Early 2021 was a affluent time for Austin Richard Publish, higher referred to as the “Sunflower” singer Publish Malone.

Whereas lots of his entertainment-industry colleagues struggled to pay hire underneath the pandemic-era lockdowns that decimated reside music within the US, Publish purchased a 9,000-square-foot ski chalet in Park Metropolis, Utah, which had been listed for $11.5 million, in an all-cash transaction that February.

By Might, he’d purchased an industrial house in a Salt Lake Metropolis suburb that had been listed for $1.45 million. There, he opened a industrial forge to craft knives and swords, “as a interest,” Publish’s consultant informed the town’s planning fee.

However later that yr, an organization managed by Publish efficiently utilized for a $10 million grant from a taxpayer-funded federal program supposed to offer “emergency help” to assist struggling arts teams get better from the pandemic.

This system, the Shuttered Venue Operators Grant, was a lifeline for the live-entertainment enterprise. Administered by the Small Enterprise Administration, it doled out $14.5 billion to establishments like film theaters, ballets, operas, expertise brokers, performing-arts venues, and museums. Not like the Paycheck Safety Program, which many venues did not qualify for, the Shuttered Venue program was a grant, not a mortgage. Certified candidates have been eligible for as much as $10 million with no obligation to repay it.

“SVOG was there to avoid wasting us, and to hold us via,” mentioned Meredith Lynsey Schade, who was managing an off-off-Broadway theater firm when the pandemic hit.

However the Shuttered Venue program was additionally affected by ineffective oversight and loopholes that allowed a number of the largest names within the music {industry} to get large payouts, an Insider investigation discovered.

R&B artist Chris Brown received $10 million. Rapper Lil Wayne received $8.9 million. Nineties rockers The Smashing Pumpkins received $8.6 million. Nickelback — sure, Nickelback — obtained $2 million.

All informed, Insider recognized dozens of firms and limited-liability corporations managed by high-profile musical artists that obtained grants via this system. A single financial-management agency in Los Angeles efficiently submitted grants on behalf of 97 artists, venues, and managers, amounting to greater than 1 / 4 of a billion {dollars} in grant payouts, Insider’s evaluation discovered, together with greater than $200 million for big-name artists alone.

Did your favourite musician get a giant federal payout?

Insider recognized dozens of big-name musical artists whose touring corporations scored hundreds of thousands of {dollars} in federal grants in the course of the pandemic.

^{Supply: Small Enterprise Administration}

Publicly, the invoice that created the Shuttered Venues grant was marketed as supporting behind-the-scenes staff at indie venues and small levels — not arena-filling musicians.

Sen. Chuck Schumer, one of many lawmakers who sponsored what was then referred to as the “Save Our Phases” invoice, informed his constituents the cash can be used for “unbiased reside venue operators, unbiased film theaters, and cultural establishments corresponding to reside performing arts organizations and museums,” based on a press launch. At a star-studded ceremony in April, Schumer was honored by the Recording Academy, the group behind the Grammys, for passing the invoice. A spokesperson for Schumer declined to remark.

I used to be so honored to be acknowledged at this yr’s @RecordingAcad #GRAMMYsontheHill!

My love for music runs deep.

That is why I made it my mission to cross the Save Our Phases Act, and I will sustain the work to assist the music and efficiency {industry}. pic.twitter.com/z1OCg22RAU

— Chuck Schumer (@SenSchumer) April 27, 2023

Lots of of musicians and different performing artists signed an open letter to Congress asking them to assist “neighborhood unbiased venues” the place lots of them had gotten their begins.

A few of those self same artists managed corporations that went on to obtain multimillion-dollar payouts from this system, together with the electronic-music famous person Steve Aoki ($9.9 million) and the “Really feel It Nonetheless” crooners Portugal. The Man ($2.25 million).

The Shuttered Venue program “helped save 1000’s of leisure venues and operators throughout the nation in the course of the COVID-19 pandemic,” an SBA spokesperson mentioned in an announcement. Almost half the grant cash went to companies with fewer than 5 full-time workers, “the smallest of small companies,” the spokesperson added.

However a number of the artists’ companies Insider analyzed would match into that class. As an illustration, Aoki’s company, DJ Child Millionaire Touring Inc., informed the federal government it had simply 4 full-time workers on its utility for a $71,000 PPP mortgage.

An absence of controls

There isn’t a indication that funds to big-name artists broke the legislation. Although the laws was focused at “reside performing arts group operators,” an SBA consultant confirmed to Insider that artists themselves have been included inside its scope.

