According to a television station in the Bay Area, several companies partially owned by California Democratic Gov. Gavin Newsom collectively received nearly three million dollars in Paycheck Protection Program loans intended to keep employees on the payroll during the COVID-19 recession.
KGO News’ investigative unit, the ABC7 I-Team, reports it “discovered discrepancies” that “appear to raise questions” about how much relief went to businesses under the umbrella of the PlumpJack Group, a hospitality management company founded by Newsom in 1992. Its properties include wineries, bars, restaurants, and a boutique hotel.
Gov. Newsom placed his ownership interest in the organization into a blind trust in 2018, meaning he would have no involvement in its business decisions while governor. Still, Hilary Newsom, the governor’s sister, currently serves as the group’s president. Its website boasts, “PlumpJack Group has established itself as the signature Northern California lifestyle and hospitality brand.”
His businesses got millions & stayed open, while CA small businesses were forced to close, struggling to qualify for the loans he so easily obtained. Ya think it has anything to do with the fact San Francisco billionaire, Gordon Getty, is an investor? Nah! https://t.co/EPzLJWXDC2
— Jim Patterson (@JimPatterson559) December 9, 2020
As the I-Team reported:
While data released by the Small Business Administration earlier this year showed the PlumpJack Group received up to $350,000 worth of PPP loans, newly-released data by the SBA indicated PlumpJack businesses – including wineries, bars, and restaurants – received more than eight times that amount at nearly $3 million altogether… ABC7’s analysis found at least nine companies affiliated with the PlumpJack Group received PPP loans.
One of the companies on the list is Villa Encinal Partners Limited Partnership. State records indicate the name is traced back to the PlumpJack winery in Napa. San Francisco billionaire Gordon Getty is an investor. According to SBA data, the company received a loan for $918,720 on April 14, 2020.
ABC7 cited data that indicates Villa Encinal Partners LP retained 14 employees with those funds. The outlet crunched the numbers, adding: “Hypothetically, if divided equally, each of them would’ve received around $40,000 to cover their payroll over a period of three months – that would amount to an annual salary of around $160,000 per employee.”
Recipients of PPP loans are eligible for forgiveness if they use at least 60% of the funding to keep workers on the payroll. If the PlumpJack Group decides to pursue loan forgiveness, it will have two to five years to apply. Otherwise, PlumpJack will be required to repay the loan at a fixed 1% annual percentage rate.
The outlet presented its findings to Sean Moulton, a senior policy analyst with Project on Government Oversight (POGO), an organization that tracks PPP loans.
“It’s unexpected for a 14 employee organization to get nearly $1 million,” Moulton told ABC7. “The purpose behind this program was to save entry-level jobs, people going in and working on that paycheck. That was what we put this out there for, to stop unemployment.”
One of the companies partially owned by Newsom — Villa Encinal Partners — received a $918,720 #PPP loan on April 14, 2020 indicating 14 employees were retained. 7X more than the avg.
— Stephanie Sierra (@StephanieABC7) December 9, 2020
According to ABC7:
The average small business loan for California companies retaining 14 employees was roughly $128,000. Yet, the PlumpJack entity Villa Encinal Partners LP – that according to SBA data also retained 14 employees – received more than seven times that amount at $981,720.
ABC7’s analysis found the only other California winery that received close to the same loan amount as Villa Encinal Partners LP is Oak Knoll Farming Corp, which retained 79 employees – more than five times as many as Villa. The average number of employees retained for every California winery that received more than $900,000 worth of PPP funding is 148.
Meanwhile, several small businesses across the country that desperately needed financial support struggled to obtain PPP loans. According to the Los Angeles Times, the program stopped taking applications in August after directing $68.6 billion to 623,000 California companies.
ABC7 said it contacted the PlumpJack Group “for clarification on how the nearly $3 million of PPP funding was spent.”
Jeff Nead, a spokesperson for the organization, provided the following statement: “Like many other companies facing extreme financial duress during the pandemic, we used loan monies to protect our workers and keep them employed. Our staff members and their loved ones have depended on these programs for their livelihoods. Gavin Newsom is not affiliated with the operation of the companies in any way. Any suggestion otherwise is unequivocally false.”
The outlet said it also reached out to Gov. Newsom for comment but has not received a response.