WASHINGTON — More than 40 public companies are pledging to return money to the government’s now that Treasury Secretary Steven Mnuchin is threatening criminal prosecutions for violating the rules of the program.
The
administration has given companies until May 14 to give back money without
penalty. It’s a key test for President Donald Trump’s administration as it
tries to ensure the $600 billion-plus emergency lending program preserve jobs
in an economy .
The
challenge is considerable. The is pushing out unprecedented federal assistance
at a rapid clip, but the pace of the program has raised questions about how
thoroughly applications are vetted.
“You’ve
got to do it both efficiently and responsibly, and it’s hard,” said James
Thurber, a professor of government at American University who founded its
Center for Congressional and Presidential Studies. He said Mnuchin “is using
the bully pulpit to scare companies.”
Loans
given to restaurant chains and the NBA’s Los Angeles Lakers The large loans
left less money available for that applied.
Questions
about the loans have led Mnuchin, a chief architect of the rescue plan, to take
on the role of enforcer. He spoken of criminal prosecution and warned companies
they must reimburse the Treasury if they falsely certified that they needed
federal aid to operate and could not get it elsewhere.
The SBA
also says it will audit every loan exceeding $2 million and if problems are
found, it will withhold the program’s offer to forgive the loan.
“So
anybody that took the money that shouldn’t have taken the money, one, it won’t
be forgiven, and two, they may be subject to criminal liability, which is a big
deal,” Mnuchin said in an interview on Fox Business Network.
According
to the data analytics company FactSquared, had agreed as of Wednesday to return
loans totaling $337.1 million. None explicitly mentioned the possibility of
criminal prosecution as a reason for their decision.
In his
warning, Mnuchin is probably leaning on a section of the U.S. criminal code
that’s been used to prosecute companies and individuals for making false
statements to federal agencies. Among those who’ve felt its sting: homemaking
tycoon Martha Stewart and former Gov. Rod Blagojevich, D-Ill.
A recent
found that at least 147 public companies received $555 million of the
potentially forgivable loans. Some had market values well over $100 million,
and many had executives earning millions annually.
National
restaurant chains — Shake Shack, Ruth’s Chris Steakhouse and Potbelly Sandwich
Shop — are among those that have committed to returning their loans. In
securing the money, the chains had used an exception in the law allowing hotel
and restaurant companies with more than 500 employees to receive help if they
have fewer workers than that in any one location. All three said they could get
money elsewhere.
Other
companies aren’t giving up the money quietly. They blame the administration for
what they call shifting and confusing rules.
The SBA
and the Treasury Department issued new guidance on April 23, after the program
was underway, stating that publicly traded companies with substantial market
value and access to private sources of credit probably would not be certifying
accurately that they qualified.
It was
that change in the guidelines that prompted many of the 40 or so companies
returning the money to do so, they said. The “returners” are out of more than
300 public companies that got an estimated $1.16 billion in loans under the Payroll
Protection Program. Most have not said publicly what their plans are.
Ashford
Hospitality Group and BK Technologies, a maker of two-way radios, criticized
the Treasury Department for the revised guidelines. They said they believed
they qualified under the original rules, then came the revisions creating
“uncertainty” and “confusion.” So they said they were returning the money out
of “an abundance of caution.”
Other
companies are keeping their money. Biolase, a maker of dental lasers that has
not reported an annual profit since 2003, said that “given the current economic
situation” it doubts it could raise money in a stock sale to make up for lost
revenue. As a company with 150 employees, well under the maximum allowed 500,
Biolase believes it qualifies for the loan of just under $3 million that it
received.
“The PPP
was essential in helping maintain Biolase as a viable business moving forward,”
the company said in an email response to an AP inquiry.
Some
legal experts are skeptical of Mnuchin’s threat of criminal penalties. They say
it is not a good way to recover taxpayer money that may have gone to big,
deep-pocketed companies because of the government’s own missteps.
Stephen
Gillers, a professor at New York University Law School who specializes in
government ethics, says criminal punishment of companies “isn’t a promising
route” for recouping money that may have been distributed as a result of the
government’s incompetence.
“Any
prosecution would have to prove that the recipients understood what the
government was really asking with an ambiguous question and intentionally gave
a misleading answer,” Gillers said.
The
small business program opened with $349 billion on April 3. The money was
exhausted in less than two weeks. Congress replenished the program with $310
billion for a second round starting last week.
Rep.
Nydia Velazquez, D-N.Y., who heads the House Small Business Committee, said she
welcomes more scrutiny of the loans. But she said the administration shoulders
some of the blame for the problems.
“It
doesn’t excuse that poor implementation and sloppy rulemaking likely allowed
bad loans to be lent, depriving deserving small businesses of help,” she said.
https://www.breitbart.com/news/us-firms-return-virus-loans-as-treasury-threatens-penalties/
***Troise
reported from New York.
**Follow
Gordon on Twitter at https://twitter.com/@mgordonap
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30/11/1999| |
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