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Forbes: As Law Enforcement Pursues SBA Loan Fraud, Jeff Grant Talks Redemption, by Kelly Phillips Erb

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Reprinted from Forbes.com.

In May of this year, David A. Staveley (a/k/a Kurt D. Sanborn) of Andover, Massachusetts, and David Butziger of Warwick, Rhode Island, were accused of conspiring to illegally obtain funds through the Paycheck Protection Program (PPP). The PPP offers billions of dollars in potentially forgivable loans to keep workers on the payroll, guaranteed by the Small Business Administration (SBA).

Staveley and Butziger claimed to have dozens of employees earning wages at four different business entities when, in fact, no employees were working for any of the businesses. They allegedly sought more than a half-million dollars in loans.

Staveley has since disappeared. According to federal authorities, David A. Staveley apparently cut off his GPS-monitoring device and went missing. He is considered a fugitive, says Jim Martin, a spokesman for the U.S. attorney’s office in Rhode Island.

In the press release announcing the charges, the Justice Department warned other PPP loan applicants that the FBI and other federal law enforcement agencies would aggressively pursue fraud charges against anyone who attempted to defraud the PPP loan program. At least 15 individuals have been charged to date in similar cases, including defendants in Virginia, Texas, and Ohio.

Special Agent in Charge Joseph R. Bonavolonta of the FBI’s Boston Field Office said that the arrests “should serve as a warning to others that the FBI and our law enforcement partners will aggressively go after bad actors like them who are utilizing the COVID-19 pandemic as an opportunity to commit fraud.”

The Small Business Administration (SBA) has previously reported that “disaster loans are vulnerable to improper payments, fraud, and default because loan transactions are often expedited to provide quick relief to disaster survivors.” The SBA ramped up hiring and training following Hurricanes Harvey, Irma, and Maria, but clearly, fraud is still occurring – and it had for years before that time.

When I wrote about the arrests of Staveley and Butziger in May, I received many emails from readers about PPP loan fraud. Most were angry. But I was struck by one email that took a different tack. It was from a man named Jeff Grant, who explained that he understood this story all too well: he served almost fourteen months in a federal prison for a white-collar crime he committed when he was a lawyer. That crime was related to improperly taking an SBA loan following 9/11.

Grant’s story was both cautionary and understanding, and I was intrigued. He and I subsequently had a conversation (you can listen to it as part of the podcast here). One of the things that struck me during the discussion was that Grant – who understands that what he did was wrong – came out of the experience with a desire to help others escape the same fate. He now works with white-collar criminals at Progressive Prison Ministries.

He wrote about his experience for Entrepreneur magazine. His takeaways are intended to offer insight on what business owners should consider before they take out disaster loans. One of his warnings that resonates with many of the emails that I’ve received is this: Beware of the belief that rules are suspended in times of emergency.

That’s something that I’ve heard from business owners and tax professionals alike. The guidance governing PPP loans can be confusing and it’s changing all of the time. But don’t confuse those changes with the suggestion that can you can skirt the rules. The rules are still the rules.

And another – one of the ones that Grant and I discussed at length – was this: We can’t save our businesses and our lifestyles at the same time. As Grant wrote, “Simply put, SBA loans are meant to save your business, not your lifestyle.” Loans aren’t meant to pay for your new car or your dining options: they’re meant to keep the lights on at your business. Be cautious, and be smart.

(You can read the entire Entrepreneur article here.)

Grant ended our conversation on a hopeful note. Now happily re-married and still connected with his daughters, Grant said that it took him a while to realize that, “I wasn’t the worst thing I ever did.”

Taxgirl Podcast: Jeff Grant talks Desperation and SBA/ PPP Loans in a Time of Crisis with Kelly Phillips Erb on Her Podcast, link here.

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Follow Kelly Phillips Erb on Twitter or LinkedIn. Check out her website.

