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Feds Announce First Arrests In Country Linked To PPP Loan Fraud | #employeefraud | #recruitment | #corporatesecurity | #businesssecurity | #


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It appears that two New England businessmen took the concept of “free money” way too far.

David A. Staveley (a/k/a Kurt D. Sanborn) of Andover, Massachusetts, and David Butziger of Warwick, Rhode Island, have been accused of conspiring to illegally obtain funds through the Paycheck Protection Program (PPP). The PPP offers billions of dollars in potentially forgivable loans to keep workers on the payroll, guaranteed by the Small Business Administration (SBA).

Staveley and Butziger claimed to have dozens of employees earning wages at four different business entities when, in fact, there were no employees working for any of the businesses. They allegedly sought more than a half-million dollars in loans.

“Every dollar stolen from the Paycheck Protection Program comes at the expense of employees and small business owners who are working hard to make it through these difficult times,” said Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division. “The Criminal Division is committed to working with our law enforcement partners to root out abuse of the important relief programs established under the CARES Act.”

The pair were specifically charged with conspiracy to make a false statement to influence the SBA to obtain a loan (in violation of 18 USC § 371) and conspiracy to commit bank fraud (in violation of 18 USC § 1349). Staveley has also been charged with aggravated identity theft (in violation of 18 USC § 1028A), while Butziger has also been accused of bank fraud (in violation of 18 USC § 1344).

According to court documents, the fraudulent loan requests were to pay employees of businesses that were not operating before the start of the COVID-19 pandemic and had no salaried employees. One of the restaurants had previously been open, but it was closed by March 10, 2020, when the town of Berlin revoked the business’ liquor license for numerous reasons. Another restaurant used in the scheme has not been functional since it was closed in November of 2018 and is currently in disrepair with dumpsters on-site and “Stop Work” notices posted on the property. 

In another instance, it is alleged that on April 6, 2020, Butziger filed an application seeking a PPP loan as the owner of an unincorporated entity named Dock Wireless. He claimed that he had seven full-time employees on Dock Wireless’ payroll, including himself, that he brought on full-time on January 1, 2020, and laid off at the end of 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. However, the Rhode Island State Department of Revenue provided information to the IRS of having no records of employee wages having been paid in 2020 by Butziger or Dock Wireless. And agents interviewed several of the supposed employees who reported that they never worked for Butziger or Dock Wireless. 

Email correspondence between the two suggests a plan to fabricate records, including forms 941 (payroll records). For example, the complaint indicates that in April of 2020, Butziger emailed Staveley, “I can create a bull sh[*]t 2020q1 for Oakland beach if you want.” In a series of emails, Staveley eventually replied, “These look good. It says we need payroll reports for the past 12 months? Can we get what we have from toast payroll on New Flatt Penny L.L.C.? And should we dream up 1st quarter on the other two? Please advise…..thank you David.” 

“The alleged actions of defendants Staveley and Butziger are criminally reprehensible,” said Special Agent in Charge Kristina O’Connell of the IRS-Criminal Investigation (IRS-CI). “Defrauding a government program designed to provide financial assistance to small business owners during the Coronavirus pandemic is tantamount to taking money directly out of the pockets of those who need it most. Today’s arrests exemplify the hard work, dedication and efficiency of IRS-CI and the entire investigative team.”

According to the Department of Justice, the charges are the first in the country linked to the popular SBA loan program. Federal investigators have hinted that more are coming.

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