Rhode Island PPP Loan Fraud Lawyers

Rhode Island PPP Loan Fraud Lawyers: Federal Defense in the State Where the First National PPP Prosecution Began

Rhode Island holds a unique place in the history of PPP fraud prosecution. On May 5, 2020, David Staveley and David Butziger became the first people in the entire United States charged with defrauding the Paycheck Protection Program. What happened next made national headlines: Staveley cut off his ankle monitor, staged his own suicide by leaving notes and his wallet in his car parked by the ocean, and fled across multiple states before being captured in Georgia. He received 56 months in federal prison, setting the first national precedent for how seriously courts would treat PPP fraud.

This matters for anyone facing PPP fraud allegations in Rhode Island because it demonstrates how aggressively federal prosecutors here have pursued these cases from the very beginning. The District of Rhode Island was not just among the first to file charges. It was the first jurisdiction in the country. The U.S. Attorney’s office in Providence has continued this aggressive approach, prosecuting defendants who tried to hide their fraud through money laundering, identity theft, and schemes that reached into other states.

Rhode Island operates as a single federal judicial district covering the entire state. All federal criminal cases, including PPP fraud prosecutions, go through the U.S. Attorney’s office in Providence. Chief Judge John McConnell has presided over significant PPP fraud sentencings, including the Ernest Ricci case that resulted in 36 months for combining PPP fraud with money laundering and bankruptcy fraud. In a small state, there is nowhere to hide from federal investigation.

If you received a PPP loan in Rhode Island and are concerned about your application or how you used the funds, understanding what has actually happened to defendants prosecuted here is essential. The sentences handed down in Rhode Island cases have set precedents followed by other jurisdictions. The wire fraud statute that applies to most PPP fraud cases carries up to 20 years in prison per count, but real outcomes depend heavily on individual circumstances.

This article explains what federal prosecutors in Rhode Island are actually charging, what sentences defendants have received, and why consulting with experienced federal defense counsel early in the process can significantly affect your outcome. The lessons from the first-in-nation prosecution here have shaped how PPP fraud is handled throughout the country.

The First-in-Nation Prosecution That Set the Standard

David Staveley and David Butziger’s case wasnt just the first PPP fraud prosecution in Rhode Island. It was the first PPP fraud prosecution in the entire nation. On May 5, 2020, less then two months after the CARES Act created the Paycheck Protection Program, federal prosecutors in Rhode Island filed charges against these two defendants for seeking over $543,000 in fradulent loans.

The scheme was straightforward. Staveley claimed to own three restaurants: Top of the Bay and Remington House in Warwick, Rhode Island, and On The Trax in Berlin, Massachusetts. He submitted loan applications claiming these restuarants had dozens of employees. In reality, he had no ownership interest in any of the buisnesses. None of them were open for buisness. There were no employees. Butziger claimed seven employees at an entity called “Dock Wireless” that also had no actual workers.

What made Stravelys case notorious was his response to being charged. Three weeks after appearing in federal court and being released to home detention with electronic monitoring, he cut off his ankle bracelet. He staged his own suicide by leaving suicide notes with associates and leaving his wallet in his unlocked car parked along the ocean in Massachusetts. Then he fled using false identities and stolen license plates.

Staveley traveled through multiple states before the U.S. Marshals Service caught him in Alpharetta, Georgia on July 23, 2020. His flight added failure to appear charges on top of the fraud charges. When he was finaly sentenced on October 7, 2021, he recieved 56 months in federal prison. This sentence set an early precedent for how seriously courts would treat PPP fraud.

Butziger, who cooperated with prosecutors and didnt flee, recieved a much lighter sentence: three years of supervised release with six months of home confinement and a $5,000 fine. The dramatic difference between there sentences illustrates how much cooperation and conduct after being charged can affect outcomes.

The Ernest Ricci Case – Money Laundering and Rental Property

Ernest Ricci’s case shows how prosecutors in Rhode Island pursue defendants who try to hide there PPP fraud through more sophisticated schemes. Ricci, 62, of North Kingstown, recieved 36 months in federal prison in May 2024 for a combination of PPP fraud, money laundering, and bankruptcy fraud.

