Law Enforcement Has Approached Me About Possible Fraudulence on My Small Business Payment Protection Program Loan Application. What Should I Do?

Two men in New England were charged with fraudulently applying for a Payment Protection Program (PPP) loan worth over $500,000. These loans, stemming from the recent CARES Act, were designed to assist small businesses during the COVID-19 pandemic. David Butziger of Rhode Island and David Staveley of Massachusetts were charged with conspiracy to make false statements on their SBA forms and conspiracy of fraud. Staveley was separately charged with identity theft and Butziger was separately charged with bank fraud. They claimed on their applications to have multiple wage-earning employees at four different businesses. The Justice Department stated the employees who claimed to work at the businesses were not actually employed. The FBI uncovered emails between the two men, discussing ways to create an application for a federal PPP loan and the supporting documents under false information without getting caught.

Butziger claimed his company, Dock Wireless, had seven workers on the payroll. The Department of Revenue determined, under further investigation, that those workers were not employed at Dock Wireless. Records further showed no evidence of any alleged workers except Butziger. Staveley claimed on his application there were dozens of employees unemployed across three restaurants he owned. However, under further investigation, it was determined two of the restaurants were closed before the pandemic hit early March, and the other restaurant had no indication Staveley was involved in the business.

For the men to be charged in a criminal court, they must be proven, beyond a reasonable doubt, to be guilty of the charges. Fraudulent applications to the PPP must have evidence containing immense wrongdoing in one or more of the four categories needed on the original application: 1) necessity for the loans, 2) size eligibility for the loan- less than 500 employees, 3) amount requested for the loan- under $10 million, or 4) the use of the loan- payroll, mortgage, rent, and/or utilities.

This happened in the United States before COVID-19. Back in 2001, after the 9/11 attack on the World Trade Center, there was a Federal Emergency Management Agency (FEMA) loan through the Small Business Administration (SBA) to support small businesses affected by the destruction of the Twin Towers. That federal loan was like the loan disbursed to small businesses during the current COVID-19 pandemic. One man was arrested for fraudulently applying for and using the SBA loan, stating his office was near ground zero. In fact, he had years of opioid abuse which led to a failing business. He received the SBA Loan and used it to pay off credit cards and support his opioid addiction but was caught months later and served 14 months in federal prison for fraudulent misrepresentation on his application.

So, what should you do if you are contacted by law enforcement and they are asking you questions about your application for a PPP Loan? Every case is different and given the fact that PPP Loans continue to be a work in progress and the forgiveness requirements seem to be changing, it is reason enough to consult an attorney before speaking to law enforcement.

At Adams and Luka, P.A., we contact law enforcement on your behalf and inquire about the reasons they are contacting you. When your attorney speaks with law enforcement, the conversation cannot be used against you. When you speak with law enforcement, it may be used against you and be interpreted incorrectly. Once we determine what information law enforcement is looking for, we will prepare documents and statements in your best interest. This way, law enforcement, and the government can confirm all loans are received and used according to the CARE Act.

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I would like thank my attorney Thomas Luka. I knew from the beginning I had the right guy in my corner. While celebrating with family and friends at a Public Park in Seminole County, a fight broke out among various people. Myself, and a good friend, broke up the fight and the instigators left. Six months later, I was wrongly accused as the person who started the fight. The first attorney I hired could not even get a response from the State Attorney handling the case. Someone referred me to Tom and I felt comfortable at his demeanor and reactions.

After conversations with Tom, who knew I would settle for nothing less than a FULL DISMISSAL due to my innocence, I hired him. His firm of Adams and Luka did the due diligence by interviewing witnesses and the police who were on the scene, as well as starting a dialogue with the State Attorney. After gathering statements from witnesses, Tom was able to present a strong argument on my behalf to the State Attorney on why the case should be dismissed. If the State Attorney was not willing to dismiss the case, Tom was ready to take the case to trial.

The result by Thomas Luka: Case Dismissed.

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