‘Given the many problems with the program, it is imperative American taxpayers know if the money is going where Congress intended…’
(Ben Sellers, Liberty Headlines) The left-wing media hammered Treasury Secretary Steven Mnuchin recently for refusing to disclose “proprietary information” about what businesses had qualified for federal loans through the coronavirus-driven Payment Protection Program.
As it turns out, the scandalous squandering of some $600 billion in small-business loans is even more wasteful than they imagined.
Among those “mom and pop” establishments that may be deemed eligible for restitution: an elite, liberal, New York-based law firm whose powerful clients have included Harvey Weinstein, former Vice President Al Gore and the National Football League.
Boies Schiller Flexner LLP reportedly circulated a memo asking shareholders for permission to seek up to $20 million from the forgivable loan program being run through the Small Business Administration, according to Reuters.
The bicoastal law firm, founded by celebrity–attorney David Boies, would not officially comment on whether it had applied for PPP funding, nor would federal officials confirm it.
However, the firm would seem to have no shortage of disposable income. It once counted Sen. Kirsten Gillibrand, D-NY, among its well-paid partners, whose annual compensation packages generally run seven figures.
The law firm also ranks among the top legal-industry entities in the country for its political donations.
In the 2016 election, for example, it gave more than $1.4 million to individual candidates and parties, according to the Center for Responsive Politics, putting it in the eighth overall spot among law firms.
And those contributions were even bipartisan: Although 99 percent went to Democrats, the remaining 1 percent went to Republicans.
Hardball Tactics and Reviled Clients
In recent months, the firm—which rocketed to stardom two decades ago, despite losing the Bush v. Gore lawsuit to determine the outcome of the 2000 presidential election—has faced a less-than-certain future.
But it has little to do with the health crisis that is impacting many small businesses, and more to do with its high-stakes business decisions—such as the #MeToo stigma it faced for representing Weinstein, now a convicted rapist.
While the firm also represents some of deceased pedophile millionaire Jeffrey Epstein‘s victims, it may have alienated the Left’s more “woke” contingent with its long list of wealthy corporate clientele.
In May, Boies Schiller was hit with a major malpractice lawsuit, to the tune of $29 million, due to its hardball tactics.
And in late April, 15 partners at its West Coast branch in Los Angeles announced that they were leaving due to internal friction over one of Boies Schiller’s recent mergers.
That included a partner representing clients in the recent college-admissions scandal, as well as one who represented Chevron, according to Business Insider.
The exodus led the firm also to cut a number of its lower-level staff members—including associates, paralegals and legal assistants—during the peak of the coronavirus lockdowns.
“Now that those same partners have decided to leave the Firm … the Firm does not have a need for staffing at current levels and believes it is appropriate that those same partners take responsibility for their associates and staff,” explained a letter from BSF’s director of human resources, Cynthia M. Schuler.
According to the PPP guidelines, that could make it ineligible for loan forgiveness without additional legal wrangling.
“Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels,” says the program’s website. “Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.”
Calls for Transparency
As of 10 weeks since the Paycheck Protection Program was launched, the Small Business Administration estimated it has processed 4.5 million loans worth $511 billion.
Media outlets including the New York Times and Washington Post have sued, trying to force the SBA to make public the list of recent loan beneficiaries under the provisions of the omnibus CARES and HEROES acts.
Those and other economic stimulus bills have added trillions in new debt that will likely yield serious inflationary consequences down the road if they haven’t already done so.
The newspapers argued that the list of beneficiaries is considered public information since taxpayers are subsidizing them with public funds.
Indeed, the SBA has made the names of its loan beneficiaries public in the past, prior to the infusion of extra funding that established the current PPP.
It says it will resume its public reporting once the funding has ended. But some partisan critics on both sides of the aisle have demanded more transparency and accountability.
“Given the many problems with the program, it is imperative American taxpayers know if the money is going where Congress intended—to the truly small and unbanked small business,” Senate Minority Leader Chuck Schumer said Friday, according to Time.
“The administration’s resistance to transparency is outrageous and only serves to raise further suspicions about how the funds are being distributed and who is actually benefiting,” he added.
Likewise, on the Right, some expressed outrage that tax-subsidized COVID funding could be going to pro-abortion groups like Planned Parenthood, as well as colleges and universities that have sizeable endowments they may tap into.
Fiscal-hawk conservatives and libertarians joined the criticism alongside far-left politicians like Rep. Alexandria Ocasio–Cortez, D-NY, but their pro-business counterparts defended the eligibility of chains.
Mnuchin told the Senate Small Business Committee that the current list would be kept private and confidential after several companies were publicly shamed for applying and pressured into returning the funds.
Restaurants chains including Shake Shack, Kura Sushi and Ruth’s Chris Steakhouse were among those told they had no business receiving for the government-backed, low-interest forgivable loans.
Defenders of the program noted, however, that amid the government-mandated business closures, the low-wage employees of franchises felt just as much pain as those running independent establishments.
“[Y]ou could make an argument that if my job was lost, the size of my employer doesn’t make any difference to me. I’m out of work,” McConnell said in April, according to the New York Post.
“So it’s an interesting debate,” he continued. “We’re feeling our way along here, we’re trying to do the best we can to get money to our people and to our small businesses.”
On the upside, should the lawsuits press onward, at lease Mnuchin and the SBA know where they can get some good legal representation.