WARWICK – Two businessmen, who authorities said were listed as owners of the former Remington House restaurant in Apponaug, became the first in the country to face federal charges for lying by soliciting more than 500,000 $ in repayable small business loans amid the coronavirus pandemic.
David Butziger, 51, of Warwick; and David A. Staveley, aka Kurt D. Sanborn, 52, of Andover, Mass., are accused of plotting to obtain forgivable loans guaranteed by the Small Business Administration by falsely claiming to have laid off dozens of workers in four different businesses due to the pandemic, according to the Office of U.S. Attorney Aaron Weisman. In fact, no employee worked at any of the entities, federal prosecutors said.
Staveley and Butziger are the first people in the country to be accused of defrauding the CARES Act SBA paycheck protection program, authorities have said. No money was returned to the men.
The arrests came after FBI agents raided Tuesday morning behind Remington House, a spokesperson for the federal agency confirmed.
US Magistrate Judge Lincoln Almond freed Butziger on a $ 10,000 unsecured loan with a warning that he would not hesitate to hold him if he violated his bail terms, potentially exposing him to danger of COVID-19 in federal prison.
Almond criticized Butziger for being accused of robbing the United States and its citizens during a vulnerable time in our country.
Almond has rejected a request by U.S. Assistant District Attorney Lee Vilker that Staveley be held at home as the case progresses amid previous convictions of fraud and domestic violence. Vilker argued he posed a flight risk due to the “highly incriminating” emails he exchanged with Butziger and a danger.
“This defendant has been a fraud machine for the past 10 years,” Vilker said. “He is truly an economic danger to the community.”
Instead, Almond accepted a recommendation from Staveley’s attorney, George West, that he be released on bail.
Butziger and Staveley are charged with Conspiracy to Make False Representations to Guarantee Small Business Loans and Conspiracy to Commit Bank Fraud. Staveley faces an additional charge of aggravated identity theft for allegedly impersonating his brother in a real estate transaction. If convicted of the charge, Staveley would receive a mandatory two-year sentence behind bars.
“Tens of millions of Americans have lost their jobs and have seen their lives plunged into chaos due to the coronavirus pandemic,” Weisman said in a statement. “It is unacceptable for anyone to attempt to steal a program designed to help hardworking Americans continue to be paid so that they can feed their families and pay part of their bills. Attorney General [William] Barr has called on all U.S. prosecutors to prioritize the investigation and prosecution of coronavirus and COVID-19 crimes, and that’s exactly what we’re doing. “
“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 this difficult time,” said Deputy Attorney General Brian A. Benczkowski of the ministry’s criminal division. of Justice. “The Criminal Division is committed to working with our law enforcement partners to eliminate abuse of the important relief programs established under the CARES Act.”
The special agent in charge of the FBI field office in Boston, Joeph R. Bonavolonta, said on Tuesday that the investigation began three weeks ago, when police in Berlin, Massachusetts, informed authorities that Staveley had used his brother’s identity in a real estate transaction. Investigators executed three search warrants that led to the discovery of “incriminating” communications between Staveley and Butziger, authorities said.
“We think both men lied and cheated so they could line their pockets,” Bonavolonta said.
According to federal prosecutors, Butziger and Staveley have applied for loans for businesses that were not operating before the start of the coronavirus pandemic. In one case, Staveley was looking for money for the employees of a company he did not own.
Authorities say Staveley claimed in loan applications over $ 438,500 that he had dozens of employees at three restaurants he owned, two in Warwick and one in Berlin, Massachusetts. An investigation has determined that one of Rhode Island’s restaurants, the former Remington House, and the Massachusetts restaurant, On The Trax, were not open before the start of the COVID-19 pandemic or at any time by the following. Additionally, Staveley neither owned nor had a role in Rhode Island’s second restaurant, Top of the Bay, for which he applied for financial assistance, they said.
According to court documents, Staveley’s Massachusetts restaurant was closed on March 10, 2020, when the city of Berlin revoked the company’s liquor license for a number of reasons, including the fact that by impersonating Kurt Sanborn, he would have misrepresented that his brother was the owner. Investigators say he used his brother’s personal identification information in other real estate transactions as well.
Authorities allege that Butziger filed for a loan of $ 105,381 on April 6 as the owner of the unincorporated Dock Wireless business on behalf of seven employees he and himself claims to have laid off.
On Twitter: @kmulvane