PROVIDENCE – Two businessmen from Rhode Island and Massachusetts have been charged in federal district court with trying to fraudulently file for forgivable Paycheck Protection Program loans, the District of Rhode Island U.S. Attorney’s Office said on Tuesday.
Prosecutors said David A. Staveley of Andover, Mass., and David Butziger, of Warwick, are the first people in the nation to be charged with fraudulently seeking Small Business Administration PPP loans created by the Coronavirus Aid, Relief and Economic Security Act.
Their “fraudulent loan requests were to pay employees of businesses that were not operating prior to the start of the COVID-19 pandemic and had no salaried employees, or, as in one instance, to pay employees at a business the loan applicant did not own,” according to the U.S. attorney’s office.
Staveley and Butziger are alleged to have discussed the creation of fraudulent PPP applications.
Staveley was charged with seeking more than $438,500 in laons for two restaurants he owned, the Remington House in Warwick and a restaurant in Berlin, Mass. He also sought loans for a Warwick restaurant, Top of the Bay, despite neither owning the business or having any affiliation, according to the complaint.
Neither of Staveley’s businesses were in operation prior to the COVID-19 pandemic shutdowns or since, the office said.
Butziger was alleged to have filed an application seeking $105,381 in loans under the federal loan program for an unincorporated entity named Dock Wireless. He is said to have told an undercover FBI agent posing as a bank compliance officer that he had seven employees. The R.I. Department of Revenue said there were no records of wages having been paid in 2020 and interviews of several of the purported employees yielded no one who said that they had worked for the company or Butziger.
“As alleged, David Staveley and David Butziger tried to capitalize on the coronavirus crisis by conspiring to fraudulently obtain more than half a million dollars in forgivable loans that were intended to help small businesses teetering on the edge of financial ruin,” said Special Agent in Charge Joseph R. Bonavolonta of the FBI’s Boston Field Office. “Thankfully, we were able to stop them before taxpayers were defrauded, but today’s arrests should serve as a warning to others that the FBI and our law enforcement partners will aggressively go after bad actors like them who are utilizing the COVID-19 pandemic as an opportunity to commit fraud.”