Ricci had filed Chapter 7 bankruptcy in 2017 to protect a $1.5 million Florida home. Before filing, he transferred his buisness Premier Home Restoration to his wife while continuing to secretly control and operate it. He submitted false documents claiming he was unemployed with no income and no assets beyond the Florida property. When the pandemic hit, he fraudulently applied for PPP and EIDL loans without disclosing that a bankruptcy trustee was the equitable owner of his company.

After obtaining the COVID relief funds, Ricci laundered the proceeds through a series of financial transactions to conceal the money. He used the funds to purchase rental property in Warwick, Rhode Island, putting the property in another person’s name to hide his ownership. The court orderd him to pay $129,306 in restitution to the SBA and $77,568 to the IRS.

Riccis case demonstrates that prosecutors in Rhode Island are willing to dig into complex financial schemes. Using PPP funds to purchase real estate and trying to hide ownership through straw buyers does not protect you from prosecution. It adds money laundering charges that increase your sentence.

Federal Charges in Rhode Island PPP Cases

Rhode Island PPP fraud defendants typically face multiple federal charges. Understanding these charges helps you evaluate your potential exposure and the importance of early legal intervention.

Wire fraud under 18 U.S.C. § 1343 is charged in almost every PPP fraud case becuase applications were submitted electronically. Each fradulent application can be a seperate count carrying up to 20 years in prison. The statutory maximum increases to 30 years when the fraud affects a financial institution, which applies to many PPP schemes.

Bank fraud under 18 U.S.C. § 1344 applys when defendants made false statements to banks that processed PPP loans. This charge also carrys up to 30 years and has a 10-year statute of limitations, meaning 2020 loans remain chargeable through 2030.

Conspiracy charges under 18 U.S.C. § 371 apply when multiple people worked together on fradulent applications. Both Staveley and Butziger were charged with conspiracy. Money laundering under 18 U.S.C. § 1956 applies when defendants moved funds to conceal there origin, as Ricci did with his real estate purchase.

Aggravated identity theft under 18 U.S.C. § 1028A adds a mandatory two-year consecutive sentence when defendants used another persons information. The Florida defendants prosecuted in Rhode Island faced this charge in addition to wire fraud conspiracy.

Real Sentences in Rhode Island Cases

Understanding actual sentences handed down in Rhode Island helps you evaluate potential outcomes more accuratley then focusing on statutory maximums that rarely apply in full.

Staveley’s 56-month sentence remains the longest PPP fraud sentence in Rhode Island. His sentence was driven by multiple factors: the fraud amount, his prior wire fraud convictions in New Hampshire, and his decision to flee and stage a fake suicide. Defendants without these aggravating factors typically recieve shorter sentences.

Ricci’s 36-month sentence reflects the combination of PPP fraud with money laundering and bankruptcy fraud. His attempt to hide the money through real estate purchases added significent time to what might otherwise have been a shorter sentence for the underlying PPP fraud alone.

Butziger’s probation-only sentence shows how dramatically different outcomes can be when defendants cooperate. He participated in the same scheme as Staveley but recieved no prison time becuase he cooperated with prosecutors, accepted responsability, and didnt flee. The scheme was also thwarted before any money was actually disbursed, which reduced the harm.

Signs Your Under Investigation in Rhode Island

Federal PPP fraud investigations often proceed quietly for months before any arrest or indictment. Recognizing warning signs early can help you take apropriate steps before the situation escalates.

Direct contact from federal agents is the clearest sign. If FBI agents, IRS Criminal Investigation agents, SBA Office of Inspector General investigators, or Postal Inspectors contact you about your PPP loan, you are being investigated. The Staveley case was investigated by multiple agencies working together. Do not answer there questions without a lawyer present.

Less obvious signs include banks notifying you about subpoenas for account records, former employees or buisness partners mentioning they were questioned about you, or accountants recieving requests for your financial documents. Any of these events suggests prosecutors are gathering evidence.

