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2020

Questions raised over how Florida Democratic Party scored Paycheck Protection Program funds

Party wouldn’t be eligible. Building fund would need employees.

The Florida Democratic Party Building Fund’s acquisition of a federal Paycheck Protection Program loan is raising questions about how that fund became eligible, and whose jobs were saved by the federal CARES Act bailout intended to help during the coronavirus crisis.

The release Monday of the federal PPP database revealed that the Florida Democratic Party Building Fund applied for and received a loan of between $350,000 and $1 million to secure the jobs of 100 employees.

The PPP was created to assist small businesses and nonprofits in keeping their staffs employed through the coronavirus crisis.

But political parties are explicitly excluded from being eligible for the PPP program. Building funds reportedly are not allowed to spend any money that directly influences an election. That means the 100 employees cited for the Florida Democratic Party Building Fund ought to be someone other than the Democratic Party’s staff.

Who are they? some Republicans are wondering. In the background Republicans may be mobilizing to challenge on it.

“Political organizations are excluded from eligibility for PPP loans which is the only reason I can imagine they tried to use the Building Fund as the applicant and asserted its tax status was something other than IRC 527,” Nancy Watkins, a certified public accountant with Robert Watkins & Company, which is one of the leading accounting firms for Republican committees, contended in a message sent to Florida Politics.

IRC 527 is the federal tax code covering political parties.

Watkins raised questions that the Republican Party of Florida, the Republican National Committee, and other groups are reportedly exploring.

“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 Florida Democratic Party. What federal employer ID did they use for the PPP loan? According to the Annual Report filed by the building fund in January, the building fund does not even have a federal employer tax identification number which is a MUST to be an employer,” she wrote.

Republican U.S. Sen. Rick Scott on Tuesday cited the Florida Democratic Party Building Fund in a news release he issued that charged that “we can clearly see the abuse. Businesses and organizations that didn’t need taxpayer money took it simply because they could.”

The Florida Democratic Party has not responded to Florida Politics inquiries on the matter Tuesday.

On Monday a spokesperson released a statement that read, “Congress passed PPP to help ensure employers maintained payroll during this crisis and to keep people employed — and that’s exactly what FDP did.”

Nationally, there appeared to be only two political party organizations that received PPP loans, according to the federal PPP database obtained through the Small Business Administration. The other was the Ohio Democratic Party, which applied as itself and somehow received a loan of between $150,000 and $350,000.

The Florida Democratic Party plans to renovate a historic building in Tallahassee to create a new headquarters, which it will be naming for former U.S. Sen. Bill Nelson. The building fund was incorporated on April 3, 2019, for the purpose of constructing, owning, and operating the building to serve as the headquarters of the Florida Democratic Party and related political organizations, according to Division of Corporation records.

Under PPP rules, a small business or nonprofit can apply for a forgivable loan from the federal government on a formula applied to the payroll of the previous 12 months before the application. The range of $350,000 to $1 million would require an annual payroll somewhere in the range of $1.68 million and $4.8 million.

Party building funds are authorized by federal elections law. Yet they are exempt in Florida from any public financial disclosures. So the building fund’s books are private.

According to the Florida Democratic Party’s financial statements for the 2019 year, the official state party had a total payroll, including benefits, of just under $4 million in 2019. That would be about right for a loan in the range of $350,000 to $1 million, provided the FDP staff were the employees being supported by the loan.

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

The FDP Building Fund’s PPP loan was approved and provided through a bank called the Newtek Small Business Finance Inc., a publicly traded company with a principal address listed on its Florida corporation papers as in Lake Success, New York, and corporate managers in Boca Raton.

Written By

Scott Powers is an Orlando-based political journalist with 30+ years’ experience, mostly at newspapers such as the Orlando Sentinel and the Columbus Dispatch. He covers local, state and federal politics and space news across much of Central Florida. His career earned numerous journalism awards for stories ranging from the Space Shuttle Columbia disaster to presidential elections to misplaced nuclear waste. He and his wife Connie have three grown children. Besides them, he’s into mystery and suspense books and movies, rock, blues, basketball, baseball, writing unpublished novels, and being amused. Email him at scott@floridapolitics.com.

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