Prime Musicians Scored $200 Million in Pandemic Taxpayer Money: Report

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Early 2021 was a affluent time for Austin Richard Publish, higher often known as the “Sunflower” singer Publish Malone.

Whereas lots of his entertainment-industry colleagues struggled to pay hire beneath the pandemic-era lockdowns that decimated reside music within the US, Publish purchased a 9,000-square-foot ski chalet in Park Metropolis, Utah, which had been listed for $11.5 million, in an all-cash transaction that February.

By Might, he’d purchased an industrial area in a Salt Lake Metropolis suburb that had been listed for $1.45 million. There, he opened a business forge to craft knives and swords, “as a interest,” Publish’s consultant informed the town’s planning fee.

However later that 12 months, a company managed by Publish efficiently utilized for a $10 million grant from a taxpayer-funded federal program meant to offer “emergency help” to assist struggling arts teams get better from the pandemic.

This system, the Shuttered Venue Operators Grant, was a lifeline for the live-entertainment enterprise. Administered by the Small Enterprise Administration, it doled out $14.5 billion to establishments like film theaters, ballets, operas, expertise brokers, performing-arts venues, and museums. In contrast to the Paycheck Safety Program, which many venues did not qualify for, the Shuttered Venue program was a grant, not a mortgage. Certified candidates had been eligible for as much as $10 million with no obligation to repay it.

“SVOG was there to save lots of us, and to hold us via,” stated Meredith Lynsey Schade, who was managing an off-off-Broadway theater firm when the pandemic hit.

However the Shuttered Venue program was additionally affected by ineffective oversight and loopholes that allowed a number of the greatest names within the music {industry} to get enormous payouts, an Insider investigation discovered.

R&B artist Chris Brown acquired $10 million. Rapper Lil Wayne acquired $8.9 million. Nineties rockers The Smashing Pumpkins acquired $8.6 million. Nickelback — sure, Nickelback — obtained $2 million.

All informed, Insider recognized dozens of companies and limited-liability corporations managed by high-profile musical artists that obtained grants via this system. A single financial-management agency in Los Angeles efficiently submitted grants on behalf of 97 artists, venues, and managers, amounting to greater than 1 / 4 of a billion {dollars} in grant payouts, Insider’s evaluation discovered, together with greater than $200 million for big-name artists alone.

Did your favourite musician get an enormous federal payout?

Insider recognized dozens of big-name musical artists whose touring corporations scored tens of millions of {dollars} in federal grants in the course of the pandemic.

A bubble chart showing which top musicians

Supply: Small Enterprise Administration

Publicly, the invoice that created the Shuttered Venues grant was marketed as supporting behind-the-scenes employees at indie venues and small levels — not arena-filling musicians.

Sen. Chuck Schumer, one of many lawmakers who sponsored what was then often known as the “Save Our Levels” invoice, informed his constituents the cash can be used for “unbiased reside venue operators, unbiased film theaters, and cultural establishments akin to reside performing arts organizations and museums,” in response to a press launch. At a star-studded ceremony in April, Schumer was honored by the Recording Academy, the group behind the Grammys, for passing the invoice. A spokesperson for Schumer declined to remark.

Lots of of musicians and different performing artists signed an open letter to Congress asking them to assist “neighborhood unbiased venues” the place lots of them had gotten their begins.

A few of those self same artists managed corporations that went on to obtain multimillion-dollar payouts from this system, together with the electronic-music famous person Steve Aoki ($9.9 million) and the “Really feel It Nonetheless” crooners Portugal. The Man ($2.25 million).

The Shuttered Venue program “helped save 1000’s of leisure venues and operators throughout the nation in the course of the COVID-19 pandemic,” an SBA spokesperson stated in an announcement. Almost half the grant cash went to companies with fewer than 5 full-time staff, “the smallest of small companies,” the spokesperson added.

However a number of the artists’ companies Insider analyzed would match into that class. For example, Aoki’s company, DJ Child Millionaire Touring Inc., informed the federal government it had simply 4 full-time staff on its utility for a $71,000 PPP mortgage.

A scarcity of controls

There isn’t any indication that funds to big-name artists broke the regulation. Although the laws was focused at “reside performing arts group operators,” an SBA consultant confirmed to Insider that artists themselves had been included inside its scope.

The federal government remains to be figuring out simply how a lot pandemic-era support went to fraudulent claims. In June, the SBA inspector common launched a report contending that 8% of the loans disbursed by the Paycheck Safety Program, which pumped about $800 billion into the US economic system in the course of the lockdowns, may need been fraudulent. The company’s Financial Harm Catastrophe Loans, which paid out about $400 billion, had an excellent larger fee of potential fraud, in response to the report: one-third. Fraudsters blew the cash on issues like sports activities automobiles, luxurious purses, and gold bars, the inspector common discovered.

