THE WELFARE QUEENIES OF KETCHIKAN
By David G Hanger
February 06, 2023
Thus “the majority of the benefits (of the PPP program) flowed to business owners, their creditors and their suppliers rather than to workers.” Only “23% to 34% of the dollars” went to workers with “three-fourths (of $1 trillion) accruing to the top quintile of households.”
Independent research conducted at the University of Texas at Austin determined that at least 15% of all PPP loans were fraudulent. The Federal government estimates as high as one-third, and in large measure because of this recognition has extended the statute of limitation for PPP fraud to 10 years from the standard three. Some of you are going to be spending a long time looking over your shoulder, and the interest is accruing for every day of that time.
The crassness and the corruption begin with the Small Business Administration (SBA) and the Trump cronies assigned to administer this program. According to the General Accountability Office (GAO), “The report found that the PPP loan application process allowed small businesses to self-certify their needs and qualification. Consequently, some applicants were able to exploit the program by illegitimately inflating their payroll costs to qualify for larger PPP loans, misrepresenting their number of employees to illegitimately appear eligible for a PPP loan, and certifying that the loan proceeds would be used for allowable costs while actually using the loan proceeds for personal use.” What essentially happened is this bunch of corrupt clowns rather than organizing and administering a program chose to open the floodgates to corruption with an inside twist, only starting with certain lenders being paid by SBA to rubber stamp these forgivable loans, most of which have already been forgiven, I should add.
The basic two-page loan application used was an invitation to commit fraud. That starts with the query for monthly rather than annual payroll information. A four-month seasonal employee paid $4000 a month earns for the year from that business a total of $16,000, but annualizing that monthly number, i.e. times 12 and you have $48,000. Pay your employee $16,000 and pocket the rest, a $32,000 freebie to someone who does not deserve it.
Next is the requirement to “certify in good faith,” that “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.” Certain locals drove a freight train through that and guzzled at the trough as if there were no tomorrow, but that “certifying in good faith” bit is legal terminology, and there is a big-time bite in the ass that comes along with violating that. So what seemed so simple, ain’t.
We know, for example, that locally a number of individuals or so-called businesses amended their sales tax returns to increase their quarterly revenue over a period of at least a year or two. The first curiosity in this regard is did these manipulators also amend their Federal income tax returns for this period of time? Since they were dealing with SBA and not the IRS it is not likely, thus in some instances we have prima facie evidence from the get-go of willful intent to commit income tax evasion for which one does time.
Combine that with an “in good faith” assertion that your business was compromised when in fact it was not provides a very substantial foundation for multiple fraud charges.
Based on their conduct I am pretty sure the Trump cronies running this program through the auspices of the Small Business Administration (SBA) actually believed that no one would ever be looking closely at what they did. They repeatedly asserted that everything they did was confidential and refused to release any information despite the fact that all of this free money was public funds, not a private business loan. They stonewalled every attempt at getting information, and it is safe to assume many of the recipients of this free money thought what they did would be hidden from others forever.
But in a society where “separation of powers” is both succinct and overlapping the courts tossed all the SBA efforts at stonewalling into the oblivion deserved, so now all of this information is available in succinct format to one and all.
One such compilation of note is www.pppdetective.com, readily accessible and fairly comprehensive. Just type in the zip code 99901 and it is all there. Or any other zip code for that matter.
A total of 784 PPP loans were approved in Ketchikan. Many of those were for amounts under $100,000 and do not merit much concern. Most of these are reasonable amounts for operations in need. Oceanview Restaurant combining PPP loans and Restaurant Relief received amounts slightly in excess of $200,000 to cover a period of two years, an amount I do not consider in any way unreasonable to cover kitchen and dining room staff. What I find odd is others like this guy who sells salmon next to the Coliseum Theater who got $800,000 declaring himself a restaurant, which he is not, and is now driving around a brand new Mercedes maroon station wagon as his business vehicle.
The website www.pppdetective.com reports the application amounts in descending order. For Ketchikan the high is $3.7 million, the low $500. The first page represents 34 outfits who collectively have claimed salary ranges up to $255,566 per individual while claiming to employ 1799 persons, an average of 60 employees per operation. That number, of course, is absurd. Twenty-one of these applications were processed through First Bank, six through Northrim, two by Keybank, and five by lenders out-of-state.
Cross-referencing with multiple cases available to me the dollar amounts for these (in most cases forgiven) loans are accurate. I am not so sure about the employee numbers listed; it is quite possible this is a later extrapolation made by some other entity; otherwise I am astonished by what I am reading. Tyler Rental, for example, is good for $1.7 million in PPP loans, an amount I consider absurd on its surface because the construction industry locally was slammed for both 2020 and 2021, so how does an equipment rental operation, etc. lose money to that extent given those circumstances? I just don’t believe it, plain and simple. But did they really claim to have 97 employees?
A jewelry store, claimed 17 to 24 employees with salary ranges of $100,000 to $147,000 per annum and pocketed $996,821. That is so much horse manure. My ex-wife in the late 1990s was the number two salesperson in the entire Colombia Emerald Jewelers chain, and her total earnings for a season were no more than $18,000, about $1000 a week. Calculating for interim inflation that salary today would be about $24,000 for a four-and-a-half month season. Twelve months is roughly 2.4 times four-and-a-half months for an annualized salary of $57,600. In the first instant these are seasonal workers in seasonal businesses, so an annualized salary is bogus; the seasonal salary is $24,000. Put bluntly there is a lot of shameless crap going on here.
