SACRAMENTO — Companies affiliated with California Gov. Gavin Newsom 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 newly released information from the U.S. government.
Nine businesses tied to Newsom’s PlumpJack Group split 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 put his business holdings into a blind trust before he took office last year and so would not have participated in the decision to obtain the loans.
It was a surprisingly large loan, said Project On Government Oversight senior policy analyst Sean Moulton. The nonpartisan independent watchdog is tracking $1.6 trillion in overall pandemic relief spending, with the Paycheck Protection Program the largest single program.
“It seems to be a small business but it got a lot of money. I’m not sure how the company justifies taking that much money when there were a lot of companies looking to get assistance," Moulton said. "You hope they’re using it wisely because there’s an opportunity cost there — that money didn’t get used for another small business that may be out of business now.”
He said Newsom “certainly runs the risk of encountering some public perception problems" over the loans.
That is not something the governor needs now. He already faces criticism for sending his children to private schools for classroom learning as most public schools remain shuttered and for dining in violation of his own rules with 10 lobbyists and others at the pricey French Laundry restaurant in Napa in early November.
PlumpJack spokesman Jeff Nead said the money was for 358 employees spread across all the affiliated businesses.
Like many businesses imperiled by the pandemic, the companies used the money “to protect our workers and keep them employed.” He said the group is operating within federal guidelines and the funds “have been critical in keeping our staff employed and continuing our operations.”
One PlumpJack company, Villa Encinal Partners Limited Partnership, received the largest loan, $918,720, yet lists just 14 employees. For the loan to be forgiven, the partnership must have spent 60% of the money on three months' worth of wages, which pencils out to annual salaries approaching $160,000 per employee.
Dividing 60% of the total among 358 employees brings a much smaller $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's not clear if the company or its affiliates will seek to have the loan forgiven, if they spent that much on salaries, or if they overstretched on their loan applications in the frantic early months of the program, Moulton said, in part because federal reporting requirements are so lax.
“The larger loans, I’ve always struggled to figure out how they fit into the overall idea behind the Paycheck Protection Program," he said. "It was all supposed to be about small businesses, it was supposed to be about keeping people employed, keeping their paychecks coming, and yet we were giving out these millions and millions of dollars.”
Newsom has been criticized by many in the business community for his aggressive shutdown orders. He in turn repeatedly has said he is a proud small businessman and entrepreneur and understands the hopes and dreams tied to business ownership and the anger over having the government restrict or forbid operations.
Newsom developed PlumpJack after he helped found it as a wine and spirits shop in San Francisco in 1992.
“Before taking office, the Governor transferred title and control of the businesses he founded to a blind trust, a step that goes beyond anything required by law,” Jesse Melgar, Newsom's communications director, wrote without elaborating.
An Associated Press review of the SBA's initial loan data in July found the governors of at least eight states and both political parties were among political leaders who had ties to companies that received loans through the program.
PlumpJack Management Group LLC, Newsom’s winery and hospitality company, then reported receiving a loan worth $150,000 to $350,000, and reported retaining 14 jobs thanks to the loan. The company is part of a portfolio of brands that include a resort hotel at the Squaw Valley ski resort, five restaurants and bars, four Napa Valley wineries, a sports retailer and more.
Private banks administered the loans to speed their distribution, which raises its own questions, he said.
“An organization in part founded by the governor, they might be given special preferential treatment — not because the governor asked for it, but because of all the connections that exist,” Moulton said.
That's in part why he objects to proposals in Congress to simply forgive the loans, no matter how they were used.
“This is a useful case to focus on because of some of the high-profile people involved, but I think this is playing out a thousand-fold across the country," Moulton said. "There are a lot of companies that got money that if you look close enough at it may not make sense with the employment that they have.”
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2020: SALUTING OUR NAPA COUNTY VETERANS
2020: Saluting our Napa County veterans
2020 turned out to be a big year for stories of veterans in Napa County, starting with the fact that we had at least five WW II vets turn 100 this year. We also brought back our popular They Served With Honor series and had a variety of stories of veterans being honored. Here's what the Year in Veterans looked like.
Longtime Napa resident Howard Lahr kept troops supplied through some of the toughest campaigns in the Pacific.
Efforts continue to have the U.S. government take over maintenance of the oldest military cemetery on the West Coast.
Seven submarines built at Mare Island Naval Shipyard during World War II were lost at sea.
How many Napa County veterans are turning 100 this year? More than you might think, Editor Sean Scully says.
Jessica Edens picked an Army career that could lead to a civilian job when she got out.
St. Helena's Newell Erickson served in a MASH unit in Korea.
Serving in Iraq left Dustin Harnois a changed man. Now a civilian, he is searching for a way of giving back.
Napa County man secured the communications for Army in war zone.
100-year-old Napa native Hal Halloran looks back on his life and service in World War II.
Family paraded by Emory Lee Drake's retirement home in Napa, using social distancing to safeguard the centenarian's health.
Greg Lake, 75, regularly drives for Molly’s Angels, taking seniors to their doctor appointments.
Fresh out of military training, a young kid from New York is sent to the Philippines during the last days of WWII to round up Japanese prisone…
Napa's Jim Crist was a mechanic and photo tech, helping support the Allied bombing campaign in Europe.
Howard Halla of the Yountville Vets Home is publishing his memoir of WWII bombing runs in China.
Catch up on Napa County's top news stories of 2020
In case you missed it, here is a look at the top stories of 2020.
It's been a turbulent year for the wine industry, which between intermittent wildfires, smoke events and pandemic lockdowns has attempted to remain open for business.
The Hennessey and Glass fires made 2020 a year to remember for all the wrong reasons.
It was the year when schools and universities went dark — and their denizens were left to teach and learn, online and indefinitely separated from their friends and peers.
COVID-19 has catapulted county government into the spotlight.