The federal government continues to be figuring out simply how a lot pandemic-era assist went to fraudulent claims. In June, the SBA inspector basic launched a report contending that 8% of the loans disbursed by the Paycheck Safety Program, which pumped about $800 billion into the US economic system in the course of the lockdowns, may need been fraudulent. The company’s Financial Damage Catastrophe Loans, which paid out about $400 billion, had an excellent larger charge of potential fraud, based on the report: one-third. Fraudsters blew the cash on issues like sports activities vehicles, luxurious purses, and gold bars, the inspector basic discovered.

The SBA has disputed these findings, and touted its oversight of the Shuttered Venue program particularly as wildly profitable. The company estimates that lower than 1% of grants disbursed via SVOG have been fraudulent, it mentioned in a report final month.

Trade sources contacted by Insider defended the Shuttered Venue program by stating that many artists sometimes contract with a whole lot of sound and lighting technicians, costumers, drivers, safety personnel, and different contractors once they put collectively a tour. All these contractors have been out of labor in the course of the lockdowns, the sources mentioned, and artists making use of for grants may have used the cash to assist maintain them afloat.

^{Digital music famous person Steve Aoki requested Congress for cash to avoid wasting small levels. Then an organization he controls received a $9.9 million grant from this system. Greg Doherty / Contributor / Getty Photographs}

However there was no requirement that they spend the cash that manner. The grant cash was supposed as substitute for misplaced income, and recipients may spend it on issues like current mortgage funds, taxes, and payroll — together with paying themselves.

The shortage of spending controls created alternatives for impropriety, based on the SBA’s inspector basic and sources reached by Insider.

For one, candidates wanted to get the SBA’s approval on an in depth funds to obtain a grant and to submit documentation displaying how the cash was finally spent. (The company denied Insider’s requests underneath the Freedom of Info Act for information displaying how the artists spent the cash, citing an exemption for confidential enterprise information.)

However after that they had the cash, recipients have been permitted to shift it round to completely different approved makes use of, the inspector basic famous in a report final yr. It referred to as the follow “regarding” and out of line with how the SBA administers different grants.

Furthermore, corporations that contract with artists to assist excursions have been themselves eligible to obtain SVOG funding, elevating questions on whether or not some corporations have been paid from artists’ grants whereas additionally receiving grants themselves. As an illustration, two of the largest sound-system suppliers for touring, Eighth Day Sound and Clair International — which merged in 2020 — every obtained $10 million grants.

Insider contacted greater than 60 grant recipients, together with Clair and Eighth Day, in addition to all the artists named on this article, to ask how they spent their grants. None of them shared detailed info, and most didn’t reply.

Eighth Day’s president, Tom Arko, mentioned he had no perception into how Eighth Day used the grant cash as a result of Clair International has dealt with its funds for the reason that merger. However he was stunned when an Insider reporter shared the names of a number of the artists whose corporations obtained grant cash. Different stars like Bonnie Raitt and Justin Bieber paid their manufacturing crews from their very own pockets when the pandemic canceled their live shows, Arko famous.

There have been few limits on how the cash might be spent. The grants could not be used instantly for some issues, like shopping for actual property or making political donations. However underneath SBA tips, the grants might be used to pay “proprietor compensation,” an quantity the company capped at regardless of the proprietor earned in 2019. In different phrases, Publish Malone or the members of Nickelback may have used no less than some grant cash to pay themselves instantly with out violating this system’s guidelines. (There isn’t a proof that they did so.)

And artists weren’t the one ones free to get in on the motion: The SBA informed Insider that grant recipients may pay the legal professionals, managers, and accountants who ready their functions no matter was “extraordinary and needed” — a determine as excessive as 15%, based on the grievance in a single lawsuit. Against this, the Paycheck Safety Program capped such charges, which it referred to as “agent charges,” at 1% for PPP loans.

Enterprise managers, expertise brokers, and others surrounding the artists additionally cashed in instantly. Two corporations owned by Publish Malone’s comanagers, Austin Rosen and Dre London, obtained grants totaling almost $20 million in 2021. Rosen, for one, did not look like hurting for cash: In 2021 and 2022, he spent $25 million to assemble a Miami Seaside property. (Insider discovered no proof that both man paid themselves.)

Two entities partly owned by the legendary expertise supervisor Irving Azoff, whose agency’s shoppers embrace The Eagles, Lizzo, Harry Kinds, and Gwen Stefani, collectively received $17.5 million from this system.

