Despite felony, Olivet receives federal PPP loan
WINGDALE — Most Americans are well aware that the federal Payment Protection Program (PPP) designed to help small businesses (with 500 employees or fewer) survive the coronavirus pandemic with forgivable loans has had some serious flaws — with enterprises like the Los Angeles Lakers and New York Knicks NBA teams and the popular burger chain, Shake Shack, getting many millions of dollars in loans (which they eventually returned amid a public outcry). Meanwhile, many small business owners complained they didn’t receive a dime — or received far too little — to help them through temporary closures caused by the health crisis.
Yet Olivet University, the evangelical Christian University founded by South Korean pastor David Jang based out of San Francisco, Calif., with a campus at the former Harlem Valley Psychiatric Center in Wingdale, and Newsweek magazine, both of which have been mired in controversy and pleaded guilty to a $35 million money laundering scheme earlier this year, received the government loans.
On Monday, July 27, Olivet spokesperson Ronn Torossian confirmed reports that the university received roughly $500,000 from the federal loan program, which is administered by the Small Business Administration (SBA).
“Following careful review with legal counsel, Olivet University had completed and submitted the PPP application in compliance with the law,” stated Torossian. “The SBA had approved it and had granted a loan amount of around $500,000.”
Newsweek, whose parent company, IBT Media, was also found guilty in the money laundering scheme, reportedly received a PPP loan worth $350,000.
The PPP loan application asks whether the applicant has been involved in any kind of fraud during the previous five years. The charges involving Olivet University and Newsweek were brought by Manhattan District Attorney (DA) Cyrus R. Vance Jr.’s office roughly two years ago; the guilty pleas were entered on Valentine’s Day, Feb. 14, of this year.
But according to Torossian, the question, which he stressed was for corporate applicants, “refers to the owners, which is the board at the time of the application.
“Nobody on the current board of the university was convicted of a felony charge at the time of the PPP application,” he stated. “Any previously indicted individuals had left the board long before the university had decided to apply for the PPP. In this regard, the university had correctly and truthfully replied to all the questions in the PPP application form.”
Vance concurred following the conclusion of the case that the executives who were responsible for the crime were no longer working by the time the guilty pleas were entered in court. Those included Andrew Lin, who resigned as Olivet chairman of the board; publishing executives Etienne Uzac, the former co-owner and chairman of IBT Media, which once owned Newsweek magazine; and William Anderson, the former CEO of Christian Media Corporation (CMC) and former Olivet trustee.
According to a past statement from Vance, Uzac and Anderson entered guilty pleas for engaging in a scheme “to fraudulently obtain $35 million from lenders.”
In Vance’s original 2018 indictment, he charged they conspired to fraudulently obtain millions in financing using Olivet’s name. The money, he said, was then laundered to “obscure its origins and fund Olivet’s operations.” According to the DA, the media companies and the university “disguised” their financial standing to appear larger than it was in order to secure loans worth $35 million, with which they said they would purchase high-tech computer servers. Then, after buying cheaper servers — if any at all — they used the loans for their own purposes, charged the DA.
On Feb. 14, both Uzac and Anderson pleaded guilty in New York State Supreme Court to money laundering in the second degree, a class C felony, and scheme to defraud in the first degree, a class E felony.
On Feb. 20, Olivet President Tracy Davis represented the university and entered a guilty plea for falsifying business records and taking part in a conspiracy. The school was fined $1.25 million for the offenses — a fraction of the $35 million the DA was pursuing. That’s mainly because Olivet had paid back all of the loans, despite their being fraudulently obtained.
Also convicted was Lin, who though convicted of fraud was only lightly punished by Manhattan district court docket Judge Ruth Pickholz. Lin pledged to refrain from serving in a governmental or managerial position at Olivet for the next two years.
Judge Pickholz ruled that Olivet will be conditionally discharged if its obligations are met during the next two years. The felony charges will then be reduced to misdemeanor charges.
The defendants — who stressed they repaid they loans in full — had hoped to get off with no jail time. They were scheduled to appear back in court for their sentencing on Monday, April 20. According to one source, the sentencing took place and they received community service hours.
According to a June SBA report, the average PPP loan amounts to roughly $107,000; the SBA claims 51 million jobs have been supported through the program as well as 84% of all people employed by small businesses in the U.S.
To date, $521 billion in PPP loans has been distributed, though there have been complaints about a lack of transparency as to where those loans have gone. But the federal government has been resistant to calls for increased transparency, claiming the information is “confidential.” The government finally released information in July on roughly 700,000 PPP loans of $150,000 or higher following intense public pressure.
The Washington Post reported that the data released, however, only reflects 15% of the loans issued and doesn’t include the majority of “sole proprietorships and independent contractors.” It also said some of the government’s information is erroneous, with incorrect figures or crediting loans that haven’t been released yet.
The program is nearing an end — the application deadline was extended until Aug. 8 — it’s unclear if there will be another round as Congress is debating further aid.