The Small Business Administration doesn't plan to seek recovery for more than $155 million in COVID relief grants paid out to successful artists and entertainers, newly public records show.
Congress set aside more than $14 billion during the pandemic to bail out struggling arts groups as audiences stayed home. Business Insider previously reported Lil Wayne, Marshmello, Chris Brown, Alice in Chains and other artists received taxpayer funds for private jets, parties, luxury clothes, and multi-million dollar bonuses for themselves — leaving little for staff salaries or benefits.
The grants could legally be used for "ordinary and necessary" expenses, and the federal government hasn't claimed that the spending was illegal.
Some of the top recipients of Shuttered Venue Operators Grants were clients of NKSFB, a Los Angeles business management firm that says it helps "the world's leading entertainers succeed financially."
In a December 20 email released in response to a Freedom of Information Act request, an SBA employee said more than $155 million out of $216.6 million in grants paid out to NKSFB clients — or more than 70% of them — were "closed," meaning that they have been fully reviewed. That leaves about $61 million across 22 grants that could still be under review.
Many grant recipients won't hear from the SBA again after they complete the closeout process, but the agency's FAQ materials say an audit-like process called "monitoring" can take place even after a grant is closed. Sen. Joni Ernst, who leads the Senate Committee on Small Business and Entrepreneurship, said in a statement that she'd be looking into abusive pandemic spending.
"Pandemic relief programs were designed to help small businesses keep their doors open and their employees afloat during an incredibly challenging time," Ernst said. "Unfortunately, the more we learn, the more it is clear that taxpayers footed the bill for the extravagant lifestyles of the rich and famous."
The grant data was gathered in the waning days of the Biden administration. Most of the grant staff have now been laid off or transferred, according to people familiar with the program. The SBA inspector-general was among several agency watchdogs fired by President Donald Trump.
It's not clear which specific NKSFB clients' grants had been closed out and which remained open. The firm has said that it cannot discuss its clients' finances. The firm's lawyer and managing partner didn't respond to comment requests for this story.
The SBA has said it followed the law and had "robust" checks in place to detect fraud. It said current and former employees who criticized its processes didn't have complete visibility into its processes. The agency didn't respond to a request for comment for this story.
But the agency was also bracing for criticism, the newly released records show. Top officials on the SVOG program were listed as attendees at a briefing for Congressional staff in response to Business Insider's reporting last December. The presentation the SBA gave to the staff was completely redacted.
SBA staff were also warned not to talk. One called an email from a BI reporter "phishing." The program's director referred to the outreach as "aggressive," the records show.
"The SBA has cloaked itself in secrecy and hid the full extent of its work from the American people for the last four years," Ernst said. "I will be working with Kelly Loeffler and the Trump administration to bring full transparency to the agency and investigate just what on earth happened with taxpayers' money."