The SBA has disputed these findings, and touted its oversight of the Shuttered Venue program particularly as wildly profitable. The company estimates that lower than 1% of grants disbursed via SVOG had been fraudulent, it stated in a report final month.

Business sources contacted by Insider defended the Shuttered Venue program by stating that many artists sometimes contract with lots of of sound and lighting technicians, costumers, drivers, safety personnel, and different contractors once they put collectively a tour. All these contractors had been out of labor in the course of the lockdowns, the sources stated, and artists making use of for grants might have used the cash to assist hold them afloat.

Steve Aoki

Digital music famous person Steve Aoki requested Congress for cash to save lots of small levels. Then an organization he controls acquired a $9.9 million grant from this system. Greg Doherty / Contributor / Getty Photographs

However there was no requirement that they spend the cash that means. The grant cash was meant as alternative for misplaced income, and recipients might spend it on issues like present mortgage funds, taxes, and payroll — together with paying themselves.

The shortage of spending controls created alternatives for impropriety, in response to the SBA’s inspector common and sources reached by Insider.

For one, candidates wanted to get the SBA’s approval on an in depth price range to obtain a grant and to submit documentation exhibiting how the cash was ultimately spent. (The company denied Insider’s requests beneath the Freedom of Info Act for data exhibiting how the artists spent the cash, citing an exemption for confidential enterprise data.)

However after they’d the cash, recipients had been permitted to shift it round to totally different licensed makes use of, the inspector common famous in a report final 12 months. It known as the apply “regarding” and out of line with how the SBA administers different grants.

Furthermore, corporations that contract with artists to assist excursions had been themselves eligible to obtain SVOG funding, elevating questions on whether or not some corporations had been paid from artists’ grants whereas additionally receiving grants themselves. For example, two of the most important sound-system suppliers for touring, Eighth Day Sound and Clair World — which merged in 2020 — every obtained $10 million grants.

Insider contacted greater than 60 grant recipients, together with Clair and Eighth Day, in addition to the entire artists named on this article, to ask how they spent their grants. None of them shared detailed data, and most didn’t reply.

Eighth Day’s president, Tom Arko, stated he had no perception into how Eighth Day used the grant cash as a result of Clair World has dealt with its funds because the merger. However he was shocked when an Insider reporter shared the names of a number of the artists whose corporations obtained grant cash. Different stars like Bonnie Raitt and Justin Bieber paid their manufacturing crews from their very own pockets when the pandemic canceled their live shows, Arko famous.

There have been few limits on how the cash may very well be spent. The grants could not be used instantly for some issues, like shopping for actual property or making political donations. However beneath SBA pointers, the grants may very well be used to pay “proprietor compensation,” an quantity the company capped at regardless of the proprietor earned in 2019. In different phrases, Publish Malone or the members of Nickelback might have used at the very least some grant cash to pay themselves instantly with out violating this system’s guidelines. (There isn’t any proof that they did so.)

And artists weren’t the one ones free to get in on the motion: The SBA informed Insider that grant recipients might pay the legal professionals, managers, and accountants who ready their purposes no matter was “peculiar and crucial” — a determine as excessive as 15%, in response to the grievance in a single lawsuit. Against this, the Paycheck Safety Program capped such charges, which it known as “agent charges,” at 1% for PPP loans.

Enterprise managers, expertise brokers, and others surrounding the artists additionally cashed in instantly. Two corporations owned by Publish Malone’s comanagers, Austin Rosen and Dre London, obtained grants totaling practically $20 million in 2021. Rosen, for one, did not look like hurting for cash: In 2021 and 2022, he spent $25 million to assemble a Miami Seashore property. (Insider discovered no proof that both man paid themselves.)

Two entities partly owned by the legendary expertise supervisor Irving Azoff, whose agency’s purchasers embody The Eagles, Lizzo, Harry Kinds, and Gwen Stefani, collectively acquired $17.5 million from this system.

LOS ANGELES, CALIFORNIA - NOVEMBER 05: Gwen Stefani and Irving Azoff attend the 37th Annual Rock & Roll Hall of Fame Induction Ceremony at Microsoft Theater on November 05, 2022 in Los Angeles, California. (Photo by Kevin Mazur/Getty Images for The Rock and Roll Hall of Fame)

Music mogul Irving Azoff, pictured right here with Gwen Stefani ultimately 12 months’s Rock and Roll Corridor of Fame induction ceremony. Two entities he partly owns acquired $17.5 million. Kevin Mazur/Getty Photographs for The Rock and Roll Corridor of Fame

Marty Singer, a lawyer for Azoff, informed Insider that the businesses complied with the SVOG program’s guidelines and that Azoff himself was not in want of any bailout funds.