^{Music mogul Irving Azoff, pictured right here with Gwen Stefani eventually yr’s Rock and Roll Corridor of Fame induction ceremony. Two entities he partly owns received $17.5 million. Kevin Mazur/Getty Photographs for The Rock and Roll Corridor of Fame}

Marty Singer, a lawyer for Azoff, informed Insider that the businesses complied with the SVOG program’s guidelines and that Azoff himself was not in want of any bailout funds.

A pandemic-era asset buy seems to assist Singer’s description of Azoff’s monetary place. In November 2021, Azoff bought a $21.5 million Beverly Hills property adjoining one other dwelling he owns.

“Irving Azoff didn’t profit personally,” he mentioned. “My consumer would not want SVOG cash to purchase a home.”

Publicly traded corporations have been ineligible for grant cash, however the live performance powerhouse Stay Nation nonetheless was in a position to profit from Shuttered Venue funding as a slew of its subsidiaries have been bolstered by grant cash, The Washington Publish reported.

In an announcement, a consultant for Stay Nation mentioned the corporate has no skill to regulate whether or not its subsidiaries entry assist applications, including that the subsidiaries used “each useful resource legally out there to them to assist their workers via this disaster, which was not solely their proper but additionally a wholly comprehensible and human factor to do.”

A $496,000 overpayment

In the meantime, smaller and fewer celebrated organizations struggled to entry Shuttered Venue funding. Many candidates discovered it troublesome to navigate the SBA’s necessities, which contributed to 30% of functions being denied, in contrast with a 3% denial charge for Paycheck Safety Program funds. The proprietor of a New Orleans escape-room firm complained to The Intercept in 2021 that the SBA was creating “winners and losers in the identical {industry} due to the arbitrariness of the awards.”

The company was initially so unprepared for the onslaught of functions that its on-line portal crashed and was offline for 2 weeks. Some small-business house owners have been informed that the SBA had denied them funding as a result of the company believed they have been useless.

Candidates went to nice lengths to qualify for SVOG funds, scrounging up ground plans and advertising and marketing supplies and amending years of tax returns to revise their NAICS codes, based on lawsuits and a music-industry accountant who spoke with Insider. However for others, the method was far simpler. Andre Lorquet, a Florida man, looted $3.8 million from SVOG with just a few phony tax paperwork, courtroom information say. He used a few of it to purchase a Lamborghini. (Lorquet pleaded responsible to id theft and cash laundering in January.)

^{An organization managed by the members of the metallic band Korn obtained almost $5.3 million in taxpayer-funded grant cash. Daniel Knighton/Getty Photographs}

The SBA’s inspector basic has raised questions on this system’s oversight, discovering in a report final yr that the “SBA didn’t comply with elementary grant administration controls supposed to guard taxpayer funds.”

In a single case the inspector basic reviewed, an utility for $55,000 resulted in a $551,000 grant — a $496,000 overpayment. In one other occasion, an SBA worker concluded {that a} recipient who had initially obtained a $4.9 million grant was truly eligible for under $3 million, however the company did not take any steps to get better the $1.9 million in overpayments.

In a response to the inspector basic’s report, the SBA contested these findings, saying each awards have been justified. “The SBA has strong compliance management processes in place to make sure funds have been utilized in accordance with congressional statute, together with ongoing monitoring applications and audit opinions, and refers any suspicions of fraud to federal legislation enforcement,” an company spokesperson mentioned in an announcement to Insider.

The inspector basic is conducting a further audit of the grant program, which it expects to launch this yr.

‘Outdoors-the-box’ advisors

Throughout the music {industry}, although, one asset-management agency alone helped unlock greater than $260 million in taxpayer cash for simply 97 artists, venues, and managers, based on an Insider assessment of the SBA’s grant-recipient database.

That agency, NKSFB, counts a number of the largest names within the music {industry} as shoppers, together with Publish Malone, Marshmello, Aoki, Godsmack, and Korn. It performed up its success with Shuttered Venue grants: One companion bragged to Billboard that they helped shoppers discover “outside-the-box” funding streams like SVOG.

One firm obtained by far essentially the most grants for reside performers

The agency started making use of for Shuttered Venue grants on behalf of its artists beginning in July 2021, based on a lawsuit filed in opposition to NKSFB by Laurence Chief, a rival enterprise supervisor who claimed he pitched the agency on the concept of getting grants for his or her shoppers — for a 15% fee — solely to have NKSFB steal his thought. NKSFB denied the allegations; the case is pending.

A veteran NKSFB supervisor, Michael Oppenheim, was initially skeptical that his shoppers would qualify for the grant, based on the lawsuit. However after Chief informed Oppenheim he’d already submitted an utility on behalf of an unnamed jazz musician, Oppenheim determined to provide the concept a strive, the lawsuit mentioned.

