Fraud Friday — Two Rhode Island  Businessmen Arrested on PPP Loan Fraud Charges

May 8, 2020

By Caity Witucki
Contributing Editor, Fraud Friday

Fraud Friday — Two Rhode Island  Businessmen Arrested on PPP Loan Fraud Charges

Two Rhode Island businessmen, David A. Staveley and David Butziger, were arrested on Tuesday for allegedly making false statements on Paycheck Protection Program (PPP) loan applications. Both men are being charged with conspiracy to make false statements to influence the SBA and conspiracy to commit bank fraud. In addition, Staveley is charged with aggravated identity theft and Butziger is charged with bank fraud.

According to court documents, Staveley allegedly used his brother’s name, ID and social security number to purchase several closed restaurants throughout Rhode Island and Massachusetts. After successfully acquiring two restaurants,  Staveley asked his agent, Butziger, to help him replicate loan submission documents. In response, Butziger not only falsified the loan submission documents, but also allegedly offered to create fake payroll information for the past 12 months. 

Using the fraudulent documents, Staveley allegedly applied for three PPP loans totaling $438,500. However, two of the applicant restaurants were not open for business prior to the start of the COVID-19 pandemic, at the time the loan applications were submitted, or at any time thereafter. Moreover, Staveley did not even own the third restaurant for which he was seeking financial relief. 

Around April 6, 2020, Butziger also allegedly filed a PPP application for $105,381. According to the application, Butziger’s unincorporated business had seven full-time employees including himself and he had not been able to pay his employees since March. However, the IRS has no record of employees’ wages ever being paid at all.

After a Massachusetts police chief received a tip about Staveley and Butziger’s fraudulent activity the scheme was discovered and all of the loan applications were denied. Staveley and Butziger are the first individuals in the nation charged with allegedly defrauding the SBA’s PPP.

“Tens of millions of Americans have lost their jobs and have had their lives thrown into chaos because of the coronavirus pandemic,” says U.S. Attorney Aaron L. Weisman. “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. Attorney General Barr has directed all U.S. Attorneys to prioritize the investigation and prosecution of crimes related to coronavirus, and we are doing just that.”

Sources:
David Butzinger Criminal Complaint
David Staveley Criminal Complaint
Department of Justice