Democrats Ask Five Companies to Return Relief Funds

Bookmark

(Bloomberg) -- Democratic members of a new House panel created to oversee coronavirus relief spending demanded that five publicly owned companies immediately return taxpayer funds the lawmakers said were intended for smaller businesses.

“Since your company is a public entity with a substantial investor base and access to the capital markets, we ask that you return these funds immediately,” the panel’s Democrats wrote to each of the five companies.

The letters weren’t signed by the five Republicans on the 12-member panel, who were named on Thursday. Representative Steve Scalise, the second-ranking House Republican and a member of the committee, blasted Democrats for making the panel’s first official act “blindly sending harassing letters to individual companies that followed the law.”

The letters were sent to EVO Transportation & Energy Services Inc.; Gulf Island Fabrication Inc.; MiMedx Group Inc.; Universal Stainless & Alloy Products, Inc.; and Quantum Corp. The companies didn’t immediately return messages seeking comment.

A statement by the panel, led by Chairman Jim Clyburn of South Carolina, said the companies all are publicly owned, have market capitalization of more than $25 million, have more than 600 employees, and sought and received loans through the Paycheck Protection Program for small business of at least $10 million.

The letters ask the companies to inform the subcommittee by May 11 if they will return these funds. If not, the lawmakers will ask the chief executive officers to produce a range of documents no later than May 15.

“Returning these funds will allow truly small businesses -- which do not have access to alternative sources of capital -- to obtain the emergency loans they need to avoid layoffs, stay in business, and weather the economic disruption caused by the coronavirus crisis,” the letters said.

The letters to the CEOs of the five companies provide the dates of when each filed with or reported to the Securities and Exchange Commission having obtained a Paycheck Protection Program loan, each in the amount of $10 million.

MiMedx, a biotech firm based in Marietta, Georgia, said April 21 that it obtained $10 million from the PPP. Just weeks earlier, the company had agreed to pay $6.5 million to the Justice Department to settle allegations that it defrauded the federal government, without admitting wrongdoing. Once a promising small-cap company with a market value of nearly $2 billion, it was delisted from Nasdaq in 2018 after its board found accounting irregularities.

The five panel Republicans were invited to co-sign the letters, and they declined, according to a official familiar with the committee action. Scalise was copied as a recipient of the letters.

The 12-member committee was created on a party-line House vote when lawmakers were in Washington last month to pass the most recent coronavirus aid package.

House Minority Leader Kevin McCarthy of California didn’t announce his appointees to the panel until this week. He and other Republicans have said the committee isn’t needed because other committees are already performing oversight.

In a statement, Scalise said Treasury Secretary Steven Mnuchin had already stated that the Treasury Department is looking into all companies that have received loans through the PPP fund.

“With a large scale audit underway, this action by Democrats represents dangerous government intimidation that could cause more widespread layoffs at a time when we should be trying to keep American workers on the payroll,” the Louisiana Republican said. “We hope Democrats will change course and spend as much time targeting, shaming, and investigating China as they do going after American workers and job creators.”

©2020 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.