Grand jury subpoenas are a clear indication that indictment may be forthcomming. If you recieve a subpoena to testify or produce documents, having experienced federal defense counsel is absolutley essential. Your testimony could be used against you or result in additional charges.

What to Do If Federal Agents Contact You

Your response when federal agents first contact you can significently affect your case. Heres what you should and shouldnt do.

Do not answer questions about your PPP loan without an attorney. You have the right to remain silent under the Fifth Amendment. Agents are trained interrogators and anything you say becomes evidence. Simply say “I’d prefer to speak with an attorney before answering any questions.”

Do not lie to federal agents. Making false statements to a federal officer is a seperate crime under 18 U.S.C. § 1001 carrying up to 5 years in prison. Many defendants make there situations worse by trying to explain away problems in there applications.

Do not destroy documents or evidence. Obstruction of justice charges can be added if prosecutors believe you destroyed evidence. Keep all records related to your PPP application.

Do not flee or attempt to evade prosecution. Stravelys attempt to fake his suicide and flee added failure to appear charges and significently increased his sentence. Running makes everything worse.

Contact an experienced federal criminal defense lawyer immediatley. Time is critical. An attorney can sometimes negotiate with prosecutors before charges are filed to prevent prosecution or reduce charges.

Potential Defenses in Rhode Island Cases

Several defenses may be available depending on your specific situation. An experienced federal defense attorney can evaluate which defenses apply to your case.

Lack of intent is the most common defense. The government must prove you knowingly and intentionaly made false statements. If you genuinley believed your application was accurate based on your understanding of program requirements, you may lack the criminal intent required for conviction. The PPP was rolled out quickly with confusing guidance.

Mistakes do not automaticaly equal fraud. If you miscalculated payroll expenses or misunderstood employee counting rules, that error might not constitute criminal fraud. The distinction between honest mistakes and intentional deception is critical.

Reliance on professional advice can be a defense if you reasonably relied on an accountant or attorney who told you the application was proper. You must show you disclosed accurate information and followed there advice in good faith.

Cooperation and restitution can significently reduce sentences. The Butziger case shows how much cooperation matters. Defendants who accept responsability, cooperate with investigators, and make efforts to repay funds recieve far better outcomes then those who fight unsuccesfully or flee.

The Statute of Limitations Question

Many people wonder wheather they can still be charged for 2020 PPP loans. The answer is yes, and the window extends longer then many people realize.

Wire fraud has a 5-year statute of limitations, meaning 2020 loans can be charged through 2025. However, when wire fraud affects a financial institution, the limitations period extends to 10 years. Courts have split on wheather PPP fraud automaticaly triggers this longer period, but prosecutors in Rhode Island have argued it does.

Bank fraud charges have always had a 10-year limitations period. This means 2020 loans remain chargeable through 2030 under bank fraud statutes. The Staveley prosecution began in May 2020, just weeks after the fraud occurred. The Ricci sentencing happened in May 2024 for conduct that began years earlier.

Do not assume your safe becuase time has passed. Federal investigations often take years to develop. You may be under investigation right now without knowing it.

Taking Action to Protect Yourself

If you have concerns about your PPP loan application, taking proactive steps now is far better then waiting for federal agents to contact you. Rhode Island’s history as the first state to prosecute PPP fraud means prosecutors here are experienced and aggressive.

An experienced federal defense attorney can help you evaluate your situation and determine the best path forward. Some defendants have benifited from approaching prosecutors before being charged. Voluntarily disclosing problems and offering repayment can sometimes result in civil resolution rather then criminal charges.

Whether your currently under investigation or simply worried about potential exposure, preserving documents and avoiding suspicious actions is important. Do not transfer assets, destroy records, or take any action that could be interpretted as consciousness of guilt.

Rhode Island PPP fraud prosecutions show that fleeing makes everything worse (Staveley’s 56 months vs Butziger’s probation), that money laundering adds substancial time (Ricci’s 36 months), and that cooperation dramaticaly affects outcomes. The federal sentencing guidelines provide structure, but individual circumstances determine results. Understanding your specific situation requires consulting with federal defense counsel who knows the District of Rhode Island and can advise you on the best aproach for your circumstances.