraud.
The individuals either attempted to request loan amounts for businesses that did not have employees prior to the start of COVID-19 or for businesses that had no salaried employees at all. In one instance, the individuals attempted to claim they were paying employees for a business that the individuals did not actually own or operate.
It is alleged that Staveley claimed on loan applications requesting more than $438,500 that he had dozens of employees at three restaurants he owned, two in Warwick, Rhode Island, and one in Berlin, Massachusetts. An investigation determined that one of the Rhode Island restaurants, the former Remington House, and the Massachusetts restaurant, On The Trax, were not open for business prior to the start of the COVID-19 pandemic, at the time the loan applications were submitted, or at any time thereafter. Moreover, Staveley did not own or have any role in the second Rhode Island restaurant, Top of the Bay, for which he was seeking financial relief.
Staveley’s Massachusetts restaurant was closed by March 10, 2020 when the local government revoked the business’ liquor license for several reasons, including that “Sanborn” allegedly misrepresented that his brother owned the restaurant.
It is alleged that on April 6, 2020, Butziger filed an application seeking a $105,381 SBA loan under the Payment Protection Program (PPP) as owner of an unincorporated entity named Dock Wireless. Butziger claimed in documentation filed with the bank and in a telephone call with an FBI undercover agent posing as a bank compliance officer that he had seven full-time employees on Dock Wireless’ payroll, including himself.
Butziger told the agent that he brought the employees on full-time on January 1, 2020, and laid them off as a result of the coronavirus in March. Butziger claimed the employees continued to work without being paid through April 2020, and that he would use SBA PPP funds to pay them.
The Rhode Island State Department of Revenue provided information to the Internal Revenue Service showing no record of employee wages having been paid in 2020 by Butziger or Dock Wireless. Agents interviewed several of the supposed Dock Wireless employees who reported that they never worked for Butziger or Dock Wireless.
“Tens of millions of Americans have lost their jobs and have had their lives thrown into chaos because of the coronavirus pandemic. It is unconscionable that anyone would attempt to steal from a program intended to help hard working Americans continue to be paid so they can feed their families and pay some of their bills,” said U.S. Attorney Aaron L. Weisman for the District of Rhode Island. “Attorney General Barr has directed all U.S. Attorneys to prioritize the investigation and prosecution of crimes related to coronavirus and COVID-19, and we are doing just that.”