Trump’s Double Standard: Millions for Corporations Troubled Before COVID-19 Crisis, Zilch for Distressed States
Watchdog Group Analysis Finds Administration Bailed Out Large Companies with ‘Financial Issues’ Long Before Coronavirus Outbreak
WASHINGTON, D.C. – In recent days, President Trump, Treasury Secretary Mnuchin, and their allies in the Senate have taken a hardline stance against additional aid for states that are stretched to the breaking point amid the historic health and economic crisis. Their message to a bipartisan coalition of state governors is clear, per Secretary Mnuchin: “[We]’re not going to bail out states that had financial issues ahead of time.”
But a new analysis from government watchdog Accountable.US, as part of its ongoing TrumpBailouts.org project, shows a glaring double standard at play given the Trump administration’s handling of the SBA Paycheck Protection Program. They’ve chosen to award tens of millions of dollars in forgivable SBA PPP loans to publicly traded-companies that could easily be argued were having “financial issues” before the health crisis began.
For instance, Town Sports International Holdings, a diversified holding company, was running a $178 million debt before the pandemic began. That apparently did not clear the administration’s bar for having ‘financial issues’ because they approved a $2.7 million forgivable loan that was meant for hurting small businesses. And now they demand impeccable balance sheets from the states. Does Mnuchin think previously troubled corporations are more worthy of government assistance than average people in states and cities across the country?
“The Trump administration has had no trouble finding money to bail out large companies, no matter what kind of problems they were having before the health crisis,” said Derek Martin, spokesman for Accountable.US. “Yet they balk at aid to states that would help avoid painful decisions like laying off firefighters, cops and other essential frontline workers in the pandemic response. The administration’s double standard — unreasonable requirements for hurting states but zero accountability for corporations — will only expedite a depression.”
Added Martin: “It’s particularly rich that the White House thinks it can judge others on fiscal responsibility after blowing up the deficit by nearly $2 trillion with their tax cuts for millionaires and giant corporations.”
KEY FINDINGS FROM THE ACCOUNTABLE.US ANALYSIS:
- $2.7 million went to Town Sports International Holdings, parent owner of gyms such as the New York Sports Club. The company collectively accumulated $178 million in debt before the pandemic. And it was attempting to purchase a spin studio to help solve its debt issues, weeks before Town Sports received its PPP relief.
- $6.3 million went to Dawson Geophysical, fresh off a 2019 loss of $15.2 million. Despite their performance, Dawson executives received $2.8 million in compensation. Beyond the raw numbers, an analysis by Simply Wall St. found CEO Stephen Jumper was “well over the median amount” paid for CEOs in his industry.
- $2.1 million went to entertainment company Cinedigm Corporation. But the financial situation of Cinedigm was clear before the pandemic – from 2015 to 2020, Cinedigm’s share price decreased 97-percent.
- $7.2 million went to Singaporean company WAVE Life Sciences (money which the company decided to return, following criticism). In January 2019, WAVE Life Science’s presented a share offering, which financial analysts said indicated a lack of confidence in their financing structure and was a potential indicator the company’s long-term pharmaceutical plans weren’t going to work.
- $100,000 went to GulfSlope Energy. This followed a net loss of $13.7 million in the year 2019 – down from a net loss of $2.6 million in 2018 – and over 6 years where the company borrowed money from CEO John Seitz to stay afloat. In 2015, Seitz alone proved insufficient, and the company borrowed an extra $267,000 from COO Ron Bain.
- $196,000 went to NioCorp Development. Per the company’s own SEC filings, NioCorp had lost money since the company was founded, expected this to continue, and stated their own “substantial doubt” about the ability of the company to continue to operate and pay their bills.
- $1.94 million went to EnServCo. EnServCo had “incurred significant net operating losses” since 2018, was in breach of two financial covenants, and stated their continued existence depended on a refinancing of a 2017 credit agreement. This resulted in “substantial doubt” about the ability of the company to continue.
- $6.5 million went to FuelCell Energy. Per their SEC filings, FuelCell Energy was not a successful company, citing a “history of net operating losses.” The losses were enough that FuelCell Energy said it had not paid state or federal income taxes in “several years.” This was despite FuelCell holding a market value of $440 million – and this was despite FuelCell finding the money to spend $490,000 on lobbying expenses during the Trump administration.