Del Mar Fairgrounds agrees to pay $5.6 million to settle allegations of improperly obtaining a $4.7 million PPP loan during the COVID-19 pandemic.
At a Glance
- Del Mar Fairgrounds, owned by the 22nd District Agricultural Association (DAA), was ineligible for the PPP loan as a government-owned entity
- The $4.7 million loan was obtained in May 2020 and later forgiven, despite the DAA’s ineligibility
- The settlement includes repayment of the full loan amount, plus interest and fees, totaling about $5.6 million
- The DAA maintains its eligibility claim but agreed to settle to avoid litigation costs and risks
Government-Owned Entity Improperly Secures PPP Loan
Another day, another revelation of misuse of pandemic relief funds. Reports this week revealed how the Del Mar Fairgrounds in San Diego County has agreed to pay $5.6 million to settle allegations of unlawfully receiving a COVID-19 Paycheck Protection Program (PPP) loan. The 22nd District Agricultural Association (DAA), which owns and operates the fairgrounds, is a government-owned entity governed by a board appointed by Governor Gavin Newsom. This fact alone should have disqualified them from receiving PPP funds, which were explicitly designed to support eligible small businesses and non-profit organizations during the pandemic.
The PPP initiative, created in March 2020, was intended to be a lifeline for struggling small businesses, not a slush fund for government entities to exploit. Yet, in May 2020, the DAA managed to secure a $4.7 million PPP loan, which was later forgiven. This blatant disregard for the program’s guidelines has cost U.S. taxpayers over $4.7 million in principal and nearly $98,000 in fees and interest.
The Del Mar Fairgrounds announced Tuesday that they have returned a $5.6 million federal PPP loan to settle a dispute with the U.S. Attorney’s Office, which argues that they were not eligible for the COVID-era funds in the first place. @itslaurasplace https://t.co/Sfgg392NIy
— The Coast News Group (@coastnewsgroup) October 23, 2024
Accountability and Oversight Failures
The settlement reached in this case highlights the critical need for stricter oversight and accountability in government spending, especially during times of crisis. While the DAA claims it applied for the loan out of necessity and was transparent about the process, the fact remains that they were ineligible for the funds from the outset.
“These loans were intended to provide critical relief to eligible businesses during a time of global crisis,” San Diego U.S. Attorney Tara McGrath said.
The Del Mar Fairgrounds case is just the tip of the iceberg when it comes to potential PPP loan abuse in California. The state received a staggering $100 billion in PPP loans, with $96 billion forgiven – the highest amount in the United States. This raises serious questions about the effectiveness of the loan approval and forgiveness process, and whether other ineligible entities may have also received funds.