Kelly Phillips Erb

Kelly Phillips Erb

Years ago, I found myself sitting in law school in Moot Court wearing an oversized itchy blue suit. It was a horrible experience. In a desperate attempt to avoid anything like that in the future, I enrolled in a tax course. I loved it. I signed up for another. Before I knew it, in addition to my JD, I earned an LL.M Taxation. While at law school, I interned at the estates attorney division of the IRS. At IRS, I participated in the review and audit of federal estate tax returns. At one such audit, opposing counsel read my report, looked at his file and said, “Gentlemen, she’s exactly right.” I nearly fainted. It was a short jump from there to practicing, teaching, writing and breathing tax. Just like that, Taxgirl® was born.

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More on SBA PPP & EIDL Loan Fraud:

Entrepreneur: I Went to Prison for SBA Loan Fraud: 7 Things You Should Know when Taking Covid-19 Disaster Relief Money, by Jeff Grant, Link to article here.

The Philadelphia Inquirer: Steal Money from the Feds? First, Meet Jeff Grant, an Ex-Con who Committed Loan Fraud, by Erin Arvedlund: Link to article here.

Fraud Stories Podcast with Mark Lurie: SBA/PPP Loan Fraud with Guest: Jeff Grant. Link to podcast here.

Forbes: As Law Enforcement Pursues SBA Loan Fraud, Jeff Grant Talks Redemption, by Kelly Phillips Erb. Link to article here.

Taxgirl Podcast: Jeff Grant talks Desperation and Loans in a Time of Crisis with Kelly Phillips Erb on Her Podcast. Link to article and podcast here.

Business Talk with Jim Campbell: Jeff Grant Talks with Jim About Going to Prison for SBA Loan Fraud and What to Know When Taking Coronavirus Relief Money, Biz Talk Radio Network, Broadcast from 1490 AM WGCH Greenwich, CT. Listen on YouTube here.

Babz Rawls Ivy Show: Babz Rawls Ivy & Jeff Grant Talk SBA / PPP Loan Fraud and 7 Things to Know Before You Take Coronavirus Relief Money, WNHH 103.5 FM New Haven. Watch on YouTube here.

Also: White Collar Week with Jeff Grant, Podcast Episode 09: Small Business Edition, with Guest Kelly Phillips Erb. Link here.

Forbes: Jacqueline Polverari: After Prison, Woman Dedicates Life To Helping Women Recover From Incarceration, by Walt Pavlo

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Jacqueline Polverari is a Team Member of our Ministry, Member of our weekly online White Collar/Economy Exiled Support Group, a past prisonist.org guest blogger, and a past Criminal Justice Insider guest. Jacquie’s organization, Evolution Reentry Services, helps returning women and their families rebuild their lives. Oct. 5th – 7th, she will be hosting a retreat in for returning women. Oct. 30th, Jacquie and I will be speaking at Western Connecticut State University. – Jeff

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Reprinted from Forbes.com, Sept. 21, 2019.

According to my friends over at The Sentencing Project, “Between 1980 and 2017, the number of incarcerated women increased by more than 750%, rising from a total of 26,378 in 1980 to 225,060 in 2017.”  More than 60% of women in state prison have a child under the age of 18.  While there are challenges that differ for women while they are incarcerated, there are also different challenges when they get home.  One of them was Jacqueline Polverari and now she’s seeking to make that transition home easier.

Polverari, MSW a Connecticut Social Worker has been working with women who have experienced incarceration, particularly white-collar crime for the past four years.  She spent seven months in the Danbury (Connecticut) Federal Prison for Women for charges related to a mortgage fraud case from 2015.  Her experience in prison and her transition back home led her to researching women who commit white-collar crime and correlations to underlying mental health issues.

After working with several different criminal justice organizations, she founded Evolution Reentry Services out of Branford, CT.  In an interview, I asked Polverari what her goals for Evolution were, “To help women returning from prison put their broken lives back together.”  Polverari said many of these women were once pillars of their communities, bread winners of the family, who are dealing with isolation, embarrassment and shame when they return home.  At the same time, they are trying to keep their families together.

