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Pair Is Arrested on First Fraud Charges Tied to Small-Business Loan Program Pair Is Arrested on First Fraud Charges Tied to Small-Business Loan Program
(32 minutes later)
WASHINGTON — Two New England men were arrested on Tuesday on charges of attempting to defraud the government’s small-business lending program, marking the first federal fraud charges related to the $660 billion program that was aimed at helping businesses hurt by the coronavirus pandemic but has been riddled with problems.WASHINGTON — Two New England men were arrested on Tuesday on charges of attempting to defraud the government’s small-business lending program, marking the first federal fraud charges related to the $660 billion program that was aimed at helping businesses hurt by the coronavirus pandemic but has been riddled with problems.
The case against the men, David Staveley of Andover, Mass., and David Butziger of Warwick, R.I., is part of the Justice Department’s broad effort to fight coronavirus-related crimes, including health care fraud, hoarding, price gouging and scams devised to steal money both from people and from federal economic assistance programs for businesses in need of aid.The case against the men, David Staveley of Andover, Mass., and David Butziger of Warwick, R.I., is part of the Justice Department’s broad effort to fight coronavirus-related crimes, including health care fraud, hoarding, price gouging and scams devised to steal money both from people and from federal economic assistance programs for businesses in need of aid.
“Across the Justice Department, anything coronavirus related is a top priority,” Brian Benczkowski, the head of the department’s criminal division, said in an interview. “The strategy is to make cases in each of those areas as fast as possible to make sure that criminals understand we’re looking at this.”“Across the Justice Department, anything coronavirus related is a top priority,” Brian Benczkowski, the head of the department’s criminal division, said in an interview. “The strategy is to make cases in each of those areas as fast as possible to make sure that criminals understand we’re looking at this.”
Mr. Staveley and Mr. Butziger were accused of trying to steal money from the Paycheck Protection Program, the newly created federal relief program that provides low-interest loans to small businesses. The loans are forgiven if proprietors meet certain criteria, like using three-quarters of the loan for payroll and spending it within eight weeks of receiving the funding.Mr. Staveley and Mr. Butziger were accused of trying to steal money from the Paycheck Protection Program, the newly created federal relief program that provides low-interest loans to small businesses. The loans are forgiven if proprietors meet certain criteria, like using three-quarters of the loan for payroll and spending it within eight weeks of receiving the funding.
The men emailed each other about possibly creating fake loan applications and falsifying documents to support their requests, the U.S. attorney’s office in Rhode Island said.The men emailed each other about possibly creating fake loan applications and falsifying documents to support their requests, the U.S. attorney’s office in Rhode Island said.
Mr. Staveley ultimately filed bank loan applications falsely claiming that he needed nearly half a million dollars in government assistance to pay dozens of employees who worked at three struggling restaurants, according to prosecutors.Mr. Staveley ultimately filed bank loan applications falsely claiming that he needed nearly half a million dollars in government assistance to pay dozens of employees who worked at three struggling restaurants, according to prosecutors.
But the employees did not exist. Two of the three restaurants on the applications had closed before the coronavirus pandemic shuttered restaurants nationwide. One closed in 2018, and a federal investigator found it boarded up. Mr. Staveley had no relationship with the third restaurant on the application, prosecutors said.But the employees did not exist. Two of the three restaurants on the applications had closed before the coronavirus pandemic shuttered restaurants nationwide. One closed in 2018, and a federal investigator found it boarded up. Mr. Staveley had no relationship with the third restaurant on the application, prosecutors said.
Mr. Butziger separately applied for a $105,381 loan, claiming that he owned a company named Dock Wireless. He told an undercover F.B.I. agent posing as a bank compliance officer that Dock Wireless had seven full-time employees, including himself, who were laid off at the end of March and had worked without pay in April. He said he planned to use his loan to rehire and pay them. But the people he named as workers told investigators that they never worked for Mr. Butziger or Dock Wireless.Mr. Butziger separately applied for a $105,381 loan, claiming that he owned a company named Dock Wireless. He told an undercover F.B.I. agent posing as a bank compliance officer that Dock Wireless had seven full-time employees, including himself, who were laid off at the end of March and had worked without pay in April. He said he planned to use his loan to rehire and pay them. But the people he named as workers told investigators that they never worked for Mr. Butziger or Dock Wireless.
Neither man was granted a loan.Neither man was granted a loan.
Mr. Staveley and Mr. Butziger were charged with conspiracy to make a false statement to influence the Small Business Administration and with conspiracy to commit bank fraud. Mr. Staveley was charged with aggravated identity theft. Mr. Butziger was charged with bank fraud. Lawyers for the men could not be found.Mr. Staveley and Mr. Butziger were charged with conspiracy to make a false statement to influence the Small Business Administration and with conspiracy to commit bank fraud. Mr. Staveley was charged with aggravated identity theft. Mr. Butziger was charged with bank fraud. Lawyers for the men could not be found.
