Newsom under fire over PPP loans to businesses owned by company he founded

Just weeks after he was caught without a mask at a crowded dinner party in violation of his own guidelines, Democratic California Gov. Gavin Newsom now seems to have landed himself in a more serious COVID-related scandal.

According to recent reports, several companies partially owned by Newsom received millions of dollars in loans from the federal government’s Paycheck Protection Program (PPP).

Discrepancies in the numbers

According to The Daily Wire, the loans, established in the first coronavirus relief package, were designed to help small businesses maintain payroll expenses throughout the widespread shutdowns caused by the pandemic.

These companies are part of the PlumpJack Group, a hospitality management firm that Newsom founded in 1992, The Daily Wire reported. The businesses include wineries, bars, hotels, and restaurants.

Local reporters, however, uncovered evidence that the companies’ total haul in PPP loans amounted to much more than previously thought.

Local ABC affiliate KGO noted that early data from the Small Business Administration “showed the PlumpJack Group received up to $350,000 worth of PPP loans,” but subsequent reports showed an overall amount of nearly $3 million.

The biggest amount went to Villa Encinal Partners LP, a Napa-area winery, which received a reported $918,000 in loans.

Raking in the dough

Despite the nearly seven-figure influx of cash, the business itself reportedly has just 14 employees. As KGO pointed out, “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.”

To add more perspective, the average PPP loan for a California firm with 14 employees was $128,000 — or $790,720 less than Villa Encinal Partners LP.

In fact, the only other winery in the state to receive a similar sum in PPP loans was Oak Knoll Farming Corp., which has 79 employees, not 14. On average, California businesses that received more than $900,000 in loans had around 148 employees.

Nevertheless, the PlumpJack Group is defending its actions as justified and necessary given the toll of the ongoing public health crisis.

In a statement to The Daily Wire, a company spokesman said: “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.”

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