An investigation by the Government Accountability Institute (GAI), supported by documents retrieved by FOIA requests, has found that then-Georgia House member Stacey Abrams received special treatment related to a government loan program that benefited her private investment in a company she helped start.
On October 7, 2021, the financial technology company Now Corp. (previously NOWaccount) co-founded by Stacey Abrams in 2010, secured $29 million in financing and an equity investment from Brigade Capital Management LP and Virgo Investment Group.
This was a significant milestone given the fact in 2013 NOWaccount had approximately $100,000 in annual revenue.
Less than two months after this announcement, on December 1, 2021, Abrams announced she would run for Georgia governor, setting up a possible rematch with Georgia GOP Governor Brian Kemp.
And in March 2022, Abrams filed a financial disclosure form which indicated her net worth was $3.17 million, a substantial increase from the net worth of $109,000 when she first ran for governor four years ago.
While most media reports attribute Abrams’ significant increases in net worth to speeches and advances for book projects, her investment in Now Corp. has received little attention. Curiously, the website for the Now Corp. currently has no mention of Abrams under the “About Us” tab, which describes the beginnings of the company. She is also not listed as a member of the management team.
It appears that Abrams – as she embarks on another high-profile political campaign – wants to separate her nine-year financial relationship with Now Corp. from her political ambitions.
A paper trail beginning in 2013 may explain why.
GAI found that NOWaccount, in 2013, while Abrams was an elected official, received approval from the Georgia Department of Community Affairs (DCA) to implement a federal government loan program to fit the NOWaccount business model. In essence, NOWaccount became a private lender approved to buy small-business trade receivables with taxpayer-guaranteed funds. No other state would offer this approach to NOWaccount.
Abrams’ business partner said in a Harvard case study that NOWaccount’s use of the federal loan program “allows us to scale faster because the government is in the first-loss position, not our lenders.”
In other words, NOWaccount could submit loan applications to the DCA for approval and then provide their selected business partners with cash for the promised collection of monies for services already provided to customers. If the NOWaccount partner defaulted on the monies provided, NOWaccount could be reimbursed by the government program with taxpayer funds.
And there were losses.
GAI also reviewed documents that indicate that Abrams’ role in the business was more substantial than previously reported. Abrams said in 2017 that she “walled myself off” from company operations. However, documents indicate she was an integral part of the plan to use the federal program to benefit NOWaccount.
For example, in February 2014, Abrams was added to the Georgia State corporate registration of the entity created by her partners that facilitated the use of the federal loan program – the Trade Credit Guaranty Corporation (TCGC).
In March 2014, Abrams was listed as a corporate officer in a new entity – Small Business Credit Cooperative (SBCC) – registered by NOWaccount in the state of Georgia to expand the use of the federal loan program through the Georgia DCA. This entity was funded in part by “a major private equity firm”
In April 2014, Abrams was mentioned prominently in the SBCC application submitted to the Georgia DCA. The application was approved.
All of this maneuvering related to her private business interest took place while Abrams was a Georgia elected official.
The program approved in 2013 by the Georgia DCA was terminated in 2017, a few months before the program was set to officially end. The reason for termination was, in part, due to losses absorbed by the Georgia DCA.
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Michael Patrick Leahy is the CEO and Editor-in Chief of The Georgia Star News and The Star News Network
Photo “Stacey Abrams” by Stacey Abrams.