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How Senate candidates Mark Kelly and Daniel McCarthy are tied to businesses that got PPP cash

Arizona Republic logo Arizona Republic 7/7/2020 Yvonne Wingett Sanchez, Arizona Republic
a group of people standing in front of a crowd: Arizona Republican Senate candidate Daniel McCarthy speaks to the crowd during a rally for the governor to open the state at Wesley Bolin Plaza in Phoenix on May 3, 2020. © Michael Chow/The Republic Arizona Republican Senate candidate Daniel McCarthy speaks to the crowd during a rally for the governor to open the state at Wesley Bolin Plaza in Phoenix on May 3, 2020.

Two businesses and a non-profit with ties to the two U.S. Senate candidates aiming to unseat incumbent Republican Sen. Martha McSally took loans from the federal government’s Paycheck Protection Program, intended to help prop up the economy by infusing more than $600 billion into businesses large and small.

Federal records show that World View Enterprises, Inc., a Tucson-based company that uses balloons to launch lower-altitude “stratollites,” had ties to Democratic candidate Mark Kelly, the front runner in Arizona's closely watched Senate race. The retired NASA astronaut co-founded the company and then worked as a strategic adviser, a position he left in February 2019. 

"Mark has not applied for any PPP loans. Mark left World View well over a year ago so he didn’t know about this loan or have any role in seeking it," Kelly's spokesman Jacob Peters told The Arizona Republic.

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World View Enterprises received between $1 million and $2 million from the Paycheck Protection Program. An official with the company said the pandemic resulted in furloughs, and the PPP funds were used to minimize the economic impact on employees and preserve jobs 

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"Specifically, we used our expertise in manufacturing large format plastics to design and manufacture medical isolation gowns. In doing so we were able to return 17 employees from furlough,"  Ryan Hartman wrote in an email to The Republic. "Additionally, through the SBA Paycheck Protection Program we were able to preserve 38 jobs."

The employees recalled from furlough as a result of the PPP program are contributing to the company's next round of flights, "which will enable World View to secure our next round of venture capital," Hartman wrote.

The program, approved by Congress and touted by McSally, allows businesses to spend the money on payroll and other qualified expenses, such as most mortgage interest, rent and utility costs. 

The loans are credited with keeping open thousands of businesses across the U.S. and keeping employees on the job. 

In the Senate race, McSally, R-Ariz., and her allies on the right have been lambasting Kelly’s business ties to World View Enterprises, whose early investors included a giant Chinese technology company with ties to the ruling Communist Party in Beijing.

Kelly has been critical of the federal government’s early performance in administering the program, and has stressed the need for economic relief for struggling businesses. In April, reports surfaced that many small businesses in Arizona were unable to access the funds and that big banks were favoring certain customers over others. 

“I’ve heard over and over from small businesses across Arizona that the clock is ticking for them, and now it’s clear many of them are running into a wall of red tape blocking them from the aid they desperately need,” Kelly said in an April 10 statement on his campaign website. “Congress created this program and put much of the application process in the hands of big banks, and they have to provide accountability and make sure this money is getting to those small business owners and their employees who need it.”

Days later, Kelly, who remains invested in World View, called on Washington, D.C. to fix the issues plaguing the program.

“The Arizona small businesses I’ve spoken with aren’t receiving the help they need and can’t wait any longer,” he said. “Right now, big banks have the power to choose what applications get priority, and that’s not how this should work. This money should go where it’s needed most. Congress needs to get this done.” 

McSally's campaign manager Dylan Lefler rebuked Kelly's criticism of the program, even though McSally had many of the same critiques about the banks the delays. 

"Mark Kelly tried to score cheap political points by criticizing the bipartisan success of PPP while quietly taking the money for his own large corporation," Lefler said. "Mark Kelly’s company has a history of taking taxpayer money and failing to provide the promised jobs. PPP was meant to help Arizonans keep their jobs, not line Mark Kelly’s pockets.”

Giffords Law Center, the educational-non-profit and research arm of the gun control group founded by Kelly and his wife, former Rep. Gabrielle Giffords, D-Ariz., to combat gun violence, also received PPP funding. The couple founded the non-profit after she survived a 2011 assassination attempt near Tucson, where she was shot in the head.

The California-based center received between $150,000 and $350,000, records show.

Jason Phelps, a spokesman for the group said the loan was used to keep employees during the pandemic and the ensuing economic fallout.

He said in a written statement that neither Kelly nor Giffords were involved in securing the loan. "As you know, Mark stepped back from the organization early last year," Phelps wrote. 

Meanwhile, the business owned by Republican Daniel McCarthy, the Glendale businessman who is challenging McSally in the Aug. 4 Republican Senate primary, received between $150,000 and $350,000, according to the federal records. 

McCarthy owns the Phoenix-based Makeup Eraser company and has previously said he hasn’t taken any government loans. Records show that two of his businesses have received two Small Business Administration awards of more than $1.5 million. 

Of the PPP loans, McCarthy said he is a “very shrewd” business owner. 

“I have a fiduciary duty to my employees and my shareholders,” he told The Arizona Republic on Tuesday. “The reality of it is my job is to work within the parameters, I have to make sure I protect my shareholders and my employees.”

The parameters, he said, include the PPP loan, which he likened to the tools used by President Donald Trump: “It’s similar to Trump’s leveraging of the bankruptcy laws,” he said. 

The Trump administration released information detailing the identities of businesses, non-profits, churches and other entities that received more than $150,000 and up to the $10 million maximum. The list included more than 11,000 businesses in Arizona, totaling more than $7 billion in financial aid intended to save more than 616,000 jobs in the state.

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In an Arizona Republic analysis of the money, Arizona recipients run the gamut, from restaurants, to casinos, to landscapers and auto dealers.  

A new USA TODAY report found that businesses owned by several members of Congress or their families received PPP loans. The list of lawmaker-connected businesses that were eligible for the funds included car dealerships, casinos, construction companies, and restaurants.

Have news to share about Arizona's U.S. senators or national politics? Reach the reporter on Twitter and Facebook. Contact her at yvonne.wingett@arizonarepublic.com and 602-444-4712.

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This article originally appeared on Arizona Republic: How Senate candidates Mark Kelly and Daniel McCarthy are tied to businesses that got PPP cash

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