DoJ Charges Two Brazen Businessmen with PPP Fraud
In a first, the U.S. Department of Justice ("DoJ") announced that it charged two businessmen with "conspiracy to make false statement to influence the SBA and conspiracy to commit bank fraud." With billions of dollars set aside for Paycheck Protection Program ("PPP") loans to help struggling small businesses make payrolls, it was only a matter of time before bad actors would see this as an opportunity to get rich quick.
Two businessmen have been charged in the District of Rhode Island with allegedly filing bank loan applications fraudulently seeking more than a half-million dollars in forgivable loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
David A. Staveley, aka Kurt D. Sanborn, 52, of Andover, Massachusetts, and David Butziger, 51, of Warwick, Rhode Island, are charged with conspiring to seek forgivable loans guaranteed by the SBA, claiming to have dozens of employees earning wages at four different business entities when, in fact, there were no employees working for any of the businesses.
While the facts of this PPP fraud scheme are interesting––the press release mentions an FBI undercover agent posing as a bank compliance officer––businesses should pay close attention to certifications in SBA Form 2483 (PPP application) and guidance from SBA and Treasury before submitting your applications (including this FAQ). It's only a matter of time before we see actions under the False Claims Act (including from whistleblowers) stemming from the PPP. In that regard, businesses who apply for PPP loans should, at minimum, contemporaneously document the reasons that support your loan eligibility and, if received, how or where you are spending the money.
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