Trump's Manhattan Property Benefitted From Small Business Bailout
President Donald Trump’s refusal to divest from his real estate empire has resulted in a barrage of unprecedented corruption scandals as he funnels millions of dollars in campaign donations to his family through his hotels and openly charges elites for access via his Mar-A-Lago resort in Florida.
Now, Trump’s mixing of business and politics has compromised the integrity of Congress’ coronavirus crisis bailout, as the president personally benefits from a government lending program intended to help small businesses, according to data the Treasury Department recently disclosed.
Rescue funding has helped a handful of business tenants continue to pay rent at a Manhattan office building Trump partially owns. The firms received up to $9 million from the Paycheck Protection Program (PPP) Congress established in March to keep small businesses alive and enable them to continue meeting payroll obligations to their workers.
It’s impossible to quantify how much Trump is directly reaping from the arrangement ― there are other investors in the property, and there is no direct evidence that Trump, his family, or the firms involved in the rescue program were aware of the situation until HuffPost brought it to their attention. But an arrangement in which the president is a downstream beneficiary of a public rescue raises unavoidable questions about how and why some PPP applicants have been accepted and others have been denied.
“It is a conflict-of-interest disaster, one we should never get used to,” said Zephyr Teachout, a law professor at Fordham University in New York and author of Corruption In America, a respected history on political graft. “Every decision made by the president has a question mark next to it … You can’t guess where and when conflicts will arise, or the way any given conflict will poison a program by raising questions around it.”
According to Trump’s latest personal financial disclosure form, he owns a 30% stake in the office building at 1290 Avenue of the Americas in Manhattan, valued at more than $50 million. The building generates over $5 million a year in income for the president.
The law firm of Selendy & Gay and three separate entities managed by Garrison Investment Group, which combined occupy four spaces in the building, each received PPP loans. According to Treasury Department data, Selendy & Gay received a loan of up to $5 million, while the three Garrison vehicles received loans totaling up to $4 million. Both Garrison and Selendy & Gay declined to comment for this story.
Law firms and financial institutions do not typically come to mind for most people when they think of small businesses. But the purpose of the PPP is not only to help local restaurants survive. Whatever their line of work, small firms have financial obligations to other parties ― their employees, utility companies, creditors and landlords. By preventing these institutions from going under, the program’s architects hoped to prevent a cascade of other losses and defaults and a snowballing economic calamity.
Lending terms for the PPP are lenient by design. If companies that receive the funding meet a certain set of criteria ― most notably, maintaining their payrolls ― they don’t even have to pay back the loan.
The legislation Congress passed in March authorizing the PPP and other rescue initiatives explicitly prohibited Trump and his businesses from directly receiving government funds. But since Trump is a partial landlord for a handful of firms receiving PPP money, he is a downstream beneficiary of the rescue.
In an email to HuffPost, the president’s son Eric Trump dismissed the idea that the Trump family had engaged in any impropriety. He demanded that his comments not be quoted for attribution, but HuffPost had not agreed to any such stipulation prior to receiving his note on that.
″This is arguably one of the most asinine narratives I have seen (and the bar is low),” Eric Trump said. “I’m actually baffled by the stupidity ... This is disgusting and you should be ashamed.”
Nevertheless, the nature of the Trump family’s operation makes it impossible to tell where legitimate public support for the economy ends and where any favors for it begins. More than 100 major donors to Trump’s campaign had received up to $273 million in PPP funding as of early July.
“The administration rigged this program meant for struggling mom-and-pops to the benefit of the wealthy and well-connected,” said Kyle Herrig, president of Accountable.Us, a non-partisan government corruption watchdog. “It’s no surprise to see upscale businesses that send Trump rent checks manage to secure millions of dollars in taxpayer money.”
And the PPP money will likely be just the beginning of the entanglement between rescue and racket. The pandemic has created particularly acute pressure on the real estate sector, as families forego vacations at resorts and hotels, businesses fail, and residential rents plunge in major cities as people flee crowded neighborhoods because of health concerns. No matter how Congress structures economic aid, any effective rescue will flush money to Trump in some form, and it will be difficult if not impossible for the public to determine whether that money is legitimate.
“This is one reason the framers of our country were so focused on structural impersonal prohibitions against conflicts of interest,” Teachout said. The Trump debacle, she added, “should teach everyone to divest ― not just presidents, by the way, but members of Congress, all decision-makers.”
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This article originally appeared on HuffPost and has been updated.
