Getty
In May of this year, David A. Staveley (a / k / a Kurt D. Sanborn) of Andover, Massachusetts, and David Butziger of Warwick, Rhode Island, were charged with conspiring to illegally obtain funds through the Check Protection (PPP)) The PPP offers billions of dollars in potentially forgivable loans to keep workers on the payroll, guaranteed by the Small Business Administration (SBA).
Staveley and Butziger claimed that dozens of employees earned wages at four different business entities when, in fact, there were no employees working for any of the companies. They allegedly sought 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 went missing. He is considered a fugitive, says Jim Martin, a spokesman for the United States Attorney’s office in Rhode Island.
In the press release announcing the charges, the Justice Department warned other PPP loan applicants that the FBI and other federal law enforcement agencies would aggressively pursue fraud charges against anyone attempting to defraud the PPP loan program. At least 15 people have been charged to date in similar cases, including those accused in Virginia, Texas and Ohio.
Special Agent in Charge Joseph R. Bonavolonta of the FBI’s Boston Field Office said the arrests “should serve as a warning to others that the FBI and our law enforcement partners will aggressively pursue bad actors. like them who are using the COVID-19 pandemic as an opportunity to commit fraud. “
The Small Business Administration (SBA) previously reported that “disaster loans are vulnerable to improper payments, fraud, and default because loan transactions are often accelerated to provide quick relief to survivors of disaster. ” The SBA increased hiring and training after Hurricanes Harvey, Irma and Maria, but clearly fraud is still occurring, and had done so for years before then.
When I wrote about the Staveley and Butziger arrests in May, I received a lot of emails from readers about PPP loan fraud. Most of them were angry. But I was struck by an email that took a different course. It was from a man named Jeff Grant, who explained that he understood this story very well: He spent almost fourteen months in federal prison for a white collar crime he committed when he was a lawyer. That crime was related to improperly obtaining an SBA loan after September 11.
Grant’s story was both cautious and comprehensive, and it intrigued me. Later, he and I had a conversation (you can listen to it as part of the podcast here). One of the things that caught my attention during the discussion was that Grant, who understands that what he did was wrong, left the experience with the 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. Their findings are intended to provide information on what business owners should consider before applying for disaster loans. One of his caveats that resonates with many of the emails I’ve received is this: Beware of the belief that rules are suspended in times of emergency.
That’s something I’ve heard from business owners and tax professionals alike. The guideline governing PPP loans can be confusing and is changing all the time. But don’t confuse those changes with the suggestion that you can circumvent the rules. The rules are still the rules.
And another, one of which Grant and I discussed extensively, was this: We cannot save our businesses and our lifestyles at the same time. As Grant wrote: “Simply put, SBA loans are meant to save your business, not your lifestyle.” The loans are not meant to pay for your new car or your dining options – they are meant to keep the lights on in your business. Be cautious and be smart.
(You can read the full article here.)
Grant ended our conversation with a note of hope. Now happily married and still connected to his daughters, Grant said it took him a while to realize that “it was not the worst thing he had ever done.”
.
