At least eight companies partially owned by California Gov. Gavin Newsom (D) received millions of dollars through the Paycheck Protection Program, according to a new report.
PlumpJack, a wine business Newsom started in 1992, received nearly $3 million in PPP loans, according to a report from KGO-TV. The Small Business Administration's loan program "helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis."
PlumpJack Management Group LLC includes five restaurants and bars, four Napa Valley wineries, a ski resort, and retail establishments, according to the company. At least nine companies affiliated with the PlumpJack Group received PPP loans, the report states.
One of the companies featured in the report is Villa Encinal Partners Limited Partnership, which has 14 employees and received a loan for $918,720 on April 14, 2020, just 11 days after the lending program launched, according to SBA data. Villa Encinal Partners Limited Partnership is linked to the PlumpJack winery in Napa, according to state records.
The Small Business Administration requires companies to spend 60% of PPP loans on wages.
"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," KGO-TV stated.
California wineries that received more than $900,000 in PPP funding had an average of 148 employees, according to the report.
Analysis from the report found that small businesses in California with 14 employees received an average PPP loan amount of $128,000; Villa Encinal Partners LP received seven times that amount.
"It's unexpected for a 14 employee organization to get nearly $1 million," said Sean Moulton, a senior policy analyst with the nonpartisan Project on Government Oversight. "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.
"It seems to be a small business but it got a lot of money," Moulton added. "I'm not sure how the company justifies taking that much money when there were a lot of companies looking to get assistance. 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."
Moulton, who specializes in tracking PPP funds, said the companies could have been given preferential treatment "not because the governor asked for it, but because of all the connections that exist."
In 2018, Newsom placed his ownership interests in the PlumpJack Group into a blind trust. The Democratic governor of California is listed on the PlumpJack Group website as the founder, and his sister Hilary Newsom is listed as the company's president and partner.
The PlumpJack Management Group released a 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.
Jesse Melgar, Newsom's communications director, responded by saying, "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."