Big law and accounting firms raked in $1.4 billion in taxpayer-backed COVID-19 “relief” loans from the federal government while regular people faced economic turmoil, according to a watchdog report obtained by the Washington Examiner.
Between 2020 and 2022, 126 of the wealthiest U.S. law firms received $809 million in forgiven Paycheck Protection Program loans, and 237 of the wealthiest U.S. accounting firms had $635 million in loans forgiven, OpenTheBooks, a financial watchdog group, said in a Friday report.
While PPP was meant to provide emergency aid to people, families, and businesses affected by the pandemic, many of these firms posted record revenues while receiving loans, and their equity partners earned millions of dollars, according to the watchdog’s analysis.
“When you think about it, law and accounting firms are uniquely well positioned to take advantage of legal loopholes and maximize benefits available to their clients under current statute,” Adam Andrzejewski, CEO of OpenTheBooks, told the Washington Examiner. “As they were leveraging every tax dollar available to them, many of their revenue numbers continued to grow.”
“It’s a stark contrast to what was happening to small businesses across the country, particularly in retail and hospitality, as they struggled to stay afloat,” he added. “Did taxpayers, many of us economically strapped, really need to reach into our pockets for these firms doing colossal business?”
Former President Donald Trump authorized PPP through the Coronavirus Aid, Relief, and Economic Security Act, a $2.2 trillion stimulus bill signed in March 2020. The program, which was implemented by the Small Business Administration, included $953 billion in aid for businesses, nonprofit groups, and other entities.
The pandemic and associated government lockdowns shuttered small businesses across the country, with roughly one-third of establishments closing during the course of the spread, according to the World Economic Forum. In 2020, the stock market took a massive tumble.
The SBA’s program has been ripe for fraud, and billions of dollars have been funneled to groups and people who did not legally qualify for aid. The vast majority of loans handed to businesses for their alleged upkeep have been forgiven by the government, according to SBA data.
Law firms included in the watchdog’s analysis received $6.5 million in loans on average. Boies Schiller Flexner, which is based in Boca Raton, Florida, and once employed Hunter Biden and Sen. Kirsten Gillibrand (D-NY), was handed an over $10 million PPP loan in April 2020 that was forgiven in October 2021, records show.
While that same firm lost revenue during the heat of COVID-19, its equity partners received $4.5 million each in profit compensation, and the firm billed clients $480 million between 2020 and 2021, said the report.
On the other hand, the New York City-based law firm Kasowitz Benson Torres grew its revenues steadily throughout 2019, 2020, and 2021. The firm also recorded a profit per equity partner average of roughly $2.4 million in 2021.
Still, Kasowitz Benson Torres was handed a roughly $10 million PPP loan in April 2020 that was waived in July 2021, records show. Employees at the firm notably gave over $107,000 to Democrats and roughly $31,000 to Republicans in 2020, according to Federal Election Commission filings.
Other deep-pocketed law firms that boasted impressive revenues during the pandemic and also took PPP loans include GrayRobinson PA in Orlando, Florida, Day Pitney LLP in Hartford, Connecticut, and Spencer Fane in Kansas City, Missouri, OpenTheBooks found.
“The Paycheck Protection Program (PPP) provided essential relief to America’s businesses but didn’t occur without rampant fraud and gross misallocation of this bipartisan aid,” Rep. Byron Donalds (R-FL) told the Washington Examiner. “As a member of the House Small Business Committee, I’ve supported efforts to bring oversight to the SBA’s implementation of the program, bring transparency, accountability, and resolution to these misuses, and hold abusers accountable.”
Accounting firms tallied in the watchdog’s analysis took an average of $2.6 million in PPP cash.
Prager Metis, which has over 100 partners and 24 offices globally, received a roughly $10 million loan in April 2021 that was forgiven in June 2022. The firm posted $133.9 million in revenue in 2019, $123.9 million in 2020, and $139 million in 2021, the report said.
Schneider Downs & Co., which works with Fortune 500 companies and is the 13th largest accounting firm in the Mid-Atlantic region, posted revenues of $88.1 million in 2019, $92.4 million in 2020, and $103.4 million in 2021. At the same time, however, the firm was handed an $8.9 million loan in April 2020 that was forgiven in June 2021.
“As a privately owned company with fewer than 500 employees, we were eligible to apply for a Paycheck Protection Program loan to allow us to operate with our workforce fully intact during a period of economic uncertainty in which all of our clients were impacted and reliant on our services,” said Sean Smith, chief marketing officer at Schneider Downs. “The loan allowed us to focus our energy and efforts on helping them manage through their rapidly changing needs.”
WithumSmith + Brown, a firm with 23 offices nationwide, posted revenues of $88.1 million in 2019, $92.4 million in 2020, and $103.4 million in 2021. The firm took a $10 million loan in April 2020 that was waived in June 2021, according to federal data.
Other accounting firms that have disclosed revenue surges between 2019 and 2021 while taking PPP loans include Aprio LLP, Cohen & Company, Whitley Penn LLP, and Berry, Dunn, McNeil & Parker.
In its report, OpenTheBooks makes clear that there is no evidence of the firms illegally obtaining the loans. The Justice Department has continued to investigate and prosecute individuals in connection to PPP money that was obtained through fraudulent means.
The SBA did not respond to a request for comment.
Reporting from The Washington Examiner.