As law enforcement pursues SBA / PPP loan fraud, a buyout story

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In May of this year, David A. Staveley (aka Kurt D. Sanborn) of Andover, Massachusetts, and David Butziger of Warwick, Rhode Island, have been accused conspiracy to illegally obtain funds through the Paycheque Protection Program (PPP). The PPP offers billions of dollars in potentially repayable loans to keep workers on the payroll, guaranteed by the Small Business Administration (SBA).

Staveley and Butziger claimed that dozens of employees earned salaries at four different business entities when in fact no employee worked for any of the companies. They are said to have requested more than half a million dollars in loans.

Staveley has since disappeared. According to federal authorities, David A. Staveley apparently cut off his GPS monitoring device and disappeared. He is considered a fugitive, explains Jim Martin, spokesperson for the US attorney’s office in Rhode Island.

In the press release announcing the charges, the Justice Department warned other P3 loan applicants that the FBI and other federal law enforcement agencies would aggressively pursue fraud charges against anyone attempting to defraud the government. PPP loan program. At least 15 people have been charged to date in similar cases, including defendants in Virginia, Texas and Ohio.

Special Agent in Charge Joseph R. Bonavolonta of the local FBI office in Boston said the arrests “should serve as a warning to others that the FBI and our law enforcement partners will aggressively attack them. bad actors like them who are using the COVID-19 pandemic as an opportunity to commit fraud. “

The Small Business Administration (SBA) has Previously reported that “disaster loans are vulnerable to improper payments, fraud and defaults, as loan transactions are often expedited to provide rapid assistance to disaster survivors.” The SBA has stepped up hiring and training in the wake of Hurricanes Harvey, Irma and Maria, but it’s clear that the fraud persists – and has been for years before that date.

When I wrote about the arrests of Staveley and Butziger in May, I received numerous emails from readers about P3 loan fraud. Most were angry. But I was struck by an email that took a different turn. It was from a man named Jeff Grant, who explained that he understood this story too well: he spent almost fourteen months in federal prison for a white collar crime he committed when he was a lawyer. . This crime was linked to improperly taking out a loan from the SBA after 9/11.

Grant’s story was both careful and comprehensive, and I was intrigued. He and I then had a conversation (you can listen to it as part of the podcast here). One of the things that struck me during the discussion was that Grant – who understands that what he did was wrong – came out of the experience with a desire to help others escape the same fate. . He now works with white collar criminals at Progressive prison ministries.

He wrote about his experience for Entrepreneur magazine. Its takeaways are meant to provide an overview of what business owners should consider before taking out disaster loans. One of his warnings that resonates with many emails I have received is the following: Beware of the belief that the rules are suspended in an emergency.

This is something I have heard from business owners and tax professionals. The guidelines for PPP loans can be confusing and they change all the time. But don’t confuse these changes with the suggestion that you can bend the rules. The rules are the rules.

And another – one that Grant and I discussed at length – was this: We cannot save our businesses and our lifestyles at the same time. As Grant wrote, “Put simply, SBA loans are meant to save your business, not your lifestyle. Loans aren’t meant to pay for your new car or your restoration options – they’re meant to keep the lights on in your business. Be careful and smart.

(You can read the entire article here.)

Grant ended our conversation on a hopeful note. Now remarried and still in touch with his daughters, Grant said it took him a while to realize that “I was not the worst thing I have ever done.”

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