Exclusive– Congressmen Blast Florida Democratic Party for ‘Swindling’ PPP: ‘You Don’t Accidentally Take a $780,000 Loan’

Terrie Rizzo chair of the Florida Democratic Party speaks during the general assembly at the state convention Saturday, Oct. 12, 2019, in Lake Buena Vista, Fla. (AP Photo/John Raoux)
AP Photo/John Raoux

Several congressmen are demanding answers from the Florida Democratic Party following shocking revelations that it applied for and accepted a large sum from a federal aid program designed to assist small businesses and workers hammered by the coronavirus pandemic and which explicitly excluded political entities.

In what appears to have been a calculated effort by the Florida Democratic Party (FDP) to exploit the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act’s Paycheck Protection Program (PPP), the party managed to receive an ill-gotten loan of $780,000. 

Outraged by the reports, several Florida congressmen spoke with Breitbart News and are calling for an investigation into the matter. 

“I am having a hard time explaining to my constituents how money I voted for to help workers seems to have ended up in the hands of political party operatives who were specifically excluded from eligibility,” said Rep. Bill Posey (R-FL) in a statement to Breitbart News on Tuesday. 

“[You] have to wonder how many small businesses and employees didn’t get the funding they deserved because the money ran out. I hope this gets properly investigated soon,” Posey added.

Posey is not alone in his frustration over the matter.

“I voted for a program to help struggling businesses, not a bunch of politicians looking to fatten their war chest in an election year,” congressman Neil Dunn (R-FL) told Breitbart News.

Signed into law by President Donald Trump in late March, the $670-billion Paycheck Protection Program (PPP) is a provision of the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) stimulus package intended to blunt the impact of an economic downturn due to the global coronavirus pandemic.

Implemented by the U.S. Small Business Administration (SBA), the PPP offers forgivable low-interest loans to retain workers and cover other existing overhead costs of small businesses facing uncertainty during the current pandemic.

The CARES Act strictly excluded political organizations from receiving aid from the taxpayer-funded program.  

Demanding that the FDP disclose their PPP application, Rep. Michael Waltz (R-FL) hopes to expose those responsible for the likely fraudulent move.

“You don’t accidentally take a $780,000 loan and you sure as hell don’t accidentally take $780,000 from taxpayers,” Waltz said in a statement to Breitbart News as he noted that Congress had explicitly excluded political parties. “The Florida Democrat Party should disclose their PPP Loan application. Floridians deserve to know who is responsible for swindling a program meant to keep workers employed.”

Speaking with a Democratic political operative intimately involved with the FDP and its operations, Breitbart News revealed that members of the FDP leadership initially inquired of the party’s legal counsel regarding its eligibility to receive funds from the PPP, whereby they were informed that as a political entity, they would be ineligible as such entities are strictly excluded. 

Despite purported knowledge of their ineligibility, shortly after Congress first passed the PPP bill in March, Florida Democrats applied for and received a whopping $780,000 loan under the “Florida Democratic Party Building Fund,” a separate legal entity it controls (which aims to renovate a historic building in Tallahassee to create a new headquarters), whereby the money was purportedly transferred to its political party. 

On July 7, Politico broke the story, and a week later, the loan was allegedly returned, with the party’s own lawmakers deeming the acceptance of the loan as questionable, suspicious, and unethical, if not outright illegal. 

In a stern conversation with FDP chairwoman Terrie Rizzo following the public disclosure, Rep. Donna Shalala (D-FL) had demanded that the party return the money while Democratic state senators Jason Pizzo and Annette Taddeo assailed the party’s original decision to accept the loan.

Telling Politico she was “extraordinarily disturbed that any political party, my party, would even think it is OK to apply for government funding meant for small businesses,” Taddeo had sought to investigate further into the matter.

“Returning the money is an obvious first step, but we must get to the bottom of how this could possibly have happened less than four months before the most important election in our history,” she said.

Furious and at a loss as to how “the party found it reasonable to even apply for funds, while condemning others, and depleting finite resources from struggling families,” Pizzo lashed out at the party.

“I spent 44 days in Tallahassee to go face to face with the [Department of Economic Opportunity] while people can’t get their unemployment benefits,” Pizzo said. “And the Florida Democratic Party is in their f—— office collecting PPP money.”

