California governor’s businesses secured $ 3 million in relief loans

SACRAMENTO, Calif. (AP) – Companies affiliated with California Governor Gavin Newsom have received nearly $ 3 million in federal loans created to help small businesses survive the pandemic, more than eight times the amount originally reported, according to reports. information recently released by the US government.

Nine companies linked to Newsom’s PlumpJack Group shared the nearly $ 2.9 million in loans through the Small Business Administration’s paycheck protection program, according to new figures released last week. The governor placed his business holdings in a blind trust before he took office last year and therefore would not have participated in the decision to obtain the loans.

It was a surprisingly large loan, said Sean Moulton, senior policy analyst for Project On Government Oversight. The independent, non-partisan watchdog tracks $ 1.6 trillion in overall pandemic relief spending, with the Paycheck Protection Program being the largest single program.

“It seems like a small business, but it has a lot of money. I don’t know how the company justifies taking so much money when there were a lot of companies looking for help, ”Moulton said. “You hope they put it to good use because there is an opportunity cost there – that money was not used for another small business that might be bankrupt now.”

He said Newsom “certainly ran the risk of encountering public perception issues” regarding the loans.

It’s not something the governor needs now. He is already facing criticism for sending his children to private schools for classroom learning as most public schools remain closed and for eating in violation of his own rules with 10 lobbyists and others at the costly. French Laundry restaurant in Napa in early November.

PlumpJack spokesperson Jeff Nead said the money was intended for 358 employees across all affiliated companies.

Like many businesses threatened by the pandemic, companies have used the money “to protect our workers and keep them employed.” He said the group was operating under federal guidelines and the funds “have been critical in keeping our staff employed and continuing our operations.”

A PlumpJack company, Villa Encinal Partners Limited Partnership, received the largest loan, $ 918,720, but only has 14 employees. For the loan to be canceled, the partnership must have spent 60% of the money for three months’ salary, which represents annual salaries approaching $ 160,000 per employee.

Dividing 60% of the total between 358 employees yields a much smaller amount of $ 4,800 per employee.

A second company received $ 680,000 and another more than $ 500,000. The tally was first reported by ABC7 News in San Francisco.

It is not clear whether the company or its affiliates will seek to get the loan canceled, have spent so much on salaries, or have spilled over into their loan applications during the frantic first months of the program. Moulton said, in part because federal reporting requirements are so lax.

“The biggest loans, I’ve always had a hard time figuring out how they fit into the whole idea of ​​the paycheck protection program,” he said. “It was all supposed to be about small business, it was supposed to keep people working, keep their paychecks coming, and yet we were handing out these millions and millions of dollars. ”

Newsom has been criticized by many business circles for its aggressive shutdown orders. In turn, he has repeatedly stated that he is a proud little businessman and entrepreneur and understands the hopes and dreams of owning a business and the anger that the government restricts or prohibits operations.

Newsom developed PlumpJack after helping him found a liquor store in San Francisco in 1992.

“Before taking office, the governor transferred title and control of the companies he founded to a blind trust, a step that goes beyond anything required by law,” Jesse Melgar wrote. , Newsom’s communications director, without further details.

An Associated Press review of initial SBA loan data in July found that governors of at least eight states and both political parties were among political leaders with ties to companies that received loans in the framework of the program.

PlumpJack Management Group LLC, Newsom’s wine and hotel company, then said it received a loan worth $ 150,000 to $ 350,000 and said it kept 14 jobs thanks to the loan. The company is part of a portfolio of brands that includes a resort hotel in the Squaw Valley ski area, five restaurants and bars, four Napa Valley wineries, a sports retailer and more.

Private banks administered the loans to speed up their distribution, which raises its own questions, he said.

“An organization partly founded by the governor, they could get special preferential treatment – not because the governor asked for it, but because of all the connections that exist,” Moulton said.

This is part of the reason why he opposes congressional proposals to simply cancel loans no matter how they were used.

“It’s a useful case to focus on because of some of the high profile people involved, but I think it’s played out a thousand times across the country,” Moulton said. “There are a lot of companies that have money which, if you look closely enough, may not make sense with the jobs they have.”

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