I-Team: 22 Bay Area companies keep $52 million in federal funding intended for small businesses amid pandemic

Wednesday, May 20, 2020
22 Bay Area companies keep $52M in federal funding intended for small businesses
Twenty-two Bay Area public companies haven't returned roughly $52 million in federal funding intended for small businesses, according to ABC7 I-Team analysis.

SAN FRANCISCO (KGO) -- Twenty-two Bay Area public companies haven't returned roughly $52 million in federal funding intended for small businesses, according to an ABC7 I-Team analysis.

According to SEC filings, three public companies have returned the funding through the Paycheck Protection Program since the I-Team first broke the story in early April.

RELATED: Congress pressures San Jose-based Quantum to return $10M in Paycheck Protection Program funding

The following companies returned roughly $18 million:

  • Castlight Health
  • Aviat Networks
  • Durect

Here is a full list of those who have and haven't returned the money.

One of the 22 companies has been singled out by Congress for not returning the money. Quantum Corporation, a data storage company based in San Jose, is one of five U.S. companies that a Congressional Select Subcommittee has sent a letter to demanding the money be returned.

In the letter addressed to Quantum's CEO, it clearly states the company doesn't meet the qualifications to be eligible for the help. The letter even referenced the company's current market value exceeding $150 million.

"There needs to be much clearer guidance on who needs to be qualified," said Danielle Brian, the executive director of the Project on Government Oversight.

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"Quantum's deadline to respond to the subcommittee has passed. And we have yet to hear if any portion of the funds will be returned. What happens now?" ABC7's Stephanie Sierra asked.

"It is possible they've set themselves up for real problems," said Brian. "The treasury has set a standard that you have to certify receiving funds is necessary in order to continue your operations."

"If that standard is not met, what penalty could the company face?" Sierra asked.

"It's a felony to lie to the federal government," said Brian. "Stating that they need these funds if they don't need them, that is not a minor infraction if that's the case."

ABC7 reached out to Quantum for further comment and was provided the same statement saying:

"We have received the letter sent by Chairman Clyburn. Quantum is responding to the Chairman and appreciates the opportunity to engage with the Committee on these important issues.

Please note that this PPP loan is saving American jobs at Quantum -- without it we would most certainly be forced to reduce headcount. We owe it to our employees - who've stuck with us through a long and difficult turnaround - to do everything we can to save their jobs during this crisis. We believe strongly that Quantum not only falls within the technical eligibility requirements of the PPP loan program, but also falls squarely within the spirit of what was intended by the CARES Act."

ABC7 asked if the company to confirm if the $10 million is being used to keep their employees on payroll. Our team didn't receive a response.

"By the time accountability can happen a few months from now, many businesses may already be out of business," said Brian. "This is why these companies have to return the money now."

Take a look at more stories and videos by the ABC7 News I-Team.

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