A New England restaurateur and his business associate have been arrested by federal authorities for allegedly trying to cheat the Paycheck Protection Program (PPP) out of more than $540,000 in forgivable loans.
The pair told program representatives that they were seeking the funds to pay dozens of employees at four ongoing small businesses, three of which were restaurants. According to the U.S. Department of Justice, two of the restaurants had closed before the COVID-19 pandemic began, and the third was owned by other parties.
Collectively, the two men did not have a single employee.
Restaurateur David Staveley, age 52, and David Butziger, 51, were the first two PPP applicants to be charged with fraud. Justice Department officials said the agency intends to be aggressive in pursuing other parties that have abused the system.
“Attorney General [William] 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,” said Aaron Weisman, U.S. attorney for the District of Rhode Island, where Staveley and Butziger were charged.
According to the Justice Department, Staveley had applied for $438,500 in PPP loans to pay workers at three restaurants he claimed to own: The Remington House, On the Trax and Top of the Bay. Investigators discovered that The Remington House and On the Trax had closed before the pandemic shut down restaurant dining rooms across the U.S., and that Staveley had no connection to Top of the Bay. The restaurant was owned and operated by others.
Investigators also discovered that On the Trax had closed in part because its liquor license had been revoked. Local authorities had discovered that Staveley had used his brother’s identification materials to seek the license.
Staveley also goes by the name Kurt Sanborn.
Butziger had applied for a $105,381 loan to pay himself and the seven others he identified as furloughed employees of a business called Dock Wireless. Authorities said they could not find any record of Dock Wireless having any employees.
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