Company tied to Trump campaign manager gets PPP loan
A company whose largest shareholder is Trump campaign manager Brad Parscale received nearly $800,000 from the federal coronavirus relief fund for small businesses, according to a filing with the U.S. Securities and Exchange Commission.
The company, CloudCommerce, was eligible for the low-interest loan through the Paycheck Protection Program, which is aimed at businesses with fewer than 500 workers. The program provides 1% loans that can be forgiven entirely if companies use 75% of the money to retain and pay workers.
Companies can borrow 2.5 times their monthly payroll, up to $100,000 per employee. CloudCommerce had 49 employees at the end of 2019, according to another filing with the SEC.
There is no allegation of illegality associated with the PPP loan.
Parscale has been CloudCommerce's largest beneficial shareholder since 2017, when CloudCommerce bought two of his companies — now called Parscale Digital and Parscale Media — and added him to its Board of Directors. He currently owns 35% of the company, according to a recent SEC filing. The filing indicates he resigned from the Board on December 10, 2019.
Trump campaign communications director Tim Murtaugh told CBS News: "Brad has absolutely no role with the company. He only has preferred stock. He has no voting rights."
"He has no idea whatsoever what the company is doing. He doesn't talk to them, they have no business with the campaign or any other company Brad is connected to," Murtaugh said.
CloudCommerce CEO Andrew Van Noy said in an email that Parscale "no longer has any involvement in decision making for the company, including the PPP loan."
"Luckily, because we received this PPP loan, we have not had to let go of any employees," Van Noy said.
CloudCommerce received the $780,680 loan from Utah's Cache Valley Bank on May 5. That's more than six times the average PPP loan size of $125,000. CloudCommerce acknowledged the loan in an SEC filing and said it is "forgivable after eight weeks if the Company uses the PPP Loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and otherwise complies with PPP requirements."
In late December, the digital marketing company began soliciting new investors through a stock offering that promises a high annual dividend payment of 10%. Dozens of ads for the stock offering were removed from Facebook in February and March, because they violated the platform's policy against "get-rich-quick" schemes and made "exaggerated promises."
Facebook said in a statement to CBS News at the time that CloudCommerce's ads violated policies that "prohibit the kinds of tactics that mislead people through exaggerated promises of guaranteed financial success."
It is not clear how much the company has raised so far from that stock offering, from which it is seeking up to $20 million. But the company raised $600,000 last year from new lending arrangements, according to recently filed financial reports with the SEC. The Treasury Department has said that companies that can raise money through other means might not qualify for the government-backed PPP loan fund.
CloudCommerce still owns the Parscale companies and has a right to use his name. In previous SEC filings it has indicated the effect that might have on its customers.
"Even if the political or media climate diminished the Parscale name, our client base is dedicated to the name, and not swayed by politics or media coverage. In addition, there is a large group of clients who find more appeal to the Parscale name, because of political or media pressure," the company wrote in two such filings in October 2019.
Last month, CBS News reported that Phunware, a company that built the Trump campaign app, got a $3 million loan from the Paycheck Protection Program.
Phunware was named in a federal lawsuit in late April by a small business named Sha-Poppin Gourmet Popcorn, which applied for, but did not receive, a PPP loan. The lawsuit also names Ruth's Chris Steak House and JPMorgan Chase. Phunware has said the company did nothing wrong in applying and receiving its PPP loan. It called the lawsuit against it frivolous.
Correction: This story has been updated to correct the name of one of the companies referenced. It is Parscale Media, not Parscale Strategy.