3 On Your Side Investigates: Paycheck Protection Under Closer Inspection

3 On Your Side Investigates: Paycheck Protection Under Closer Inspection
Published: Nov. 4, 2021 at 6:47 PM CDT
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JACKSON, Miss. (WLBT) - A months-long 3 On Your Side investigation finds more than $17 million in loans from the federal Paycheck Protection Program flowed to organizations and businesses associated with more than 60 state legislators over the last eighteen months, a handful of which also provided false information to the U.S. government when applying for the money.

The analysis, which did not uncover any evidence of fraud or illegal activity, relied on records from the Mississippi Secretary of State, disclosure documents filed with the state’s ethics commission and public loan data from the Small Business Administration provided by ProPublica.

This year alone, nearly a hundred thousand Mississippians received $2.3 billion in PPP loans from the CARES Act, which provided much-needed financial assistance to business owners.

“The CARES Act was an umbrella act that distributed tons of money. And in each part of that act, people look to try to see if they can get money,” said Acting U.S. Attorney Darren J. LaMarca. “We’ve seen matters in our office now, that pertain to people who never had a business and applied for PPP. People who at one time had a business, but it was no longer a concern, who’ve applied. And then you’ve got those who have a business, but then exaggerate the number of employees.”

Most of those cases -- investigators say -- are legitimate, however.

Rep. Nick Bain (R-Corinth) runs a law firm in north Mississippi that got more than $37,000 in PPP loans.

“It was beneficial; it helped assure that we could pay our employees and help to make sure that they had food on their table for the months that they needed it,” Bain said. “I don’t regret taking that because it did help my employees.”

3 On Your Side researched every House and Senate member -- 174 in all -- and found more than a third either directly received a PPP loan or had a connection to a company that did.

In addition, one statewide elected official -- Secretary of State Michael Watson -- also got PPP money.

Our analysis found the ten highest amounts to these individuals or companies associated with them equaled nearly $14 million alone.

Businesses linked to Rep. Charles Busby (R-Pascagoula) got more than anybody else: $4.6 million.

Big M Transportation -- a business that Rep. Steve Massengill (R-Hickory Flat) works for and his family owns -- got over $3.7 million.

Four businesses tied to Rep. Willie Bailey (D-Greenville) got $2.8 million.

How did we determine whether legislators had connections to businesses or organizations?

If they or their spouse owned a business, were a partner in it or had a stake in it, like a shareholder, that would count as a connection.

Lawmakers listed as registered agents, directors and other high-level positions in an organization’s documents filed with the Mississippi Secretary of State’s Office would also count.

Legislators who were merely employed at a company with no other ties to the business or owner did not.

3 On Your Side also found loans tied to five lawmakers that might warrant a closer look -- two with false information.

Republican Sen. John A. Polk’s company, Polk’s Meat Products in Magee, got more than $750,000 in PPP money.

The secretary of state’s website shows Polk’s Meat Products registered as a corporation since 1975, but whoever applied for this loan listed it as a “sole proprietorship,” according to SBA records.

While a corporation is a legal entity separate from the owner of the business, a sole proprietorship means the owner operates the business and would not apply to entities with shareholders.

It’s unclear why Polk’s company chose this option.

Polk did not respond to multiple requests for comment.

Rep. Earle Banks (D-Jackson) is a shareholder of Peoples Funeral Home, according to his statement of economic interest.

That company got more than $17,000 in PPP funds, but its loan information listed the type of industry as “other management consulting services” instead of what it is: a funeral home.

3 On Your Side initially reached out to Banks through his email listed on the state legislature’s website, but he did not respond.

The representative responded the day after our investigative report aired.

“Management told me that on the application of PPP, there’s no place on there to check off for funeral homes [as the type of industry],” Banks said. “Therefore, they checked off ‘other.’ And I say that probably other funeral homes did the same thing.”