A pandemic-era asset buy seems to assist Singer’s description of Azoff’s monetary place. In November 2021, Azoff bought a $21.5 million Beverly Hills property adjoining one other residence he owns.

“Irving Azoff didn’t profit personally,” he stated. “My consumer does not want SVOG cash to purchase a home.”

Publicly traded corporations had been ineligible for grant cash, however the live performance powerhouse Stay Nation nonetheless was in a position to profit from Shuttered Venue funding as a slew of its subsidiaries had been bolstered by grant cash, The Washington Publish reported.

In an announcement, a consultant for Stay Nation stated the corporate has no skill to regulate whether or not its subsidiaries entry support packages, including that the subsidiaries used “each useful resource legally accessible to them to assist their staff via this disaster, which was not solely their proper but additionally a completely comprehensible and human factor to do.”

A $496,000 overpayment

In the meantime, smaller and fewer celebrated organizations struggled to entry Shuttered Venue funding. Many candidates discovered it tough to navigate the SBA’s necessities, which contributed to 30% of purposes being denied, in contrast with a 3% denial fee for Paycheck Safety Program funds. The proprietor of a New Orleans escape-room firm complained to The Intercept in 2021 that the SBA was creating “winners and losers in the identical {industry} due to the arbitrariness of the awards.”

The company was initially so unprepared for the onslaught of purposes that its on-line portal crashed and was offline for 2 weeks. Some small-business homeowners had been informed that the SBA had denied them funding as a result of the company believed they had been lifeless.

Candidates went to nice lengths to qualify for SVOG funds, scrounging up flooring plans and advertising supplies and amending years of tax returns to revise their NAICS codes, in response to lawsuits and a music-industry accountant who spoke with Insider. However for others, the method was far simpler. Andre Lorquet, a Florida man, looted $3.8 million from SVOG with a couple of phony tax paperwork, court docket data say. He used a few of it to purchase a Lamborghini. (Lorquet pleaded responsible to identification theft and cash laundering in January.)

CHULA VISTA, CALIFORNIA - SEPTEMBER 02: Musicians Jonathan Davis of Korn performs on stage at North Island Union Amphitheatre on September 02, 2019 in Chula Vista, California. (Photo by Daniel Knighton/Getty Images)

An organization managed by the members of the metallic band Korn obtained practically $5.3 million in taxpayer-funded grant cash. Daniel Knighton/Getty Photographs

The SBA’s inspector common has raised questions on this system’s oversight, discovering in a report final 12 months that the “SBA didn’t comply with basic grant administration controls meant to guard taxpayer funds.”

In a single case the inspector common reviewed, an utility for $55,000 resulted in a $551,000 grant — a $496,000 overpayment. In one other occasion, an SBA worker concluded {that a} recipient who had initially obtained a $4.9 million grant was really eligible for less than $3 million, however the company did not take any steps to get better the $1.9 million in overpayments.

In a response to the inspector common’s report, the SBA contested these findings, saying each awards had been justified. “The SBA has sturdy compliance management processes in place to make sure funds had been utilized in accordance with congressional statute, together with ongoing monitoring packages and audit opinions, and refers any suspicions of fraud to federal regulation enforcement,” an company spokesperson stated in an announcement to Insider.

The inspector common is conducting an extra audit of the grant program, which it expects to launch this 12 months.

‘Outdoors-the-box’ advisors

Throughout the music {industry}, although, one asset-management agency alone helped unlock greater than $260 million in taxpayer cash for simply 97 artists, venues, and managers, in response to an Insider overview of the SBA’s grant-recipient database.

That agency, NKSFB, counts a number of the greatest names within the music {industry} as purchasers, together with Publish Malone, Marshmello, Aoki, Godsmack, and Korn. It performed up its success with Shuttered Venue grants: One associate bragged to Billboard that they helped purchasers discover “outside-the-box” funding streams like SVOG.

One firm obtained by far essentially the most grants for reside performers

The agency started making use of for Shuttered Venue grants on behalf of its artists beginning in July 2021, in response to a lawsuit filed towards NKSFB by Laurence Chief, a rival enterprise supervisor who claimed he pitched the agency on the concept of getting grants for his or her purchasers — for a 15% fee — solely to have NKSFB steal his concept. NKSFB denied the allegations; the case is pending.