The women she has seen over the past several years displayed very similar characteristics of “low self-esteem, lack of self-confidence, being the caretaker or “fixer” with the inability to say ‘no’.”  Realizing that there were few resources for women returning from prison, she started helping as many people as she could.

“People have little empathy or sympathy for this group of women,” Polverari said, “typically seeing them as privileged women who were greedy or taking advantage of others but in reality, that is rarely the case.  One can see that with the ‘Varsity Blues’ cases that involve Felicity Huffman and Lori Loughlin. Women are currently being incarcerated at a higher than ever before, yet there is little statistical information and resources dedicated to guiding these women to a productive life beyond prison.

Polverari decided that there needed to be more focus on these women in order to help change the stigma related to their crime and why they committed those crimes in the first place.   Jacqueline has been speaking all over the country creating some noise as to the lack of resources available for this group.  “These are women who are very educated, had been in positions of upper management and made some poor choices within the workplace,” Polverari said.  “In fact, I have found that their actions that led to criminal acts initiated as a result of trying to fix a problem, which created a new problem, and so on.”  Now, even though they served their time for the mistake, they are labeled a felon for life.

Of the 120+ federal prison camps, only 27 are for women, usually creating situations where they are far from home (financial burden of family travel and fewer visits).  In Danbury, Polverari said there were about 157 inmates but she rarely saw more than two guards at the prison.  “For the most part, women live a life of isolation in prison that carries over when they are home,” Polverari said.  Like many male white collar offenders who go to prison, they are allowed to self-surrender.  There were no locks or bars and most women have never even been handcuffed.  However, the real issues are when they come home where they have lost their husbands, homes, and respect from their communities.

One powerful therapy for these women, according to Polverari, is to talk with other women who have gone through it.  But there is a problem, conditions of supervised release post prison prohibit speaking with another felon whether that other person is on supervised release or not.  “It poses a problem because how can these women find someone who can relate to their situation?” Polverari said.  She’s trying to change this.

Polverari and her group at Evolution are hosting a mental health retreat where women who have been convicted of a non-violent crime can gather under the guidance of a social worker.   The retreat is available to all women regardless of ability to pay.  It is the weekend of October 4-6th for a day of bonding, communicating about employment opportunities, housing solutions, finances and gratitude.  It is a mental health retreat to help women understand that one poor choice does not define the rest of their lives, even with a felony that follows them their entire lives.

At a time when our society has focused on issues regarding mental health, it is good to see that there is help for this group of unique individuals who in the past have led a life of isolation.

 

 

Walter Pavlo

I established 500 Pearl Street as a strategic consulting firm for attorneys and their clients as an advisor on federal criminal cases. I write here on criminal justice matters, particularly related to white collar crime, and speak nationally on the topic. In 2007, I released the book “Stolen Without A Gun” with Neil Weinberg, former Executive Editor Forbes Magazine (now a Reporter for Bloomberg). Follow me on Twitter or LinkedIn. Check out my website or some of my other work here.

Forbes: Feds Bust Prison Consulting Firm, By Walt Pavlo, Forbes Contributing Columnist

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Reprinted from Forbes.com, Jan. 28, 2019

The prison consulting business has been plagued by gimmicks and false promises.  Now a federal indictment in Connecticut could blow the lid off of a number of scammers that have taken advantage of defendants and their families.

US Attorneys in Connecticut have indicted three people who worked at RDAP Law Consultants LLC (RDAP Law) a firm that promised, guaranteed, that its clients would earn up to 18 months off of prison for hiring them.  Tony Tuan Pham, Samuel Copenhaver and Constance Moerland were indicted on charges that they coached people to fake drug and alcohol habits to gain entry into the Bureau of Prisons’ 500-hour program, Residential Drug Abuse Program (RDAP).  Getting into the program can get inmates up to one year off of their prison term and it is the only program in the BOP that offers a reduced time in prison.   The BOP considers it one of their premier successes:

“The Bureau and National Institute on Drug Abuse combined funding and expertise to conduct a rigorous analysis of the Bureau’s RDAP. Research findings demonstrated that RDAP participants are significantly less likely to recidivate and less likely to relapse to drug use than non-participants. The studies also suggest that the Bureau’s RDAPs make a significant difference in the lives of offenders following their release from custody and return to the community.”