Pizzo, an attorney, believed it was illegal for a statewide political party to receive money through an SBA loan as businesses “primarily engaged in political or lobbying activities” are ineligible for such loans, but felt it was an unconscionable move regardless.

“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.”

Pizzo added that he even alerted Democratic nominee Joe Biden’s daughter Ashley to the problem. 

The revelation of the FDP decision came the same week that Biden announced his Florida team, including senior adviser Juan Penalosa, who is the party’s executive director and is listed as the director of the building fund that applied for the PPP loan.

The party was in the process of underwriting the salaries of campaign staff throughout Florida, including those working to elect Biden, the party’s presidential nominee, in the nation’s biggest battleground state.

In response to Pizzo’s tweets, State Rep. Anna Eskamani, an Orlando Democrat, replied, “PPP was created for small businesses and nonprofits desperate for support during COVID-19, not for political parties.”

The FDP’s use of the program was later called out by the Republican Party, which highlighted a May statement by FDP Chair Terrie Rizzo criticizing President Trump and labeling the PPP a “disaster,” while failing to disclose that her own party had applied for a considerable loan.

“In May, Florida Democrats chastised President Trump’s Paycheck Protection Program. Today, we find out that Terrie Rizzo and her corrupt Florida Democrats gladly accepted money from the program, taking anywhere from $350,000 to $1,000,000 away from deserving Florida small businesses,” read a Republican press release in July.

After the revelations and outrage from politicians, the FDP was pressured to return the loan and stated its intention to “volunteer” to do so.

On August 5, a month after the initial report, the FDP issued a statement acknowledging the “mistake.”

“[L]ike many employers during the shutdown, FDP was concerned about meeting payroll and keeping our staff employed, so we applied,” the statement read. “It now seems they [the bank, loan processor and SBA agents] made a mistake in approving the funding.”

Writing on behalf of the Patricia Sigman Campaign, Tallahassee-based election law attorney Mark Herron stated that the FDP “did erroneously accept CARES Act funding.”

Herron is also listed as the registered agent for the Florida Democratic Party Building Fund and, in the past, has described the opportunities available to dodge consequences for large-scale problematic spending. 

“You can do almost anything in Florida if you put it in the right bucket,” Herron told the Tampa Bay Times in 2018. 

“They handle nickel and dime cases but overlook the huge problems of unregulated and improper spending,” he added. “They will kill you to death if you don’t file a report on time or don’t put a disclaimer on a sign. But to deal with these big issues? It ain’t happening.”

Unwilling to accept responsibility, the FDP has shifted the blame to others.

“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,” wrote Peter Schorsch in Florida Politics

Though originally intended to remain private, under the Freedom of Information Act, the SBA eventually released the names of those who received funds in early July. 

According to the SBA database, the Florida Democratic Party Building Fund received between $350,000 and $1 million intended to protect 100 jobs.

Republican Party of Florida Executive Director Helen Aguirre Ferré has accused the FDP of intentionally defrauding the PPP while calling for a release of the loan application.

Read the full statement:

“The Florida Democrat Party should absolutely release a copy of their loan application.

“Furthermore, the Republican Party of Florida believes they need to prove to the public that they returned all the funds. It is mind boggling that they thought they were even qualified in the first place – the PPP eligibility language is very clear –political organizations are not eligible for PPP loans. The program was intended to help private sector businesses save and protect jobs, keeping workers paid and employed.

“We don’t believe for one second that this was a mistake. The FDP knew what they were doing from the onset— but the one thing they never contemplated was that the data about who applied and received funds would be made public, shining a light on their actions.  

“Like the rest of the public, we will be waiting for answers.”

Without the release of the original application, it is impossible to know whether there was an unlikely error on the bank’s part or whether there were intentional falsifications intended to exploit undeserved funds.

In order to obtain the loan, the FDP may have had to resort to a number of unethical and illegal practices.

Bank Fraud:

The FDP only managed to qualify for funds — despite SBA rules which explicitly deem political parties ineligible — by using a not-for-profit corporation (the Florida Democratic Party Building Fund, Inc.) as a front company in order to circumvent federal rules, which succeeded in securing the loan to pay the salaries of its employees. 