A veteran NKSFB supervisor, Michael Oppenheim, was initially skeptical that his purchasers would qualify for the grant, in response to the lawsuit. However after Chief informed Oppenheim he’d already submitted an utility on behalf of an unnamed jazz musician, Oppenheim determined to offer the concept a strive, the lawsuit stated.

Inside weeks, NKSFB had submitted purposes on behalf of “dozens” of its “standard mainstream artist and band purchasers,” in response to the swimsuit. Below SBA guidelines, the agency can be permitted to take a minimize of every grant.

NKSFB purchasers acquired practically 10% of the entire grants awarded to performing arts organizations

One enterprise supervisor informed Insider his purchasers started to “aggressively” press for SVOG cash as soon as phrase of NKSFB’s technique acquired round. The enterprise supervisor stated he did not assume artists or managers certified, and went to a distinguished lawyer, who agreed.

“If you happen to have a look at the identify of this system, it is the ‘Shuttered Venue Operator Grant,'” the supervisor stated. “Nowhere in there do you hear ‘performer’ or ‘artist’ or any of that.”

NKSFB’s managing associate Mickey Segal declined to remark, citing a company coverage of not discussing consumer issues. Oppenheim died in April.

NKSFB acquired its purchasers more cash than the everyday grant recipient

‘Evaluating wounds’

Schade, the theater-company supervisor, who says she’s the kind of individual to “all the time do my homework,” heard in regards to the invoice that might create the Shuttered Venue Operators Grant in early 2021 and threw herself into studying its intricacies. She grew to become one thing of an SBA whisperer to small and midsize arts teams making use of for the grant, reviewing purposes and funneling data from the SBA to a 2,500-member Fb group. Their questions in the end grew to become so overwhelming that she employed an assistant to assist her deal with them, she stated.

A lot of the cash disbursed via the grant program went to symphony orchestras, theatrical teams — together with all 5 touring productions of “Hamilton,” the Oregon Shakespeare Pageant, and the magician David Copperfield — live performance halls, zoos, aquariums, and small community-arts organizations, in response to a overview of the greater than 13,000 grant recipients revealed on the SBA’s web site.

Grant officers scrutinized candidates minutely, candidates informed Insider, asking them to submit live performance posters and contracts from earlier excursions to show that they had been official performers.

Some recipients say it is unfair to critique this system in hindsight. On the time it went into impact, pandemic shutdowns had battered the performing-arts {industry}, leaving tens of 1000’s of actors, musicians, stagehands, ushers, safety guards, lighting and sound technicians, costumers, and set designers out of labor. Managers and brokers, who take fee funds from artists’ income, additionally noticed their supply of revenue dry up because the pandemic canceled excursions, three music {industry} managers informed Insider.

Although she was an up-close witness to the struggles of small arts organizations in the course of the pandemic, Schade stated she was in no place to guage well-known musicians that had obtained cash via the grant program.

Performing arts teams suffered beneath pandemic lockdowns. Broadway reveals had been canceled for greater than a 12 months. For a lot of, the SVOG funds got here as a lifeline. Alexi Rosenfeld/Getty Photographs

“Evaluating wounds in the course of the pandemic shouldn’t be a wholesome strategy to strategy issues,” Schade stated. Larger acts have extra bills, she added.

“We are able to, now, look again three years later and say there wasn’t sufficient oversight,” she stated. “However the actuality is that when there is a hearth that is burning you go searching and attempt to put that fireplace out.”

The difficulties of the pandemic, although, clearly didn’t have an effect on the entire grant recipients equally.

Gary Osier, a reserving agent whose firm represents dozens of acts together with ZZ Prime, Foreigner, and 98 Levels, seems to have weathered the pandemic with out a lot monetary misery. In November 2021, because the Delta variant raged all through the nation, he was in a position to buy a $2.1 million four-bedroom lake home outdoors Dallas utilizing money.

However his firm, Gary Osier Presents, wasn’t fairly as lucky. It utilized for a $10 million SVOG grant, which it obtained in July 2021. The corporate had beforehand obtained a PPP mortgage of $127,000; its utility stated it had one worker on the time.

The grant got here at a time when the SBA was beneath stress to do extra to assist the touring {industry}. Only a month earlier, 55 senators had despatched the company a letter urging it to disburse the SVOG funds extra rapidly.

“The SVOG program is exclusive, with crucial restrictions inbuilt to make sure taxpayer funding goes solely to eligible candidates in want,” they wrote. “Bureaucratic course of can not stand in the way in which of getting these desperately wanted funds out the door.”

In an announcement, Osier stated his firm “totally complied with all auditing and monitoring necessities of the SVOG program, together with use of grant funding” and “put the grant funds to work solely for the critically vital functions for which the SVOG program was designed.”

When requested what these functions had been, he didn’t reply.



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