Nearly $ 3 million earmarked for small businesses amid the pandemic has gone to companies founded by Gov. Gavin Newsom, according to the data
While data released by the Small Business Administration earlier this year showed that the PlumpJack Group received up to $ 350,000 in PPP loans, recent data by the SBA indicated that PlumpJack companies – including wineries and bars And restaurants – received more than eight times that amount. About 3 million dollars in total.
In 2018, the governor of Newsom placed his ownership stakes in the PlumpJack Group in blind confidence. This means that he will not have knowledge or a role in the business decisions of the company that are made during his time in the position.
Data mining
The ABC7 I team discovered discrepancies between the company’s SBA data and publicly available records that appear to raise questions about the amount of money some companies are receiving under the program.
An ABC7 analysis found that at least nine PlumpJack companies took out PPP loans.
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One of the companies on the list is Villa Encinal Partners Limited Partnership. State records state that the name dates back to the PlumpJack winery in Napa. Billionaire San Francisco Gordon Getty investor.
According to SBA data, the company took out a loan of $ 918,720 on April 14, 2020.
In order to be forgiven for the loan, the SBA requires the use of at least 60 percent to cover their wages. Based on SBA data, Villa Encinal Partners LP has maintained 14 employees. Hypothetically, if split evenly, they would each receive about $ 40,000 to cover their paychecks over a period of three months – this would amount to an annual salary of around $ 160,000 per employee.
“It’s not expected that the 14-employee organization will get close to $ 1 million,” said Shawn Moulton, senior policy analyst at the POGO. He specializes in tracking public-private partnership funds. “The purpose behind this program was to provide entry-level jobs, and people who would go in and work on this salary. That was what we put this for, to stop unemployment.”
The average small business loan for California companies with 14 employees was roughly $ 128,000. However, the PlumpJack Villa Encinal Partners LP entity – which also according to SBA data retained 14 employees – received more than seven times that amount at $ 9,18720.
An ABC7 analysis found that the only other California winery with nearly the same loan amount as Villa Encinal Partners LP was Oak Knoll Farming Corp, which retained 79 employees – more than five times as much as a villa.
The average number of employees retained per California winery that earned more than $ 900,000 in partnership funding is 148.
Millbrae Pancake House took out a loan of $ 431,400 and has kept 53 employees. By comparison, that’s less than half of what Villa got and Burke retained nearly four times as many employees.
“It seems unfair because there are small family businesses like ours that need this money,” said owner Erin Burke.
After 60 years in operation, Burke was forced to close her family-owned business on November 29.
“We are just trying to do our best and live,” she said. “This money was not enough.”
The San Francisco Chamber of Commerce reported that the majority of small businesses that have struggled to obtain PPP loans say that the loan size was not sufficient or that the owner misunderstood the request.
“I think it’s heartbreaking,” said Jay Cheng, the organization’s director of public policy. “We see big discrepancies between the small businesses, the type of loans they took out, their ability to obtain loans, and the larger companies that are well resourced, have good employees, and have strong relationships with their banks.”
Another PlumpJack Group company is Balboa Cafe Partners LP which received a loan of $ 506,799 on April 29, 2020. A commercial data firm estimated in June 2020 that Balboa Café Partners employed seven individuals, but the SBA data associated with the loan application states that they have kept it. 55 employees.
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The PlumpJack group responds
ABC7 contacted the PlumpJack Management Group to clarify how nearly $ 3 million in PPP financing has been spent.
We have received the following statement:
“Like many other companies that have faced severe financial pressure during the pandemic, we used loan money to protect our workers and keep them in action. Our employees and loved ones have relied on these programs to make a living. Gavin Newsom does not belong to the operation. From the companies in any way. And any suggestion. Other than that it’s an unequivocal error, “said Geoff Ned, a spokesperson for the PlumpJack management group.
The governor of Newsom does not belong to corporate operations because his interests are in blind trust. However, he is listed as a founder on the website and his sister Hillary Newsom is listed as president and partner of the company.
According to the governor’s 2019 economic interest statement, Newsom has an ownership interest in eight PlumpJack subsidiaries that have received PPP funding.
CalMatters The governor’s tax returns for 2018 revealed that he and his wife earned $ 1.2 million in wages and investments – most of which stems from his wine and hospitality ventures.
ABC7 contacted PlumpJack for a second time to request payroll records to find out how each of the 14 Villa Encinal Partners employees was paid.
We have received the following statement:
“The Plumpjack Management Group operates within federal guidelines that have been created for COVID-19 SBA loan recipients. These funds have been important in keeping our employees employed and continuing our operations. Any implicit indication that we have done anything outside of the guidelines (or we have it), said Jeff Ned, a spokesperson for the group. (PlumpJack Administration, Loan Forgiveness Request) is not responsible.
The PlumpJack group will have two to five years to file a loan forgiveness application if they choose to do so. This means that the company may not have to repay these loans.
Myriam Barajas, SBA’s 9th District Communications Director, said any company seeking pardon “must certify when applying that it has retained its employees.” “This will include salary records, filing documents, and there is a lot of evidence that these companies have to prove that they paid their employees.”
If the companies don’t ask for forgiveness from the loan, they have to pay it off – but these companies still benefit.
“They were able to take advantage of the very low interest rate that the government was offering,” said Daniel Bryan, executive director of the Government Monitoring Project. “These are one percent loans … It’s basically free money for them.”
ABC7 has contacted the Newsom government for further comments on this story and we have not received a response yet.
In total, nearly $ 16.8 billion in PPP financing has gone to more than 130,000 companies across the Gulf region. The average number of employees retained in companies is 10.
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