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Companies Tied To California Officials Get US Virus Loans

Gov. Gavin Newsom gives an update in Rancho Cordova, Calif., Friday, June 26, 2020, on the state's response to the coronavirus pandemic.
Associated Press
Gov. Gavin Newsom gives an update in Rancho Cordova, Calif., Friday, June 26, 2020, on the state's response to the coronavirus pandemic.

Businesses tied to California Gov. Gavin Newsom, Lt. Gov. Eleni Kounalakis and two of the state’s legislative leaders were among those that received federal loans aimed at keeping small businesses afloat during the coronavirus pandemic, records released Monday showed.

A Northern California winery and hospitality company, PlumpJack, founded and partly owned by Newsom, received a loan worth $150,000 to $350,000 from the Paycheck Protection Program, according to data released by the U.S. Treasury Department.

Before taking office as governor in 2019, Newsom announced he would step away from his businesses and put his assets in a blind trust managed by a family friend and attorney.


“You would have to ask the people that are running those businesses,” Newsom said in response to a question about why his company applied for the loan.

McKenzie Ward, vice president of marketing for PlumpJack Group, said the governor “has no say in any decision we are making” and that the company was grateful to qualify for the aid. Federal data shows the loan helped save 14 jobs.

A labor consulting company led by state Senate Minority Leader Shannon Grove, a Bakersfield Republican, received a loan within the same dollar range. Grove listed herself as president and CEO of Continental Labor Resources Inc. on most recent state public disclosure forms, reporting that she drew an income of over $100,000. The loan saved 365 jobs at the company, according to data.

A consulting firm founded and run by Jennifer LeSar, the spouse of state Senate President Pro Tem Toni Atkins, D-San Diego, received a loan in the range of $350,000 to $1 million, helping retain 15 jobs. LeSar Development Consultants counts California cities and housing groups among its clients, working on homelessness and affordable housing policy.

Kounalakis’s husband, Markos Kounalakis, is director of a family-run real estate company in Sacramento that received a loan worth between $350,000 to $1 million. In state public disclosure forms, Eleni Kounalakis reported her husband, a longtime foreign affairs news columnist and analyst, as drawing a salary between $10,001 to $100,000 from AKT Investments Inc., which dubs itself the largest land development company in Northern California.


There is nothing barring elected officials from applying for and receiving the loans. Bob Stern, the former president of Center for Governmental Studies in Los Angeles, said he doesn’t see anything improper about it. But he added transparency still matters.

“Anytime there’s federal money going to businesses owned by public officials, the public should know about it,” Stern said.

Under the PPP initiative, the government is backing $659 billion in low-interest business loans that will be forgiven if employers use the money on payroll, rent and similar expenses. Companies typically must have fewer than 500 workers to qualify.

The public may never know the identity of more than 80% of the nearly 5 million beneficiaries to date because the Trump administration has refused to release details on loans under $150,000 received by the vast majority of borrowers.

That secrecy spurred an open-records lawsuit by a group of news organizations, including The Associated Press. Still, the release of the data is the most complete look at the program’s recipients so far.

Records show over 87,000 businesses in California received loans worth $150,000 or more.

Newsom’s company, PlumpJack Management Group LLC, is part of a portfolio of brands that include a resort hotel near Lake Tahoe, five restaurants and bars, four Napa Valley wineries, a sports retailer and more. His blind trust is managed by Shyla Hendrickson.

Hendrickson did not return emails about whether Newsom’s businesses received any loans under $150,000.

Newsom developed PlumpJack after he helped found it as a wine and spirits shop in San Francisco in 1992, on the same street the management group is still located.

Financial disclosure forms give an imprecise figure on how much Newsom draws from the five companies making up the PlumpJack portfolio. For 2019, Newsom reported on annual state financial disclosure forms making at least $200,000.