9/11 grant recipients questionable
NEW YORK – Donald Trump, the Rockefeller Group and Ford Models were among the tycoons and huge corporations that received federal Sept. 11 recovery grants earmarked by Congress for small businesses, a New York Daily News investigation has found.
Other unlikely recipients include subsidiaries of corporate giants Dell Inc., Morgan Stanley, the AXA Group and the Bank of China, records show.
Even World Trade Center leaseholder Larry Silverstein’s company qualified for some small-business recovery aid.
The firms were allowed to collect small-business grants because the state agency that dished out the free money, the Empire State Development Corp., ignored the federal definition of a small business and adopted a much looser standard.
The ESDC used employee counts – setting the maximum for its $556 million Business Recovery Grant program at 500 workers – to determine whether applicants were small businesses.
Federal law requires that the size category of the types of businesses most common in lower Manhattan – finance, insurance, real estate and law firms – be determined based on annual revenue. Only the wholesale, manufacturing and mining sectors – obviously uncommon downtown – are measured by number of employees.
Also, in totaling the number of employees, the ESDC didn’t require applicants to include employees of subsidiaries and other affiliated businesses. Federal regulations require that linked companies are included in determining whether a business is small.
An analysis of a complete set of grant data recently obtained under the state Freedom of Information Law found that vast portions of the money went to businesses that few would consider small:
•At least $114 million – 20 percent of the total awarded under the BRG program – went to companies that reported too much revenue to meet the federal definition of a small business. And that figure likely represents only a fraction of the grant recipients whose revenue would surpass federal limits, because the ESDC asked applicants only to report the revenue attributable to their lower Manhattan office.
•Some $468 million – 84 percent of the money the ESDC handed out through the BRG program – went to businesses in sectors that federal law says should be evaluated based on revenue, not on the number of employees, the standard the ESDC used.
•The ESDC didn’t note applicants’ affiliations, so it would be impossible to calculate how much money went to subsidiaries of huge corporations, though the New York Daily News found dozens of examples by researching recipients.
The newspaper asked the ESDC to address why many large corporations received small business aid, citing three examples. The ESDC partially addressed one of the three and said Friday that it would switch the accounting of the other two to a program for large businesses.
“If, in a few cases, (large businesses) did receive compensation, it was provided as a result of administrative errors,” Deborah Wetzel, a spokeswoman for the ESDC, wrote via e-mail. “However, we do not believe that compensation provided to large firms as a result of processing errors amounted to a significant amount of BRG funding.”
But the New York Daily News found dozens of examples of large firms slipping through as small ones.
One couldn’t tell from ESDC records, for example, that 40 Wall Street LLC is owned by Trump.
Trump bills himself as the “largest real estate developer in New York.” Last week, Trump sued a New York Times reporter for concluding in a book that the host of “The Apprentice” isn’t a billionaire.
But the ESDC’s rules transformed Trump into a small-business man. His company collected a $150,000 grant for losses at 40 Wall St.
The grant application describes the corporation through which Trump owns that building as having 28 employees and $26.8 million in annual revenues.
That passed the ESDC’s small business test of less than 500 employees. But the revenue amount would put the single Trump property over the federal definition of a small business – which is $6 million annually for lessors of non-residential buildings.
A Trump spokeswoman did not respond to a call and e-mail message seeking comment.