A local grocery store claimed duress to the extent of $805,000, apparently because of the mass graves at the cemetery filled with hundreds or thousands of local pandemic victims that so terribly affected their bottom line. But oh wait, there were no mass graves; in the first year this town actually did a superb job of keeping the infection rate down. A landslide left the town with two instead of three grocery stores almost simultaneous to the pandemic, and somehow this grocery store desperately needed $805,000 in government hand-outs.
Likewise, in the plumbing and heating business all those folks who were sent home to work in combination with all those poor folks filling mass graves at the cemetery reduced the need for plumbing and heating services to the extent of $1,876,929 in government beggary for the one outfit and $835,700 for the other.
Nor were our local engineering outfits pikers in this regard with a dole totaling $1,146,735 during a period of time when the construction industry was as busy as it had ever been.
Any number of nonprofit operations also went in for big bucks from a program that was intended to cover interim losses caused by the pandemic, not other causes. Thus Community Connections snarfed $1,638,110, which I don’t get because nonprofits generally operate with budgetary accounting, and their financial sources are grant funds. I find it dubious that suddenly on March 20, 2020, and for a period of a few months thereafter Community Connections was short $1.6 million for payroll costs. Looks to me like they just found another free source of money and used it as such. Likewise with SSRAA which gobbled up $1,639,777. I am quite aware that there are major problems in the fisheries, and I am also quite aware that not much of that is attributable to the pandemic, but rather to other causes. USDA, AIDEA, and others have been generous with subsidies, so why exactly was the PPP fund held liable for losses from other causes, and milked accordingly?
The nonprofit Residential Youth Care facility pocketed $1,276,740.
The highs for local businesses are Waterfall Group at $3,701,952, E.C. Phillips $2,389,038, and Slagle LLC $2,100,742. That’s more than $8 million to three local outfits who I am sure suffered miserably. E.C. Phillips seems to follow the pattern of the fisheries generally in that it was not making as much money, but why does the government have to subsidize losses with pandemic funds that are incurred because of other economic factors? That makes no sense to me.
The other two are tourist operations, and for Waterfall those numbers represent 37 $100,000 a year salaries or 74 $50,000 a year salaries. Was the wipeout really that bad? Sure looks to me like a whole lot of folks living in maximum comfort while doing nothing. $2,100,742? No comment.
I did not realize that pouring coffee from a drive-thru was worth so much, $133,000. I think many of us need to consider changing professions. Scooping ice cream into a cone also commands a six-figure salary these days. We have dentists claiming $200,000+ in losses, which is nonsense, and even so-called accountants grubbing for government money to an extent far exceeding what I gross annually. Accountants are supposed to be held to a much higher standard. We are oath takers privileged to take an oath which permits us to have a license to practice. A big part of that oath has to do with anything signed (or taken) “in good faith.” My firm earned more revenue in 2020 than in 2019, and more in 2021 than in 2020, and there is no logical reason for any accountant to have experienced something different than the experience of my firm.
From $500 to $3.7 million if it’s free money straight off the government printers the consequence of sitting on your ass and not producing anything is inflation. Politics is politics, I understand, but trying to foist the causes of this hyper-inflation on the Democrats is obscene. Under Trump we start with $2 trillion annually given away to corporations because of his tax changes, then $6 trillion in pandemic stimulus funds, etc., topped off by $10 trillion in so-called “maximum liquidity” to the stock market (primarily to prevent a revolution by destitute 401K holders). That aggregates to $22 trillion, and if you look in the crannies, you can probably jack that number up to more than $25 trillion, all blown in a year or two. And for any and all of this there is no additional production whatsoever.
By contrast is Biden’s $5 trillion infrastructure and stimulus program which certainly has its inflationary attributes but is a drop in the bucket compared to what was done just previously; and there is real infrastructure being worked over out there; lots of roads being fixed everywhere but Ketchikan.
While those who applied to cover basic need and did not expect the government to provide them with bogus profits contributed a tad to inflation, the guzzlers, the self-righteous trough hogs, blew inflation through the roof. I have identified so far three commercial real estate deals and one big private dock that were paid for with PPP funds. Two of the real estate deals the folks have other money and can claim that is what they used, but I doubt seriously any of those real estate deals would have been concluded without this government stimulus. The third deal no chance at all; the guy is not well-healed. I hear the dock is real nice.
Those with six- and seven-figure appetites for free government money are the true welfare queenies of Ketchikan. Most on the list are extreme right-wingers, provincial and xenophobic to the core; very few have even thought of breaking bread with a Hispanic or a black person; and are perennially opposed to even one extra dollar for unemployment, food stamps, medicare, and social security. Most of these government programs they want to destroy, many having adopted as operative principle Ayn Rand’s “objectivism,” i.e. “Let them perish as they should.”
What hypocrites! Closet socialists to the core with a level of self-righteous and self-absorbed entitlement beyond measure. They also jacked up local prices by more than 20%, and that number will go higher.
David G Hanger
Received February 03, 2023- Published February 06, 2023
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