The RDAP program is a 9-month program of intensive drug and alcohol therapy.  Those who enter the program participate in a regimen of therapies while incarcerated and counseling sessions after their release from prison.  To qualify, a defendant must state that they have a drug or alcohol dependency within the year prior to their arrest … but that statement must be included in a Presentence Report, a historical report that provides detail on the defendant’s life (criminal past, family history, medical history and drug abuse).  In many cases, defendants, particularly those involved in the drug trade (the majority of federal charges), have a drug problem.  However, having that abuse documented in the Presentence report is imperative to gaining admission.  When it is not, documentation must be provided to support a history of abuse … and that has launched a cottage industry of  “consultants” who are falsifying information for those who did not initially qualify for the program.

When a defendant, a desperate defendant, reached out to RDAP Law, they would direct them to fraudulently obtain one or more prescriptions for medications used to treat withdrawal symptoms, and to bring those medications upon reporting to a BOP facility to begin serving their prison term.  This created the false appearance of substance abuse disorder. RDAP Law also educated clients about how to mimic withdrawal symptoms and instructed clients “who were not yet in custody to adopt a daily habit of drinking alcohol or to have a medical professional provide a prescription for anti-anxiety medication prior to the client reporting to a BOP facility.”  If none of those worked, RDAP Law recommended that defendants show up at prison drunk.  For all of this, they would charge fees up to $10,000.

I have talked to a number of defendants and they all tell me that they are bombarded with emails and phone calls for prison consulting services once they have been sentenced.  These consultants promise results ranging from time off of a prison term to luxury prison designations.  It is a scam that has been going on too long.

RDAP Law’s luck ran out when it promised a defendant entry into RDAP and the defendant was working in cooperation with the FBI and US Attorneys office in Connecticut.  Pham’s pitch had six pieces of advice according to an excerpt from a recorded call:

Number one, you drink every day, including weekday. Number two, alcohol is very important to you. It’s a big part of your life.  Three, you’re a good drinker now. . . . Your first glass of wine you don’t feel anything.  Number four, you’ve tried to quit many times and you can’t. . . . You get sick if you don’t drink, you don’t feel like yourself. Ok? You can’t sleep. You can’t think.  Like an alcoholic, like an addict. You don’t feel good unless you have a drink.  That’s five. And number six, it’s called abuse. Abuse meaning bad things. Ok? You do bad things when you drink.

Now, the defendant in that case is not going to the RDAP program but will likely receive some time off for cooperating against RDAP Law.  The RDAP Law website is still up, but I’m guessing the feds are monitoring it … as well as a few others.

It is also likely that the BOP will look at their requirements for qualifying for RDAP.  For every person who has faked drug or alcohol abuse to get into the program, there are many who did not qualify but had real substance abuse problems that were not properly documented.  The BOP, for all of its shortcomings, has a successful program in RDAP that needs to be strengthened.  Prosecutions like this will start that process.

When Walt is not writing on white collar crime, he works with experts who present on it. Check out 500 Pearl Street Speakers or contact him at waltpavlo@500pearlstreet.com.

Walter Pavlo Contributor

I established 500 Pearl Street Speakers as a boutique speaker bureau that brings together journalists, former law enforcement agents, forensic accountants, lawyers and those involved in white collar crimes to create memorable training events. When I’m not speaking or writing, I’m working with Jack Donson at Prisonology LLC to help everyone facing federal prison. In 2007, I released the book “Stolen Without A Gun” with Neil Weinberg, former Executive Editor Forbes Magazine (now a Reporter for Bloomberg). I write on white-collar crime and try to provide a different perspective than that of the mainstream media.