Lawmakers crafted the Paycheck Protection Program to help small businesses weather the stay-at-home orders that forced them to close and destroyed consumer demand, but officials struggled to define what types of businesses were small enough to be eligible. Some large companies took the loans and some small businesses were unable or hesitant to secure them.Lawmakers crafted the Paycheck Protection Program to help small businesses weather the stay-at-home orders that forced them to close and destroyed consumer demand, but officials struggled to define what types of businesses were small enough to be eligible. Some large companies took the loans and some small businesses were unable or hesitant to secure them.
Even as Congress was hashing out the details of the economic rescue package, Justice Department officials anticipated that the program would also be a magnet for fraudsters. They had seen criminals prey on rescue aid distributed after the 2008 financial collapse.Even as Congress was hashing out the details of the economic rescue package, Justice Department officials anticipated that the program would also be a magnet for fraudsters. They had seen criminals prey on rescue aid distributed after the 2008 financial collapse.
“Before the ink was even dry and the votes were cast, we were thinking about what kinds of fraud we were likely to see in conjunction with the P.P.P., the economic stabilization fund and, to a lesser degree, the loans to air carriers and national security businesses,” Mr. Benczkowski said.“Before the ink was even dry and the votes were cast, we were thinking about what kinds of fraud we were likely to see in conjunction with the P.P.P., the economic stabilization fund and, to a lesser degree, the loans to air carriers and national security businesses,” Mr. Benczkowski said.
“We focused immediately on the P.P.P. because it involved individuals and small businesses, and it seemed obvious to us that we would see people file for businesses that didn’t exist, inflate the value of their payrolls or even steal the identities of legitimate businesses in an attempt to get their loans,” he said.“We focused immediately on the P.P.P. because it involved individuals and small businesses, and it seemed obvious to us that we would see people file for businesses that didn’t exist, inflate the value of their payrolls or even steal the identities of legitimate businesses in an attempt to get their loans,” he said.
The charges revealed Tuesday had all of those elements. They were the result of a tip given to the local police, who shared it with the F.B.I. and the U.S. attorney’s office in Rhode Island. But most cases will probably be harder to find.The charges revealed Tuesday had all of those elements. They were the result of a tip given to the local police, who shared it with the F.B.I. and the U.S. attorney’s office in Rhode Island. But most cases will probably be harder to find.
Updated June 12, 2020Updated June 12, 2020
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people. Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.
A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.
The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.
Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.
Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.Exercise researchers and physicians have some blunt advice for those of us aiming to return to regular exercise now: Start slowly and then rev up your workouts, also slowly. American adults tended to be about 12 percent less active after the stay-at-home mandates began in March than they were in January. But there are steps you can take to ease your way back into regular exercise safely. First, “start at no more than 50 percent of the exercise you were doing before Covid,” says Dr. Monica Rho, the chief of musculoskeletal medicine at the Shirley Ryan AbilityLab in Chicago. Thread in some preparatory squats, too, she advises. “When you haven’t been exercising, you lose muscle mass.” Expect some muscle twinges after these preliminary, post-lockdown sessions, especially a day or two later. But sudden or increasing pain during exercise is a clarion call to stop and return home.
States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.
Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.
Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.
If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)
Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.Taking one’s temperature to look for signs of fever is not as easy as it sounds, as “normal” temperature numbers can vary, but generally, keep an eye out for a temperature of 100.5 degrees Fahrenheit or higher. If you don’t have a thermometer (they can be pricey these days), there are other ways to figure out if you have a fever, or are at risk of Covid-19 complications.
The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.
If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.
If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.If you’re sick and you think you’ve been exposed to the new coronavirus, the C.D.C. recommends that you call your healthcare provider and explain your symptoms and fears. They will decide if you need to be tested. Keep in mind that there’s a chance — because of a lack of testing kits or because you’re asymptomatic, for instance — you won’t be able to get tested.
The department is working with banks, the Small Business Administration, the Treasury Department and others to gather and analyze data from the loan applications for red flags.The department is working with banks, the Small Business Administration, the Treasury Department and others to gather and analyze data from the loan applications for red flags.
“We’re bringing the same approach to bear that we bring in the health care fraud context and opioid-related prosecutions,” Mr. Benczkowski said. “You can never prosecute cases based solely on data, but the data can tell you where to look more quickly than if you had to wait for a witness.”“We’re bringing the same approach to bear that we bring in the health care fraud context and opioid-related prosecutions,” Mr. Benczkowski said. “You can never prosecute cases based solely on data, but the data can tell you where to look more quickly than if you had to wait for a witness.”
Mr. Benczkowski said that it was too early to tell how many loan applications were fraudulent or whether any patterns of fraudulent behavior have emerged, but that he expected to see both of those over time.Mr. Benczkowski said that it was too early to tell how many loan applications were fraudulent or whether any patterns of fraudulent behavior have emerged, but that he expected to see both of those over time.
He said the coronavirus has slowed law enforcement work that requires grand juries and trials and had also made it harder to conduct in-person interviews with witnesses and subjects. He hopes that those aspects of investigations ramp back up soon, he said.He said the coronavirus has slowed law enforcement work that requires grand juries and trials and had also made it harder to conduct in-person interviews with witnesses and subjects. He hopes that those aspects of investigations ramp back up soon, he said.