SBA officials plead ignorance of union related COVID relief fraud

SBA officials plead ignorance of union related COVID relief fraud

SBA officials plead ignorance of union related COVID relief fraud

As part of its ongoing effort to expose and hold federal officials accountable for bending, breaking or ignoring the law to help the Biden administration’s favorite special interest — Big Labor — the Freedom Foundation has obtained records showing how high-ranking officials at the Small Business Administration (SBA) were aware that hundreds of unions improperly received federal COVID-19 relief funds, yet pleaded ignorance of the impropriety in response to a congressional inquiry.

In February, the Freedom Foundation released research showing that labor unions and related organizations received as many as 223 forgivable loans totaling $36.1 million through the SBA-administered Paycheck Protection Program (PPP) between March 2020 and March 2021, when unions were not legally eligible to participate in the program.

The research garnered widespread media coverage and received congressional attention. On April 6, Rep. Virginia Foxx (R-NC), ranking member of the Education and Labor Committee, Rep. Blaine Luetkemeyer (R-Mo.), ranking member of the Small Business Committee, Rep. Rick Allen (R-Ga.), ranking member of the Health, Employment, Labor and Pensions Subcommittee, and Rep. Beth Van Duyne (R-Texas), ranking member of the Oversight, Investigations and Regulations Subcommittee, sent a joint letter to SBA administrator Isabel Casillas Guzman citing the Freedom Foundation report and demanding additional information about unions’ receipt of PPP loans be provided by April 20.

Later the same day, Alejandro Renteria, the SBA’s deputy associate administrator for the Office of Congressional and Legislative Affairs, emailed a link to the Freedom Foundation’s research to George Holman, associate administrator for the SBA’s Office of Congressional and Legislative Affairs, noting, in part, “This came out in February” (the rest of the message was redacted).

From April 6 through April 22, SBA officials worked to prepare a response to the congressional inquiry. Internal SBA email correspondence confirms that both Renteria and Holman reviewed and signed off on the SBA’s reply.

Despite the fact that SBA staff were apparently aware of the Freedom Foundation’s report by the time of the congressional inquiry, which itself referenced the Freedom Foundation’s research, the SBA’s April 22 response letter denied any knowledge of the issue, obtusely stating only that the agency “did not collect” information about union PPP loan applications and “cannot provide data that requires this information.”

More recently, the SBA’s Office of the Inspector General (OIG) released a report on Sept. 26, the stated objective of which was to “determine whether PPP loans to nonprofit organizations were made in accordance with eligibility requirements.” Since unions were categorically excluded from the program as 501(c)(5) nonprofits, and since the Freedom Foundation filed a formal complaint with the SBA OIG back in February based on its findings, the report would have been an excellent opportunity to address the issue.

Unfortunately, the OIG report only analyzed more traditional 501(c)(3) nonprofits that may have been too large to qualify for PPP funds, leaving unions out of the analysis. Given the SBA’s apparent unwillingness to recover from labor unions illegally claimed PPP funds intended to help keep small businesses operating through the pandemic, congressional investigators should double down on holding federal officials to account for their dereliction, as the Freedom Foundation fully intends to do.

Director of Research and Government Affairs
As the Freedom Foundation’s Director of Research and Government Affairs, Maxford Nelsen leads the team working to advance the Freedom Foundation’s mission through strategic research, public policy advocacy, and labor relations. Max regularly testifies on labor issues before legislative bodies and his research has formed the basis of several briefs submitted to the U.S. Supreme Court. Max’s work has been published in local newspapers around the country and in national outlets like the Wall Street Journal, Forbes, The Hill, National Review, and the American Spectator. His work on labor policy issues has been featured in media outlets like the New York Times, Fox News, and PBS News Hour. He is a frequent guest on local radio stations like 770 KTTH and 570 KVI. From 2019-21, Max was a presidential appointee to the Federal Service Impasses Panel within the Federal Labor Relations Authority, which resolves contract negotiation disputes between federal agencies and labor unions. Prior to joining the Freedom Foundation in 2013, Max worked for and the Washington Policy Center and interned with the Heritage Foundation. Max holds a labor relations certificate from the University of Wisconsin-Madison and graduated magna cum laude from Whitworth University with a bachelor’s degree in political science. A Washington native, he lives in Olympia with his wife and sons.