Two men sought half a million dollars in coronavirus aid for fake businesses, feds say
Two men in New England are accused of filing for more than $500,000 in coronavirus aid for small businesses they don’t own in what prosecutors are calling the first case of stimulus fraud.
David A. Staveley, 52, of Massachusetts, and David Butziger, 51, of Rhode Island, claimed to have “dozens of employees” at four businesses that qualified for loans under the Paycheck Protection Program, prosecutors said in a U.S. Department of Justice news release.
But there were no employees at any of the businesses, one of which didn’t even belong to them, according to the release.
“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,” Special Agent in Charge Kristina O’Connell said in the release.
Congress passed the Coronavirus Aid, Relief and Economic Security Act, also known as the CARES Act, in March to help combat an economic downturn caused by COVID-19.
Under the act’s Paycheck Protection Plan, small businesses could apply for loans guaranteed by the Small Business Administration to keep their employees on the payroll during the pandemic, McClatchy News reported.
About $349 billion was set aside for the PPP, according to the Justice Department. But only about 6% of small business owners successfully claimed the money before the fund dried up, Forbes reported.
Congress authorized an additonal $300 billion last month, and the SBA has resumed accepting applications.
According to Tuesday’s release, at least two people tried to skirt the system by fudging their applications for aid.
Staveley — who prosecutors said often posed as his brother and used the fake name Kurt D. Sanborn — and Butziger discussed their plans on how to submit fake loan applications and what supporting documents they’d need via email, the criminal complaint states.
Prosecutors said Staveley sought $438,500 to help cover the cost of employees at three restaurants he purportedly owned in Rhode Island and Massachusetts — two of which investigators found weren’t open before the pandemic, when the loan application was sent “or at any time thereafter.”
One of the restaurants closed March 10 when its liquor license was revoked, according to the release.
The third never belonged to Staveley, prosecutors said, nor did he “have any role” in it.
Butziger, meanwhile, applied for $105,381 under the PPP for a business called Dock Wireless, where he claimed to have seven full-time workers — including himself, the release states.
But the Rhode Island State Department of Revenue had no record of their wages being paid in 2020, according to court documents. When agents interviewed the purported employees, none said they had ever worked for Butziger or Dock Wireless.
Both men were charged with conspiring to make false statements to influence the SBA and conspiracy to commit bank fraud.
Staveley faces charges of aggravated identity theft and Butziger has also been charged with bank fraud.
Prosecutors said they are the “the first individuals in the nation charged with allegedly defrauding the CARES Act SBA Paycheck Protection Program.”
This story was originally published May 5, 2020 at 1:26 PM with the headline "Two men sought half a million dollars in coronavirus aid for fake businesses, feds say."
