The Celebrities and Politicians Who Profited Off of PPP Loans


Show Notes

 

Today’s topic is passion. And free stuff.

Everyone likes getting free stuff. Take our co-host Eric Eggers, for example, who admits to waiting five minutes while shopping at the local big-box store to score a free hot dog. But the true connoisseurs of free stuff seem to be rich people in Hollywood.

Free stuff flowed from Washington DC during the pandemic through a program called the Payment Protection Program. Passed with bipartisan support and run through banks, the program has cost US taxpayers $953 billion. The program was broadly popular because government shutdowns imposed during the Covid pandemic prevented many businesses from operating. The program was meant to lend money to small businesses to pay their employees while they were not able to work. Most of these “loans” have since been completely or mostly forgiven.

Would the program have passed if lawmakers knew the top beneficiaries would include celebrities like Tom Brady, Khloe Kardashian, Reese Witherspoon, Kanye West, Jay-Z, Jared Kushner, Diddy, and Nancy Pelosi’s husband? Eric and host Peter Schweizer give the details on the latest episode of The DrillDown podcast.

Businesses of all sizes took advantage of the PPP program, and it is fair to point out that many businesses did have to cease operations because of the government-ordered lockdowns of “non-essential” businesses. The program was supposed to allow those businesses to pay their employees with borrowed money from the government during the forced closures.

Several famous rock bands were bailed out, which is understandable given that the government banned large gatherings like concerts. According to Rolling Stone, “With concert tours almost completely shuttered through the ongoing COVID-19 pandemic since March, some of the biggest acts in music — including the Eagles, Pearl Jam, Guns N’ Roses and Green Day — have received federal funding to support their crews for any current and future postponed tours, according to data released Monday by the Small Business Administration and Treasury Department.”

But why would Kanye West, with a personal net worth of $2 billion, need to borrow government money for his “Yeezy LLC,” based in La Palma, California? The company borrowed $2,363,585, with $1,772,689 spent on payroll for 106 staffers.

Why would Jay-Z (worth $1.3 billion) need a loan from the government for two associated companies? Malibu Entertainment is linked to his streaming platform, called Tidal, and took $2,106,398 to secure 95 jobs. The loan was mostly forgiven.

Donald Trump’s son-in-law Jared Kushner’s family got three PPP loans for various businesses: Observer Holdings, LLC got $800,407; Princeton Forrestal, LLC, a hotel business, got $1,569,977; Esplanade Livingston, LLC, a real estate holding company, got $630,735. These loans were all forgiven.

The same happened for the other named celebrities on the Daily Mail’s listing.

After the first round of PPP loans, up to 90 percent of ethnic minority business owners were unsuccessful at getting the loan and were at the ‘end of a line’, according to an Associated Press survey, which showed a disproportionate amount of white people in rich areas being approved for a loan. A study from the University of Texas estimated that about 15 percent of claims made for PPP funds – $76 billion – were fraudulent. President Biden has since pledged to go after those fraudulent loans.

As Peter says on this week’s show, the reason for all this is that, just as they do with their taxes, wealthy people can hire smart lawyers and accountants to take advantage of these kinds of one-time programs, while small businesses struggle to do the paperwork. “These programs are ostensibly designed to help ordinary Americans, but ultimately they’re put together in a way not to help a little guy, but to help the well-connected person,” Peter says.

Eric continues, “the operational thesis of what we do here at the Government Accountability Institute is to explore and demonstrate the ways in which (counter to the popular narrative) big business and big government are in fact, business partners… Actually, in one of his songs, Jay-Z says ‘I’m not just a businessman. I’m a business, man!’”