Newsweek and Olivet University pull fire for obtaining coronavirus stimulus loans after participating in a $ 35 million money laundering program that resulted in guilty pleadings by former media company and college executives.
Founded by supporters of controversial Korean-American cleric David Jang, Olivet University received a $ 500,000 loan under the state Payroll Protection Program administered by the Small Business Administration.
Newsweek, whose parent company IBT Media was also run by Jang supporters at the time of the scandal, reportedly received $ 350,000 in PPP funds.
The loan application includes a question about involvement in fraud in the past five years. The Manhattan Attorney’s Office filed the charges two years ago. After receiving pledges of guilt in February, prosecutors said the executives in charge of the program had been removed at the time the pleadings were made.
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But that hasn’t stopped a government watchdog from criticizing the nearly $ 1 million loans to the two companies.
“The fact that these two organizations, embroiled in a fraud and embezzlement scandal, were given access to PPP loans while excluding real small businesses underscores the fatal shortcomings of this program,” said Kyle Herrig, president of Accountable.US, a watchdog -Group . “Grossly inadequate oversight and poor implementation meant that this program was botched from the start and exploited by bad actors. And that was actually it. “
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The prosecutor’s 17-month grand jury investigation culminated in January 2018 when officials searched Newsweek’s offices and carted away 18 computer servers. There was also a subsequent raid on an Olivet facility that housed the abandoned Harlem Valley Psychiatric Center that did not provide computer servers.
Olivet pleaded guilty to a case of conspiracy and forgery of business records in February and agreed to pay a $ 1.25 million fine over the next 24 months. Former chairman of the board, Andrew Lin, has been banned from attending Bible College for two years.
Newsweek’s participation was limited to funds that were passed on to the then parent company IBT Media. Etienne Uzac, former IBT co-owner, pleaded guilty in February and received a non-jail sentence.
Olivet spokesman Ronn Torossian said the SBA had approved around $ 500,000 in loan for the college.
“The PPP funds were used exclusively for covered expenses for the eight week covered period after receipt of the loan. Like many other universities, we are affected by the pandemic, ”he said.
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“No one on the university’s current board was convicted of a crime at the time of the PPP motion. All of the previously accused resigned from the board long before the university decided to apply for the PPP. “
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A Newsweek spokesman did not return a request for comment.
