Florida Democrats’

$780K
“Erroneous”
PPP Loan

This spring, Florida Democrats applied for a PPP loan using the Florida Democratic Party Building Fund, Inc. and were granted at least $780,000. When Congress passed the CARES Act, they explicitly excluded political parties from receiving these loans. Using publicly available records, official federal and state rules and statutes, media accounts, and statements made by Florida Democrat Party officials, lawyers and staff, what follows is an account of how a major party managed to funnel taxpayer money to their political war chest.

“FDP has blamed the SBA, they have blamed the lender, leading Democrats have blamed party leaders, yet no one has taken responsibility for what has turned out to clearly have been a calculated plan that backfired.”  

– Florida Politics  | Sept. 17, 2020

$780K

Taxpayer Dollars Awarded Meant to Benefit Small Businesses

5

Separate Bank Transfers from One Entity to Another

100

Employees Claimed That Never Existed

5

Questions that Demand Answers

Five Unanswered Questions

1. Why aren’t Florida Democrats calling for the loan application’s release?

2. What jobs was the loan meant to save?

3. Why hasn’t party leadership referred this matter to their audit committee for review?

4. Who authorized the loan application process and who certified, under penalty of law, that the application was true and accurate?

5. Why would you report returning a loan to a bank that was not the lender of the funds?

Read the Florida Politics article.

To Understand, You Must First

Follow the
money

March 27, 2020

Paycheck Protection Program Announced

  • Landmark legislation passed to provide small businesses with forgivable loans to help keep their doors open and their workers employed during the Pandemic.
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April 2020

Loan Application

  • Florida Democrats applied for a PPP loan using the Florida Democratic Party Building Fund, Inc

A Closer Look

Who Applied for the loan?

Florida Democrats applied using the Florida Democratic Building Fund, Inc. However, Florida Democratic Building Fund, Inc. was NOT eligible. The only non-profits eligible were 501c3 organizations. They had no employees, but listed the number of employees in another entity and used their payroll data from the second entity to justify the loan to the first.

Why this Matters

That looks like bank fraud.

The Organization Matters

Why Use a Different Entity?

They applied for the loan using the Florida Democratic Building Fund, Inc. and transferred all of the money to a political party. They would have claimed the loan was to protect the paychecks of building fund employees, yet they sent the money to a different entity – an ineligible entity – and claim the money was to pay the party’s employees in multiple news articles.

Read More

In this Miami Herald article. 

Why They Were Ineligible

A Closer Look at the Rules

“Paycheck Protection Program rules posted April 15 on the online federal register state that businesses identified by the Small Business Administration as being generally ineligible for loans from the agency would also be considered ineligible for PPP loans. Some of those regulations have been challenged or modified. But the SBA regulations that prohibit businesses primarily engaged in political or lobbying activity” from receiving loans through the agency were upheld April 21 by a federal judge in Washington, D.C., after the American Association of Political Consultants sued to overturn the restrictions under the federal rule.”

– ‘They Made a Mistake.’ Florida Democratic Party will return PPP loan, blames SBA
Miami Herald  |  July 9, 2020

In order to apply for a loan, you must provide the name of the entity, federal employer ID, number of employees and average monthly payroll. Those numbers are used in the formula to conclude how much money an entity can receive.

 

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APRIL 15, 2020

Loan Approved

  • The Florida Democratic Party Building Fund, Inc., claiming it was in the public relations industry, received at least $780k from the Small Business Administration through the Paycheck Protection Program. Source

Florida Democrats applied for a PPP loan using the Florida Democratic Party Building Fund, Inc. and were granted at least $780,000. SBA spreadsheet says it was between $350k and $1m.

“What tax status does the FDP claim it has for its building fund? The Florida Democratic Party Building Fund, Inc. is a separate legal entity from the Florida Democratic Party. What federal employer ID did they use for the PPP loan? According to the Annual Report filed by the building fund in January, the building fund does not even have a federal employer tax identification number which is a MUST to be an employer,” she wrote. 

Nancy H. Watkins, CPA
Questions Raised Over How Florida Democratic Party Scored Paycheck Protection Program Funds
FLORIDA POLITICS  |  July 7, 2020

From One Entity to Another

Money Changes Hands

After receiving a lump sum from the taxpayer-funded program, they  transferred the money from the Florida Democratic Building Fund, Inc. to the Florida Democratic Party over several days. They took the money from the entity that applied (which had no employees) and gave to an entity that would never qualify, no matter how many employees, because it is a political party. 

April 24, 2020

$200K Transferred

  • $200,000 was transferred from the Florida Democratic Party Building Fund, Inc. to the Democratic Committee of Florida
April 27, 2020

$200K Transferred

  • $200,000 was transferred from the Florida Democratic Party Building Fund, Inc. to the Democratic Committee of Florida

April 28, 2020

$200K Transferred

  • $200,000 was transferred from the Florida Democratic Party Building Fund, Inc. to the Democratic Committee of Florida
April 28, 2020

$150K Transferred

  • $150,000 was transferred from the Florida Democratic Party Building Fund, Inc. to the Democratic Committee of Florida

April 29, 2020

$30K Transferred

  • $30,000 was transferred from the Florida Democratic Party Building Fund, Inc. to the Democratic Committee of Florida

A Closer Look

How the Money Changed Hands

In total, the Florida Democratic Party transferred $780k from the Florida Democratic Building Fund, Inc. into their Federal account (Democratic Executive Committee of Florida (C00005561) in five chunks from April 24 April 29. Interestingly, the banks didn’t fund PPP loans in chunks, but as single amounts. 

Why this Matters

The banks and the federal government call that “structuring.”  Structuring is illegal.

