Correction: An earlier version of this story incorrectly reported the ownership of The Remington House property. Warwick Post regrets, and has corrected, the error.
WARWICK, RI — David Butziger, 51, listed as the owner of the Remington House property in Apponaug, and an accomplice are charged in a PPP fraud case in U.S. District Court today for filing false bank loan applications seeking more than a half-million dollars in forgivable loans under the CARES Act.
David Butziger, 51, of Warwick, Rhode Island and David Staveley, 52, aka Kurt D. Sanborn, 52, of Andover, Massachusetts, were charged by U.S. Attorney Aaron L. Weisman with conspiring to seek forgivable loans guaranteed by the SBA, claiming to have dozens of employees earning wages at four different business entities when, in fact, there were no employees working for any of the businesses.
The two are the first individuals in the nation charged with allegedly defrauding the CARES Act SBA Paycheck Protection Program.
According to online records with the Rhode Island Secretary of State, Butziger filed business licenses on April 29, 2020, listing Apponaug Restaurant Group LLC as the owner of the Remington House and Top of the Bay properties. However, Top of the Bay is actually owned by SABA, LLC, according to city property records.
The Remington House Inn was actually owned by Berek Enterprises, LLC, for which neither of the defendants were listed as having any ownership or management role, according to the the RI Secretary of State.
Staveley and Butziger were charged by way of a federal criminal complaint with conspiracy to make false statement to influence the SBA and conspiracy to commit bank fraud. Additionally, Staveley is charged with aggravated identity theft. Butziger is charged with bank fraud.
According to court documents unsealed today in U.S. District Court in Providence, the 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.
Staveley claimed in loan applications requesting more than $438,500 that he had dozens of employees at three restaurants he said that he owned, The Remington House and Top of the Bay in Warwick, Rhode Island, and On The Trax in Berlin, MA, according to Weisman’s office. An investigation determined that the former Remington House Inn restaurant, and On The Trax, 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 afterwards. Also, Staveley did not own or have any role in Top of the Bay or the Remington House Inn restaurant (as distinguished from the property, also named The Remington House).
“Tens of millions of Americans have lost their jobs and have had their lives thrown into chaos because of the coronavirus pandemic. 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,” said Weisman, U.S. Attorney for the District of Rhode Island, “Attorney General Barr has directed all U.S. Attorneys to prioritize the investigation and prosecution of crimes related to coronavirus and COVID-19, and we are doing just that.”
Allegedly, Staveley and Butziger discussed via email the creation of fraudulent loan applications and supporting documentations to seek loans guaranteed by the SBA for COVID-19 relief through the Paycheck Protection Program (PPP). The case alleges that Staveley posed as his brother in real estate transactions.
According to court documents, Staveley’s Massachusetts restaurant was closed by March 10, 2020, when the town of Berlin revoked the business’ liquor license for numerous reasons, including that “Sanborn” allegedly misrepresented that his brother owned the restaurant. Investigators obtained information that Staveley/Sanborn allegedly used his brother’s personal identifying information in other real estate transactions as well.
The documents also allege that on April 6, 2020, Butziger filed an application seeking a $105,381 SBA loan under the PPP as owner of an unincorporated entity named Dock Wireless. Butziger claimed in documentation filed with the bank and in a telephone call with an FBI undercover agent posing as a bank compliance officer that he had seven full-time employees on Dock Wireless’ payroll, including himself. Butziger falsely represented to the agent that he brought the employees on full-time on Jan. 1, 2020, and laid them off at the end of March. Butziger claimed the employees continued to work without being paid through April 2020, and that he would use SBA PPP funds to pay them.
The Rhode Island State Department of Revenue provided information to the IRS of having no records of employee wages having been paid in 2020 by Butziger or Dock Wireless. Agents interviewed several of the supposed Dock Wireless employees who reported that they never worked for Butziger or Dock Wireless.
“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.”
“Unfortunately, there are scammers out there trying to illegally profit from this pandemic. I commend the U.S. Attorney’s office for aggressively going after fraudulent activity and pandemic-related crimes., said U.S. Senator Jack Reed (D-RI).
“We knew attempted fraud was coming and included tough rules in the law to help law enforcement crack down on scammers and go after anyone who tries to abuse the system. Those who seek to steal from taxpayers are going to get caught and should pay a heavy price. Hopefully, federal and state law enforcement can deter wrongdoing. I will continue to monitor the program to ensure it works to root out fraud, waste, and abuse,” Reed said.
The Justice Department acknowledged and thanked the FBI, IRS-CI, SBA Office of Inspector General, The Warwick Police Department, and the FDIC, Office of Inspector General for their efforts investigating the mater.
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