However, since the FDP Building Fund may not legally hire employees and does not possess any, employees from the party itself may have been listed on the application, in which case the party would be guilty of bank fraud.

Campaign Finance Law Violations:

Taxpayer funds meant for harmed businesses may have been used to finance the Florida Democratic Party in the midst of an election year. 

By depositing the funds into their federal account, such funds would be used to influence a federal election — a violation of campaign finance law.

Illegal Structuring:

Political parties are explicitly excluded from eligibility for the PPP program while building funds are prohibited from spending money which directly influences an election. Accordingly, the one hundred employees cited for the FDP Building Fund ought not be identical to the Democratic Party’s staff.

“Political organizations are excluded from eligibility for PPP loans; that’s the only reason I can imagine that they tried to use the building fund as the applicant and asserted its tax status was something other than IRC 527 [the federal tax code covering political parties],” said Nancy Watkins, a leading certified public accountant for Republican committees, to Breitbart News.

“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 FDP. What federal employer ID did they provide for the PPP loan? According to the annual report filed by the building fund in January, the fund doesn’t even have a federal employer tax identification number, which is necessary to be an employer,” she continued.

“But that application would be false if they [the building fund] used another entity’s payroll information, namely the Florida Democratic Party, which definitely is IRC 527 and not eligible” for PPP money, Watkins contended.

By transferring the $780K to a political party account over several days from April 24th to April 29th, they would have taken the funds from the entity that applied (which had no employees) and gave them to an entity that would never qualify, no matter how many employees, for it is a political party. 

Such an act is referred to by banks and the federal government as “structuring,” which is illegal.

False Statements:

Federal Accounts cannot receive donations from a building fund. 

Proceeds on the FDP’s Federal Election Commission (FEC) report were not reported as having been received from the building fund, but rather as being loaned by CARES, which is not a legal entity. 

Lying on one’s FEC report is illegal.

Suspicious Activities:

Oddly, the loan was purportedly returned to a bank that was not the lender of the funds in five separate installments, each up to $200,000, in July.

Questions still remain and absent a comprehensive investigation, including the release of the original PPP loan application and a certificate of satisfaction (showing the loan was repaid), answers will hardly be obtained. 

Some remaining questions include:

  • Given that the building fund has no Employer Identification Number (EIN) (nor employees) though the loan application required one, was it the party’s EIN that was used? And how exactly did the building fund claim 100 employees?
  • Why was the loan provided through a bank known as Newtek Small Business Finance Inc. yet returned to Hancock Whitney Bank?
  • Why did they report the money coming from CARES instead of the building fund?
  • Since the building fund’s finances are not publicly disclosed, is $780,000 the total received or merely what was transferred to the party?

Though leading Democrats had demanded to get to the bottom of this fiasco, the issue seems to have been quietly swept aside, though Democratic politicians would be expected to be just as demanding in exposing potential fraud at American taxpayers’ expense, especially during the current period.

In addition to Harron, Breitbart News sought the comments of Juan Penalosa, executive director of FDP and adviser to Joe Biden, as well as Florida Democratic Chair Terrie Rizzo. 

Despite being notified of the story, all declined to comment. 

Florida Democrats appear to be riding out a “ridiculous strategy of admit nothing, deny everything and blame everybody,” Florida Republican Senate Campaign Committee spokeswoman Erin Isaac told Breitbart News. 

The media, too, has been relatively discreet about the whole matter.

“Florida Democrats looted a program intended to protect jobs for hardworking Americans and the mainstream media is doing nothing short of participating in the cover-up. The two pillars of media bias are their refusal to face the truth and their cult of willful ignorance. Meanwhile, a major political party is getting away with an $800,000 heist in broad daylight,” a top GOP consultant told Breitbart News.

With FDP members involved in the Biden campaign as well as congressmen from Florida, a critical swing state, claiming that this was no mistake while demanding transparency, this scandal, left unresolved, can have far-reaching implications for the 2020 elections. 

“Nikki Fried, Gary Farmer, Terri Rizzo and anyone else in charge over there probably need to get in a room and figure out how to put an end to this before it puts an end to their candidates,” spokeswoman Erin Isaac said.

Follow Joshua Klein on Twitter @JoshuaKlein.

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