Inside weeks, NKSFB had submitted functions on behalf of “dozens” of its “standard mainstream artist and band shoppers,” based on the go well with. Beneath SBA guidelines, the agency can be permitted to take a lower of every grant.

NKSFB shoppers received almost 10% of the overall grants awarded to performing arts organizations

One enterprise supervisor informed Insider his shoppers started to “aggressively” press for SVOG cash as soon as phrase of NKSFB’s technique received round. The enterprise supervisor mentioned he did not suppose artists or managers certified, and went to a outstanding lawyer, who agreed.

“Should you take a look at the identify of this system, it is the ‘Shuttered Venue Operator Grant,'” the supervisor mentioned. “Nowhere in there do you hear ‘performer’ or ‘artist’ or any of that.”

NKSFB’s managing companion Mickey Segal declined to remark, citing a company coverage of not discussing consumer issues. Oppenheim died in April.

NKSFB received its shoppers more cash than the standard grant recipient

‘Evaluating wounds’

Schade, the theater-company supervisor, who says she’s the kind of particular person to “all the time do my homework,” heard in regards to the invoice that will create the Shuttered Venue Operators Grant in early 2021 and threw herself into studying its intricacies. She turned one thing of an SBA whisperer to small and midsize arts teams making use of for the grant, reviewing functions and funneling info from the SBA to a 2,500-member Fb group. Their questions in the end turned so overwhelming that she employed an assistant to assist her deal with them, she mentioned.

A lot of the cash disbursed via the grant program went to symphony orchestras, theatrical teams — together with all 5 touring productions of “Hamilton,” the Oregon Shakespeare Competition, and the magician David Copperfield — live performance halls, zoos, aquariums, and small community-arts organizations, based on a assessment of the greater than 13,000 grant recipients printed on the SBA’s web site.

Grant officers scrutinized candidates minutely, candidates informed Insider, asking them to submit live performance posters and contracts from earlier excursions to show that they have been legit performers.

Some recipients say it is unfair to critique this system in hindsight. On the time it went into impact, pandemic shutdowns had battered the performing-arts {industry}, leaving tens of 1000’s of actors, musicians, stagehands, ushers, safety guards, lighting and sound technicians, costumers, and set designers out of labor. Managers and brokers, who take fee funds from artists’ income, additionally noticed their supply of earnings dry up because the pandemic canceled excursions, three music {industry} managers informed Insider.

Although she was an up-close witness to the struggles of small arts organizations in the course of the pandemic, Schade mentioned she was in no place to evaluate well-known musicians that had obtained cash via the grant program.

^{Performing arts teams suffered underneath pandemic lockdowns. Broadway reveals have been canceled for greater than a yr. For a lot of, the SVOG funds got here as a lifeline. Alexi Rosenfeld/Getty Photographs}

“Evaluating wounds in the course of the pandemic shouldn’t be a wholesome technique to method issues,” Schade mentioned. Greater acts have extra bills, she added.

“We are able to, now, look again three years later and say there wasn’t sufficient oversight,” she mentioned. “However the actuality is that when there is a fireplace that is burning you go searching and attempt to put that fireplace out.”

The difficulties of the pandemic, although, clearly didn’t have an effect on all the grant recipients equally.

Gary Osier, a reserving agent whose firm represents dozens of acts together with ZZ Prime, Foreigner, and 98 Levels, seems to have weathered the pandemic with out a lot monetary misery. In November 2021, because the Delta variant raged all through the nation, he was in a position to buy a $2.1 million four-bedroom lake home exterior Dallas utilizing money.

However his firm, Gary Osier Presents, wasn’t fairly as lucky. It utilized for a $10 million SVOG grant, which it obtained in July 2021. The corporate had beforehand obtained a PPP mortgage of $127,000; its utility mentioned it had one worker on the time.

The grant got here at a time when the SBA was underneath strain to do extra to assist the touring {industry}. Only a month earlier, 55 senators had despatched the company a letter urging it to disburse the SVOG funds extra rapidly.

“The SVOG program is exclusive, with needed restrictions inbuilt to make sure taxpayer funding goes solely to eligible candidates in want,” they wrote. “Bureaucratic course of can’t stand in the best way of getting these desperately wanted funds out the door.”

In an announcement, Osier mentioned his firm “totally complied with all auditing and monitoring necessities of the SVOG program, together with use of grant funding” and “put the grant funds to work solely for the critically necessary functions for which the SVOG program was designed.”

When requested what these functions have been, he didn’t reply.