WLBT reviewed more than a dozen other funeral home PPP loans and found that all of them had “funeral homes and funeral services” listed under industry, not “other.”

When we told Banks that, he said his cousin was the one who filled out the paperwork, and he never saw the application before it was sent off.

“He told me that he did not see a listing. Maybe he overlooked it. I don’t know,” Banks said.

Banks also told 3 On Your Side he recently changed his email address and did not see the interview requests WLBT sent.

It’s important to note here that nothing uncovered in this investigation has been deemed illegal or fraudulent, but in a few cases, information provided to the federal government by elected officials was false.

“I don’t think that means that what they did was fraud. It very well could have numerous legitimate reasons, maybe negligent reasons. Maybe it is a reason to inquire further,” LaMarca said.

Neither LaMarca nor FBI Jackson Special Agent in Charge Jermicha Fomby would address specifics that we found.

Click here to see the full list of lawmakers and the PPP loans received by companies associated with them.

“If there’s something that we deem that fits within the violation of it, you know, of the law that leads to fraud, then we conduct the investigation,” Fomby said. “And then those facts are turned over to the US Attorney’s Office, and the U.S. attorney’s office will make a determination regarding prosecution.”

It may sound odd that some legislators -- elected from around the state -- got loans for their businesses.

Being a member of the House or Senate in Mississippi is a part-time job, meaning most, if not all, lawmakers work somewhere else and many have their own companies.

At the same time, lawmakers like Bain expect greater attention paid to the money they borrow.

“We are a bit in a fishbowl and people watch us. We are certainly held to a higher level. And I think it’s imperative that we treat ourselves that way,” Bain said.

3 On Your Side didn’t find anything irregular about Bain’s loans.

Our analysis did reveal that the vast majority of this PPP money doled out -- 80 percent -- went to Republican lawmakers, many of whom have also publicly criticized federal assistance as “handouts.”

Watson took issue with that in a statement he released to 3 On Your Side.

“The PPP program was designed and enacted as an emergency measure to stabilize our economy. As a small business trying to help clients whose businesses were slammed by government interference, it was the responsible thing to do,” Watson said.

Last month, Sen. Chris McDaniel (R-Ellisville) said on social media that “welfare programs will never be more effective problem solvers than local churches, charities and volunteers.”

Months earlier, his law firm took more than $415,000 in PPP money to help them get by, SBA records show.

McDaniel did not respond to emails to his official legislative email address.

After the investigative report aired, McDaniel reached out to 3 On Your Side, saying he had never seen our emails because his official senate inbox has been overloaded with messages.

“PPP loans were designed to provide relief from economic injury caused in large part by the government’s damaging reaction to COVID,” McDaniel said. “It’s not welfare. Instead, it’s the government owing small businesses for the financial nightmare it helped create by shutting down segments of the economy. If the government causes harm to people, it should be held responsible.”

Bain believes each situation varies, depending on the business affected, and said law firms were especially hit hard.

“When you’re not able to go to work, and you’re in a law practice, like ours, or any business where you’re dealing on the public coming through the door, when they’re actually physically unable to do that, it’s a little bit different,” Bain said.

House Speaker Philip Gunn would not comment on specific findings 3 On Your Side shared with his office, but did acknowledge the importance of his members following the law.

“All of our members are expected to abide by the law and should be held accountable by the proper authorities if it is found they are not doing so,” Gunn said in the statement.

Author’s note: An earlier version of this story had a list which indicated two businesses that appeared to be associated with Rep. Scott Bounds received money. Bounds told WLBT that he was not president of the Neshoba County Fair Association when it applied for one loan and was not a stakeholder in Working Solutions, LLC, a company owned by Bounds’ brother that also received PPP money. Bounds told us he was an hourly employee for the LLC and received no benefit from the money. Additionally, our analysis initially found what initially appeared to be Sen. J. Walter Michel receiving PPP money for a business with his exact name. Michel clarified and provided additional records to show his brother owns the business and he did not receive any money from the program.

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