New England pair first in nation charged in payroll relief program scam

May 6 (UPI) -- Authorities have arrested two New England men for attempting to defraud a federal loan program, becoming the first people charged in connection to a government program aimed at helping small businesses suffering amid the coronavirus pandemic pay employees.

The men, David A. Staveley, 52, and David Butziger, 51, are accused of applying for more than $500,000 in forgivable loans from the new CARES Act Payroll Protection Program claiming to have dozens of employees at four companies, the Justice Department said in a statement.


According to court documents, prosecutors accuse the pair of applying for the loans to pay employees at businesses that had stopped operating prior to the COVID-19 pandemic and had zero staff on payroll.

"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 U.S. Attorney Aaron L. Weisman for the District of Rhode Island.

The charges come as the Justice Department has been tasked by Attorney General William Barr to target crimes attempting to exploit the coronavirus pandemic, including price gauging, scams and the selling of fraudulent products.


According to the court documents, the two men conspired over email to defraud the $660 billion Payroll Protection Program that is part of the federal government's more than $2 trillion coronavirus relief bill President Donald Trump signed in late March.

Prosecutors said Staveley, of Andover, Mass., filed bank loan applications for more than $438,000 to pay dozens of employees at three restaurants that an investigation showed two of which were not open prior to the start of the pandemic and the third he did not own.

Butziger, of Warwick, R.I., is accused of filing for more than $105,000 from the Small-Business Administration under the Payment Protection Program to pay seven full-time employees but agents interviewed several of the supposed workers who said they were never employed by the restaurant in question.

The two men were arrested Tuesday and have been charged with conspiracy to make false statements to influence the SBA and conspiracy to commit bank fraud. Staveley faces an additional charge of aggravated identify theft and Butziger was charged with bank fraud.

"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 Federal Bureau of Investigation's Boston Field Office, adding, their 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."


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