Federal Stimulus Fraud Prosecutions

The Law Office of Matthew Galluzzo, PLLC Team

Two men in Rhode Island were recently arrested and charged by federal prosecutors with attempting to defraud the Small Business Administration (SBA) of over $500,000 by purportedly submitting a false application for relief funds earmarked for small business owners through the Coronavirus Aid, Relief and Economic Security (CARES) Act. Given the increasing desperation of many small business owners during the pandemic and quarantine, as well as the significant amount of federal funding being made available, one can expect more such prosecutions to occur in the near future.

According to a Department of Justice press release, David Butziger and David Staveley sought over half a million in forgivable loans for various businesses that either were no longer operating, for which they had no employees, or in which they held no ownership stake. Though they have not yet been indicted, they have been charged by way of criminal complaint Conspiracy to Make a False Statement to Influence the SBA (18 U.S.C. § 371), Conspiracy to Commit Bank Fraud (18 U.S.C. § 1349), and Bank Fraud (18 U.S.C. § 1344[2]). Though it is difficult to estimate the prison penalties they may be facing, a fraud involving $500,000 might put them at an offense level of 18 for purposes of the Federal Sentencing Guidelines. As such, they might be facing a Guideline sentence of 18-24 months in prison following a guilty plea. However, there is no statutory minimum sentence, so they could receive in theory receive probation.

This arrest and prosecution should serve as a serious warning to any small business owners considering submitting false or exaggerated applications. However, it will be interesting to see whether the federal authorities will start making arrests or threatening to prosecute individuals whose applications might contain sloppy mistakes rather than outright falsehoods. Without the assistance of a competent accountant, or with a fluctuating and/or seasonal payroll, one could easily envision a small business owner submitting an “honest” application that raises eyebrows from SBA administrators.

If you have been contacted by law enforcement or federal investigators about a federal stimulus application you submitted for your business, you should strongly consider contacting Matthew Galluzzo, an experienced federal criminal defense attorney and former Manhattan prosecutor. He will take the time to understand your business so he can respond intelligently to investigators, and he is respected by federal investigators and judges throughout New York. Most importantly, he will defend you like you’re family.

Client Reviews

I found myself in such a dark place thinking only God could understand and help me through this horrible situation. But Matthew Galluzzo did. And he did so in a very kind, compassionate and respectful manner. Enough said.

Client

Matthew Galluzzo saved the day when the unthinkable happened. Every phone call was returned within minutes. All email correspondences were replied to expeditiously. Matt handled our case as if it was a member of his own family in the courtroom. Despite all the obstacles along the way, Matt's legal...

Kate

In less than an hour of assessing my case, Mr. Galluzzo had a clear direction and evoked a confident demeanor that was infectious. During the course of several court appearances he was always prepared, and took more than a personal interest when errors in court procedure occurred. Mr. Galluzzo...

Client

We hired Matt when my son was arrested on several very serious felony charges. Matt is not only very knowledgeable about the law, he genuinely cares about his clients. He was patient and professional, inside the courtroom and out, in what turned out to be a very long process. He worked closely with...

Client

Get in Touch

  1. 1 Over 20 Years of Experience
  2. 2 Available 24/7
  3. 3 We Fight for You!
Fill out the contact form or call us at (212) 344-5180 to schedule your consultation.

Leave Us a Message