May 19, 2020

Federal Filing

  • The Florida Democratic Party did not report that the proceeds were deposited from their building fund.  They reported the money as being loaned by CARES. CARES is NOT a legal entity. The money was provided either by the bank directly (which it was not) or by the bank to the Florida Democratic Building Fund, Inc., which transferred it to the Democratic Executive Committee of Florida (which is likely what happened). Source

 Florida Democrats reported they received $780K in CARES money on their report April Federal Election Commission (FEC) filing submitted May 19, 2020. CARES is an acronym for a piece of legislation – The Coronavirus Aid, Relief, and Economic Security (CARES) Act. It is not an entity.

A Closer Look

FILING A FALSE REPORT

When they reported the proceeds on their Federal report, they didn’t accurately report the entity that gave them the money.  CARES is not an entity. CARES is an acronym for a piece of legislation – the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This means they lied on their Federal Election Commission report and the lie is still in place.

Why this Matters

Lying on an FEC report is illegal.

Florida Democrats Scramble to Move Money

From Exposure
to Cover-up

 

July 6, 2020

PPP Loan Receipients Disclosed

  • Among those listed was the the Florida Democratic Party Building Fund, Inc.
July 8, 2020

Florida Democrats to Return PPP Money Amid Scandal

  • Politico

July 9, 2020

ARTICLE: More questions emerge over Florida Democrats’ Paycheck Protection Program Loan

  • Florida Politics
July 9, 2020

ARTICLE: Cerabino: Florida Dems pay the price for free-money gambit

  • Palm Beach Post

July 14, 2020

ARTICLE: Florida Democrats took coronavirus aid. Now they face a reckoning

  • Politico

 Florida Democrats reported five separate expenditures made on July 15, 2020 to Hancock Bank as a Loan Repayment in their Federal filing dated August 20, 2020 .

“Forget the legality for just a second and consider what should have been a huge ethical dilemma,” Pizzo said. “They are taking financial resources from someone who might have food or housing insecurity in the middle of a pandemic. I don’t know who possibly thought that was a good idea.”

– Sen. Jason Pizzo
“Florida Democrats took coronavirus aid. Now they face a reckoning”
Politico  |  July 14, 20220

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July 15, 2020

Money is Shifted…Again

  • On July 15, 2020, the Democratic Executive Committee of Florida shifted money five times to Hancock Bank – not the entity the received it from – describing each as a “loan repayment.”

In May, Terrie Rizzo, the chair of the Florida Democratic Party, blasted PPP as a “disaster” that “funneled” money to large corporations. But it then came to light that the Democratic Party itself had received one of the loans.

The party in late April received more than $815,000 in PPP loans, federal campaign records showed, even though political parties were supposed to be ineligible for the program. Republicans — and many leading Democrats — railed about the party’s PPP loan when it was revealed. Party leaders quickly said they would return the funds, and campaign records show that the money was repaid in mid-July.

– “Florida Democratic Candidates Hounded Over PPP Loans
Politico

A Closer Look

How the Money Impacts Elections

So, by nature of the fact that the money was deposited into their Party account it WAS used to influence elections. Further, during the 83 days the money was in the Party account (4/24/2020 – 7/15/2020) they made payroll 6 times (4/30, 5/15, 5/30, 6/15, 6/30, 7/15). 

Why this Matters

Political parties were explicitly excluded from PPP eligibility. When Florida Democrats transferred the money to the Party, they very clearly intended to use it to impact elections. 

Now You May Be Wondering,

Was this an accident?

 

They Consulted with Lawyers First

“Yep, it’s pretty straight forward. The government made emergency funding available for employers to keep staff employed. We applied for the funding after consulting our lawyers and informing folks at the DNC. We filled out all the paperwork with the support of our bank, lawyers and the funding officers that the Federal Government assigned to help applicants. And after submitting the application we were eligible by the agents the Federal government and SBA chose to administer the payments — and they gave us the funding to be used to pay staff,” he wrote.

– An email from the Florida Democratic Party Executive Director Juan Penalosa and Vice Chair Judy Mount as reported by Florida Politics’ Scott Powers on July 9, 2020 in “More questions emerge over Florida Democrats’ Paycheck Protection Program loan.” 

Their Lawyer Knows His “Buckets”

“You can do almost anything in Florida if you put it in the right bucket.” 

Florida’s Pourous campaign finance laws: ‘You can do almost anything’ – Groups exploit gray areas as big money pours into elections.

– Associated Press

– Mark Herron, top Democrat Party Lawyer, Florida Democratic Building Fund, Inc. registered agent and Florida Legislative Campaign Committee lawyer comments on Florida’s campaign finance laws to the Associated Press in a May 21, 2018 story

They Continue to Conceal Their Building Fund was Used to Apply

In a letter from the Florida Democratic Party’s counsel to Jeff Hoffman on August 14, 2020, Mark Herron, top Democrat Party lawyer, Florida Democratic Building Fund, Inc. registered agent and Florida Legislative Campaign Committee lawyer states:

“…the Florida Democratic Party, which did erroneously accept CARES Act funding…”

However, the Florida Democratic Party did not accept CARES Act money since they would not qualify as a political organization. Instead they used the Florida Democratic Building Fund, Inc. – which has no employees – and claimed they had 100 people on staff to receive at least $780K of small business relief dollars that should have been given to businesses to keep their doors open and their workers employed.

They Had Several Opportunities to Do The Right Thing

 And yet every time, they were faced with a decision – to apply, use false information, collect tax payer money, move it to an unqualified entity, and then use PPP money to influence elections – they always chose what was in their best interest with zero regard for the struggling small businesses this money was set aside to help.

One has to wonder that if they were not caught and the public demanded they give it back, would they have ever chosen to put mom and pop businesses ahead of themselves? 

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