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In the first case of its kind, two men have been arrested and slapped with federal charges in Rhode Island for allegedly trying to obtain more than $500,000 in loans from a stimulus program enacted to help employers continue to pay workers during the pandemic.
The defendants are accused of applying for Small Business Administration (SBA) loans in April for four different businesses — restaurants and a wireless company — that either they did not own or were fake firms or entities that had no employees before the pandemic, according to court documents filed in Providence, Rhode Island.
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The men purported to have dozens of employees and sought loans totaling nearly $544,000, documents show. Altogether, some $659 billion in potentially forgivable loans are being made available through the Paycheck Protection Program (PPP), part of the COVID-19 economic relief enacted by Congress.
Officials on Tuesday assailed the men's alleged conduct as “unconscionable” and “reprehensible."
Capitalizing on a crisis
The head of the FBI in Boston said the men allegedly “tried to capitalize on the coronavirus crisis” by conspiring to fraudulently obtain loans “intended to help small businesses teetering on the edge of financial ruin."
The FBI official, Special Agent in Charge Joseph Bonavolonta, added: “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."
The defendants are David A. Staveley, 52, of Andover, Massachusetts, and David Butziger, 51, of Warwick, Rhode Island. (Staveley also has aliases, Kurt David Sanborn or David Sanborn, court documents show.)
Multiple charges brought
Both men face charges including conspiracy to commit bank fraud and conspiracy to lie to influence the SBA.