Home Business first case of fraud involving a PPP program for small businesses

first case of fraud involving a PPP program for small businesses

0
88


TO CLOSE

Small business owners share their difficult and confusing journeys when applying for the Paycheck Protection Program loan.

USA TODAY

WASHINGTON – Two New England businessmen have been charged with illegally attempting to obtain hundreds of thousands of dollars in loans from the federal paycheck protection program, the country’s first fraud involving massive efforts to save small businesses from the coronavirus crisis.

David A. Staveley, 52, of Andover, Massachusetts, and David Butziger, 51, of Warwick, Rhode Island, are charged with conspiracy to obtain repayable loans guaranteed by the Small Business Administration. Loans amounted to almost $ 544,000, according to the United States Department of Justice.

They said dozens of employees were earning wages in four different entities when in fact none of the employees worked for any of the companies, according to a DOJ press release released on Tuesday.

Loan Reviews: Treasury to review large loans after return of LA Lakers PPP product for small businesses

Congress created the PPP in March as part of the CARES Act, the federal response to the COVID-19 pandemic, which forced social distancing that forced millions of small businesses to contract or shut down entirely. . They have allocated more than $ 660 billion to the program, which has approved loans for some 4 million businesses.

The program provides loans of up to $ 10 million to businesses with 500 or fewer employees operating when the COVID-19 pandemic began to hit the country. Loans are fully canceled if at least 75% of the money is spent on keeping or rehiring employees. The rest must be spent on business-related expenses such as rent or utilities.

(Photo: Getty)

Staveley and Butziger are charged with conspiracy to make false statements to influence the SBA and of conspiracy to commit bank fraud. In addition, Staveley,who allegedly pretended to be his brother in real estate transactions, is charged with aggravated identity theft and Butziger is charged with bank fraud.

“Every dollar stolen from the paycheck protection program comes at the expense of employees and small business owners who are working hard to get through these tough times,” said Assistant Deputy Attorney General Brian A. Benczkowski of the division. Ministry of Justice criminal investigation. “The Criminal Division is committed to working with our law enforcement partners to eliminate the abuse of the large relief programs established under the CARES Act.”

According to court documents released Tuesday in the US district court in Providence, Rhode Island, the pair requested loans for companies that were not operating before the start of the COVID-19 pandemic and had not salaried employees. In one case, a loan was requested for a Rhode Island restaurant that the applicant did not own, according to the federal complaint.

Pay check protection: Confused by the federal government’s small business loan program? You’re not alone. Here is your guide

Staveley and Butziger allegedly discussed via email the creation of fraudulent loan requests and supporting documents to request the loans, according to the billing documents.

Staveley applied for loans over $ 438,500, saying he had dozens of employees at three restaurants he owned, two in Warwick, Rhode Island and one in Berlin, Massachusetts, according to the DOJ.

A DOJ 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 until the start of the COVID-19 pandemic in when loan requests were submitted. , or at any time thereafter, depending on the complaint. In addition, according to the DOJ, Staveley neither owned nor had a role in Rhode Island’s second restaurant, Top of the Bay, for which he was seeking financial assistance.

According to the complaint, Butziger filed an application on April 6 for a loan of SBA $ 105,381 under the PPP as the owner of an unincorporated entity named Dock Wireless.

Butziger said in documents filed with the bank and in a phone call with an FBI undercover agent masquerading as a bank compliance officer that he planned to use the loan to pay seven employees on time full on Dock Wireless’s payroll, including himself, a claim that turned out to be false, according to the DOJ.

“Tens of millions of Americans have lost their jobs and lost their lives in chaos because of the coronavirus pandemic,” said US district attorney Aaron L. Weisman for the district of Rhode Island. “It is unacceptable for anyone to try to steal a program to help hard-working Americans continue to be paid so that they can feed their families and pay some of their bills. ”

Autoplay

Poster thumbnails

Show captions

Last slide Next slide

Read or share this story: https://www.usatoday.com/story/news/politics/2020/05/05/coronavirus-first-fraud-case-involving-ppp-small-business-program/3085676001/

LEAVE A REPLY

Please enter your comment!
Please enter your name here