Rags To Riches - A Stacey Abrams Story

Show Notes


Georgia politician Stacey Abrams leveraged her public service in state government to make millions of dollars for a company she partially owned, new research from the Government Accountability Institute (GAI) shows.

Abrams’s company, NOW Corp., received special treatment from a Georgia state department that administered federal funds, despite her assurances in 2018 during her run for governor that she had “walled herself off” from the company while she was the leader of the Democratic party in the state legislature.

Joining hosts Peter Schweizer and Eric Eggers on the latest episode of The Drill Down podcast is GAI distinguished fellow and former congressman Jason Chaffetz, who was chairman of the House Oversight Committee, to discuss GAI’s latest finds.

In 2013, when NOWaccount (as it was then known) had just $100,000 in annual revenue, the Georgia Department of Community Affairs (DCA) helped the business tailor a federal loan program which figured to make the company more profitable. The company later tried to persuade other states to adopt a similar program – states where Abrams was not in the legislature – but none did.

As Jason writes in an op-ed for Fox News, NOWaccount’s model was to purchase receivables (at 97 cents on the dollar) from businesses that have not yet been paid for services provided. NOWaccount paid the businesses in cash in return for the right to collect the funds due, collecting the remaining three percent as their fee. The financial success of Abrams’s company was, in part, based on minimizing the number of customers of each business that defaulted on their payments.

However, the money involved was provided through a federal program created during the Obama administration, in the wake of the 2008 economic crisis, to help small businesses grow. NOWaccount would grow indeed, by lending businesses money upfront for invoices for which the businesses were awaiting payment. NOWaccount secured state contracts in 2014 that allowed it to use federal taxpayer dollars to replenish loans left unpaid, as was previously reported by the Atlanta Journal-Constitution in 2018.

This arrangement was so unusual that the Harvard Business School did a case study on the scheme, quoting John Hayes, one of Abrams’s fellow partners, as explaining that it “allows us to scale faster because the government is in a first-loss position, not our lenders.”

NOWaccount set up two entities as non-profit organizations to lend the money, and those entities would be reimbursed by taxpayer dollars whenever the loans were not paid, according to Jason’s article.

In 2018, when she ran unsuccessfully for governor, journalists asked Abrams about this business relationship, which began in 2010 when she, along with Hayes and Lara O’Connor Hodgson created the company. She told reporters at the time that she had received a verbal opinion from the Georgia Attorney General’s office that her ownership was not a deterrent to NOWaccount’s involvement with the state contracts for that program, as well as assuring them she had “walled herself off” from the company’s business arrangements.

Through a Freedom of Information Act request, GAI obtained the company’s application to that program. Despite her claim to have “walled herself” from the business, the application submitted to the state DCA by the company lists Stacey Y. Abrams as a “key manager” of the company and provides a one-page biography of her in it. (See the actual document here.)

GAI began to ask questions after the Associated Press reported last month that Abrams’s net worth is now $3.17 million – about 3,000 percent more than her net worth of $109,000 when she first ran for governor in 2018. Back then, she was reporting liabilities including $54,000 to the IRS, $96,000 in student loan debt, and $83,000 in credit card balances. All of this has since been paid off.

After she rose to national prominence following her unsuccessful gubernatorial run, she has earned money through media appearances, speeches, and books, many of which have focused on her allegations of threats to the democratic process of elections. She has never conceded her defeat in the 2018 race, claiming instead the election was “stolen” through “voter suppression.”

As Jason tells the co-hosts, “I think the concern here is that it appears Stacey Abrams, a government official in the state legislature, received special treatment related to her private business.”

As Peter agrees, “it’s hard not to see this as a back-scratching arrangement.”

Jason concludes, “It just rings bells [similar to] other problems and scandals that we’ve had. I think she has a lot of questions that she needs to answer.”