SCOTT DETROW, HOST:
Early on in COVID, music venues were really struggling. Yeah, a lot of businesses were, but retail shops could lean on online orders, and restaurants could pivot to outdoor dining or delivery. But it was hard to pivot if your bread and butter was cramming a few hundred people into your dark club to sing and dance and generally breathe the same air together. Enter, the Shuttered Venue Operators Grant. This was a program signed into law by President Trump in December 2020, intended to help keep music venues and theaters afloat. It also lined the pockets of rich and famous musicians - that is according to a new investigative report by correspondent Katherine Long and her colleagues at Business Insider. She spoke about her reporting with NPR culture reporter Andrew Limbong and began by explaining how the grant worked.
KATHERINE LONG: This program was established to direct federal grant money towards small venues, small arts venues, small arts groups and movie theaters - organizations that were really struggling during the pandemic lockdowns because it was so difficult to get people in the same space. They weren't able to put on live shows. They weren't able to show movies, and they needed grant funding because a lot of them weren't eligible for the Paycheck Protection Program. Most of these venues and arts groups operate using contractors instead of employees. That means that they didn't have a huge payroll base that would show them as eligible for the PPP. So Congress passed this bill with the idea that some of this money would trickle down to the contractors who helped put on these shows. In some instances, that didn't work out too well.
ANDREW LIMBONG, BYLINE: Yeah. But let's see how it did work - right? - so let's say I owned, like, a 500-cap club. How would I go about getting money?
LONG: Sure. So organizations who saw a revenue decline from 2019 through 2020 were eligible for this funding, and there was a maximum grant amount of $10 million. But most of the organizations who received money, over 13,000 of them, got much less. The median grant size was around $300,000. So you applied through the Small Business Administration. You laid out a budget. You said, we're going to spend this amount of money on transportation, we're going to spend this amount of money, you know, paying our contractors, we're going to spend this amount of money on rent. The SBA would approve that funding, and you'd basically get a check. And at the end of the grant period, you'd show the SBA how the money was spent.
LIMBONG: But it didn't always work like that, right?
(LAUGHTER)
LIMBONG: And you opened your piece with Lil Wayne, the famous rapper. What did you find?
LONG: That's right. What we found was that Lil Wayne - who around the time the pandemic started, he booked around $100 million from selling the catalog rights from artists on his label - he applied for and received an $8.9 million grant from the Shuttered Venue Operators Grant program. He spent $1.3 million of that on private jets. He spent over $460,000 of that on clothing, largely designer brands like Gucci and Balenciaga. He spent $88,000 of it on a concert that he no-showed. Instead, he partied with the rapper 2 Chainz at a club a three-hour drive away that same night. And he spent nearly $15,000 of it on flights and hotels for women whose connection to his touring business was pretty unclear, including a waitress at a hot wings restaurant and a porn actress.
LIMBONG: Again, this is all federal taxpayer money, right? I just want to make that clear.
LONG: That's right. So the records we reviewed were unique for the level of detail they showed musicians using these funds. This wasn't just us connecting the dots. The thousands of pages of accounting records we reviewed listed specific line item expenses that artists had billed for the grant. So when we say Lil Wayne billed taxpayers for nearly $15,000 for flights and hotels for women, including a porn actress and a hot wings waitress, it's because those specific expenses were billed directly to taxpayers. That's probably not how Congress intended these funds to be used.
LIMBONG: How did you find all of this out?
LONG: We've been reporting on this program for over a year now. We first started getting into it last year when we got a tip about the Shuttered Venue Operators Grant. We published a story that was based largely on publicly available documents, including the database that the SBA keeps of all of the SVOG grant recipients, as well as a lawsuit. Then my colleague, Jack Newsham, kept reporting on this program. He kept his finger to the pulse. He published a story about how artists had to sign drug-free workplace certifications to get their funding. He also published a story about how the powerful Los Angeles accounting firm that realized there was a loophole large enough to drive a tour bus through and was able to get nearly $200 million of this money for their celebrity musician clients initially had some doubts about whether their clients were even eligible for the program.
LIMBONG: Let's do another example. Tell me about Alice In Chains.
LONG: Yeah, Alice In Chains is a story that really sticks with me. They applied for and received a $6.3 million grant through their loan-out company. That's basically a corporate alter ego they set up to handle the business of touring. We know from the records we reviewed that they didn't use any of the grant money to pay for benefits like health care for their touring employees, and that's not abnormal in the entertainment industry. But in 2022, one of the band's guitar techs, a person called Scotty Dach, was diagnosed with cancer. We found a GoFundMe page for him that said he didn't have health insurance and he couldn't afford to pay for health care. A few weeks later, he was dead. Now, Alice In Chains had to certify to the government that their loan-out company needed the grant to survive the pandemic, but a month before the grant check hit their bank account, they'd made $48 million selling the rights to their catalog.
LIMBONG: Has the Small Business Administration responded to any of this reporting?
LONG: The SBA told us that it complied with the law when it administered this grant program. It also said that it implemented industry-leading fraud controls. It didn't respond to many specific questions we had about what our reporting found. Many of the musicians named in this article also did not respond to requests for comment.
LIMBONG: In the grand scheme of things, this program did help keep tons of small businesses alive, right?
LONG: That's right. It did. There were over 13,000 organizations that benefited from this program, which disbursed over $14 1/2 billion in funds. In the grand scheme of things, compared to programs like the PPP, the Economic Impact Disaster Loan and unemployment insurance, the Shuttered Venue Operators Grant had fairly tight controls. The FBI estimates that the amount of fraud that came from the PPP, EIDL and unemployment insurance amounts to the largest amount of fraud ever in history. The Shuttered Venue Operators Grant, I mean, we focused on around $200 million of questionable spending out of that $14 1/2 billion total that was disbursed through the grant.
LIMBONG: How does money being used in this way lead people to being skeptical of financial support for the arts in the first place?
LONG: One thing that we've heard is that when prominent musicians, when celebrities take advantage of these programs, it starts becoming more acceptable for others to do so. So the fact that, you know, famous people like Lil Wayne, Chris Brown, Alice In Chains, the DJ Marshmello access these funds, that kind of shifts the public's perception of who might be eligible for programs like this in the future.
LIMBONG: That was Katherine Long. Her investigative reporting at Business Insider is titled, "How Rich Musicians Billed American Taxpayers For Luxury Hotels, Shopping Sprees, And Million-Dollar Bonuses." Thanks, Katherine.
LONG: Thanks so much for having me.
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DETROW: NPR reached out to musicians Lil Wayne and Alice In Chains for comments. We have yet to hear back as of this broadcast. Transcript provided by NPR, Copyright NPR.
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