WASHINGTON – The U.S. Department of Justice announced Tuesday that two men from Rhode Island have been charged with fraudulently seeking SBA Paycheck Protection Loans amid the coronavirus (COVID-19) pandemic.
In response to the pandemic, the federal government allocated $349 billion in forgivable loans for small businesses across the country under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Two businessmen -- David A. Staveley, aka Kurt D. Sanborn, 52, and David Butziger, 51 -- from Warwick, Rhode Island have been charged for conspiring to unlawfully obtain forgivable loans under the CARES Act for non-existent businesses.
Officials say the two men are “charged by way of a federal criminal complaint with conspiracy to make false statement to influence the SBA and conspiracy to commit bank fraud”. Staveley has also been charged with aggravated identity theft, officials said.
The charges follow after Staveley allegedly requested more than $438,500 in loans for dozens of employees at three restaurants in Rhode Island and Massachusetts, officials said. An investigation determined two restaurants were not open for business before the pandemic and that Staveley has no connection to the third restaurant.
Officials say that Butziger allegedly filed an application seeking $105,381 in loans for an unincorporated entity called Dock Wireless and claimed seven full-time employees worked there. An investigation determined that no employee wages were paid in 2020 by Butziger or Dock Wireless. Officials say that agents interviewed supposed employees of Dock Wireless who said they never worked there or for Butziger.
“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.”
Officials say that Staveley and Butziger allegedly communicated plans to fraudulently secure the small business loans via email. The men are the first in the U.S. to be “allegedly defrauding the CARES Act SBA Paycheck Protection Program,” the statement reads.
The case is being prosecuted by Assistant Chief Lawrence Atkinson of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Lee H. Vilker for the District of Rhode Island.