Newsweek, Olivet University get heat for PPP loans

Newsweek and Olivet University are drawing fire for receiving coronavirus stimulus loans following their involvement in a $35 million money-laundering scheme that has resulted in guilty pleas by former executives of the media company and the college.

Olivet University, founded by followers of controversial Korean-American cleric David Jang, landed a $500,000 loan under the federal Payroll Protection Program administered by the Small Business Administration.

Newsweek, whose parent company IBT Media at the time of the scandal also was run by followers of Jang, reportedly received $350,000 in PPP money.

The loan application includes a question about involvement in fraud over the previous five years. The Manhattan District Attorney’s office brought the charges two years ago. After obtaining guilty pleas in February, the DA said the executives responsible for the scheme had been removed by the time the pleas were entered.

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But that has not stopped a government watchdog from criticizing the nearly $1 million in loans to the two entities.

“That these two organizations mired in a fraud and embezzlement scandal were able to access PPP loans, all while actual small businesses were shut out, underscores the fatal flaws of this program,” said Kyle Herrig, president of Accountable.US, a watchdog group. “Grossly inadequate oversight and inept implementation meant this program would be botched from the beginning and exploited by bad actors. And indeed it was.”

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The culmination of the DA’s 17-month grand jury probe occurred in January 2018, when officers raided Newsweek’s offices and carted away 18 computer servers. There also was a subsequent raid on an Olivet facility that was the home of the abandoned Harlem Valley Psychiatric Center that yielded no computer servers.

Olivet pleaded guilty in February to one count of conspiracy and one count of falsifying business records, and agreed to pay a $1.25 million fine over the next 24 months. Its former chairman of the board, Andrew Lin, has been barred from having any affiliation with the Bible college for two years.

Newsweek’s involvement was limited to money funneled to then-parent company, IBT Media. Etienne Uzac, former co-owner of IBT, pleaded guilty in February and received a non-jail sentence.

Olivet spokesman Ronn Torossian said the SBA approved a loan amount of around $500,000 for the college.

“The PPP funds have been used in the covered eight-week period after receipt of the loan exclusively for covered expenses. We have been affected by the pandemic, as have many other universities,” he said.

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“Nobody on the current board of the university was convicted of a felony charge at the time of the PPP application. Any previously indicted individuals had left the board long before the university had decided to apply for the PPP.”

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A spokesman for Newsweek didn’t return a request for comment.