Two charged in RI with stimulus fraud

This is the first case in the nation where people have attempted to swindle money from the government assistance provided because of the pandemic.

PROVIDENCE – The FBI Boston division charged two businessmen from Rhode Island with allegedly filingbonus bank loan applications seeking more than a half-million dollars as part of the CARES Act.

This is the first case in the nation where people have attempted to swindle money from the government assistance provided because of the pandemic.

“We allege that these men claimed to have dozens of employees earning wages at four different businesses, when in fact there were no employees working any of these businesses,” said U.S. Attorney Aaron Weisman at a press conference Tuesday.

David A. Staveley, aka Kurt D. Sanborn, 52, of Andover, Massachusetts, and David Butziger, 51, of Warwick, Rhode Island, have been charged with conspiring to seek forgivable loans guaranteed by the Small Business Administration through the Paycheck Protection Program.

The two individuals claimed to to have dozens of employees earning wages at four businesses. It was discovered that there were no employees working for any of the businesses.

“It was all a sham in order to get a cut of the cash,” said FBI Special Agent in Charge Joseph Bonavolonta.

Staveley and Butziger are charged via a federal criminal complaint with conspiracy to make false statement to influence the SBA and conspiracy to commit bank fraud. Butziger is charged with bank fraud and additionally Staveley is charged with aggravated identity theft.

Allegedly Staveley requested more than $438,500 in loans in order to pay dozens of employees at three restaurants. Two of the restaurants are in Warwick, R.I., and one in Berlin M.A.

Officials began investigating the men three weeks ago after a tip from the Police Chief in Berlin, Massachusetts where one of the restaurants, On the Trax, was located.

An investigation determined that the former Remington House in Warwick, R.I. and On The Trax restaurant in Berlin, M.A. were not open for business prior to the start of the COVID-19 pandemic, at the time the loan applications were submitted, or afterward.

Staveley did not own or have any role in the second R.I. restaurant, Top of the Bay, which he used to seek financial relief.

“We believe both men lied, cheated, and carried out this scheme, so they could line their pockets at the expense of the hardworking small businesses that are teetering on the edge of financial ruin as a result of this pandemic,” said Bonavolonta.

Both men appeared in court Tuesday and were released on unsecured bond.

Officials say though this is the first instance in the nation of people using the pandemic as an opportunity to commit fraud, they are sure it won’t be the last.

“It is unconscionable that anyone would attempt to steal funds from a program intended to help
hardworking Americans,” said Weisman.

ABC 6 reached out to Top of the Bay for comment on this but did not hear back.

 

Categories: Coronavirus, News, Rhode Island