© Getty Images

Times of crisis -

Many small businesses struggled during the COVID-19 pandemic. Independent cafes, restaurants, salons, and other businesses that relied on in-person contact and lacked the safety net of a large corporation were forced to significantly reduce or completely cease operations.

© Getty Images

Crushed businesses -

The pandemic not only had devastating global health consequences but also precipitated a financial crisis, exacerbating emotional and mental health challenges, especially for the self-employed and small business owners.

© Getty Images

Artists struggled -

The artistic community also faced significant hardship. Independent venues, actors, musicians, and other performers suddenly lost what was often already an unstable source of income. 

© Getty Images

Pandemic relief -

Recognizing these challenges, the federal government initiated the Shuttered Venue Operators Grant, signed into law by Donald Trump in 2020. 

© Getty Images

Much-needed support -

The grant was supported by legislators like Sen. Chuck Schumer and it was meant to serve as a lifeline for struggling independent venues and arts organizations during the pandemic.

© Getty Images

Recognition -

Schumer even received the 2023 Grammys On The Hill award, which "recognizes those who have led the fight for creators' rights," according to the Recording Academy's website. Schumer accepted the award, stating that he was "honored to be recognized (...) for Congress's work to support the recording and performance industry during the worst of the COVID-19 pandemic."

© Getty Images

Fraud potential -

But back during the pandemic, some specialists remained suspicious of the grant's potential for misuse. This suspicion arose amidst massive pandemic-relief fraud, such as the Paycheck Protection Program and Economic Injury Disaster Loans, which dispensed over $200 billion in suspected false claims, in what the FBI has called the largest fraud in history.

© Shutterstock

Strict guidelines? -

However, the US Small Business Administration (SBA), which oversaw the program attested that, compared with those better-known programs, the Shuttered Venue Operators Grant had relatively strict eligibility requirements.

© Shutterstock

Application process -

Applicants were required to make a good-faith statement to the SBA, certifying that the grant was necessary to support the loan-out company's ongoing operations. If approved, grantees received up to $10 million to spend on certain "ordinary and necessary" expenses for their entertainment businesses.

© Shutterstock

Application process -

Grantees also had to prove that the company's revenue had fallen by at least 25% between a quarter in 2019 and the same quarter in 2020.

© Shutterstock

Taking advantage -

However, accounting firms and money managers soon realized that the generic nature of the grant allowed it to accommodate their superstar clients through their loan-out companies—corporate entities used to handle the touring business.

© Getty Images

Loophole -

Not only was it generic, but the program also had a loophole. The law directed the SBA to examine revenue, not assets. Thus, musicians with huge bank accounts and multiple mansions were still eligible for the grant as long as their loan-out company's revenue had declined.

© Getty Images

Busted -

This loophole was readily exploited by some big names in the industry. An investigation conducted by Business Insider uncovered thousands of pages of accounting documents revealing for the first time how some wealthy musicians spent grants they received through the program.

© Shutterstock

Cashing in -

The uncovered documents reveal how artists directed millions in taxpayer funds not toward supporting crew members during the pandemic, but instead toward their own luxury purchases and entertainment expenses, often while sitting on substantial wealth from other business ventures.

© Getty Images

Federal resource abuse -

Sen. Gary Peters, chair of the Committee on Homeland Security and Governmental Affairs, called celebrity musicians' use of Shuttered Venue grants "an abuse of federal resources." The senator stated that pandemic relief was intended to help businesses and workers in need, "not super wealthy celebrities."

© Getty Images

Lil Wayne's grant -

One of the big spenders revealed by the investigation is rapper Lil Wayne. The accounts show that he spent more than $1.3 million from the grant on private jets and over $460,000 on clothes and accessories, many of them from high-end brands like Gucci and Balenciaga.

© Getty Images

Shopping spree -

Other records show that the rapper spent $8,626.41 on a single trip to high-end boutique Dover Market in 2022, and that he also billed taxpayers more than $175,000 for expenses related to a music festival promoting his cannabis brand.

© Shutterstock

Shopping spree -

Among the items he bought, the investigation says, were a $1,990 Balenciaga sweater, a pair of $950 Marni pants, and $200 Converse x Rick Owen sneakers.

© Getty Images

Mystery women -

Lil Wayne also reportedly used grant money to cover nearly $15,000 worth of flights and luxury hotel rooms for women with unclear connections to his touring operation, including a waitress at a Hooters-type restaurant and an adult film actress.

© Getty Images

Chris Brown's grant -

Lil Wayne wasn't alone in misusing grant funds. Chris Brown also diverted grant money for personal gain, including a significant paycheck and lavish spending. Of the $10 million grant awarded to Brown's company CBE Touring, a substantial $5.1 million was funneled directly to Brown himself.

© Getty Images

Birthday bash -

Reports show he billed taxpayers nearly $80,000 for his extravagant 33rd birthday party, held in a luxurious Los Angeles venue. Expenses included a $3,650 LED dance floor and over $29,000 for escorts, bottle service, and damages to rented couches.

© Getty Images

Shooting hoops -

More than $179,000 of the grant received by Brown's company was used to fund a celebrity basketball tournament broadcast on YouTube, including a $20,000 payment to Indianapolis Colts tight end Mo Alie-Cox, who played on Brown's team.

© Getty Images

Not just rappers -

Rappers were not the only artists to take advantage of the grant. Others exploited another grant category called "owner compensation." The SBA's guidance allowed artists to use grants paid to their loan-out companies to pay themselves, as long as the payments did not exceed their 2019 levels.

© Shutterstock

Marshmello's grant -

DJ Marshmello, whose real name is Christopher Comstock, was awarded a $9.9 million grant. Over a year later, when the SBA sought documentation of how the funds were used, his business manager, Steven Macauley of NKSFB, revealed that all the money was directly paid to Comstock.

© Getty Images

Steve Aoki's grant -

The investigation revealed that artists often paid themselves significantly more than other individuals involved in their live shows. Steve Aoki's loan-out company, DJ Kid Millionaire Touring, used $2.4 million in grant money for payroll costs, of which $1.9 million was designated as "officer pay." Notably, Aoki is the sole officer of the company.

© Getty Images

Alice in Chains' grant -

Records show that on March 23, 2022, Alice in Chains singer and guitarist Jerry Cantrell received a $1.4 million SVOG distribution. The band's drummer, Sean Kinney, received the same amount, while bassist Mike Inez received approximately $682,000.

© Getty Images

More profit -

In total, $3.4 million of the $4.1 million allocated for payroll went directly to the three main musicians. While the band did pay some staff, it continued to profit from both the grant plus merchandise and copyright sales.

© Getty Images

Death of staff member -

Meanwhile, Scott Dachroeden, a longtime band employee, was diagnosed with cancer. Despite receiving substantial grant money, the band, instead of using the funds for employee benefits like health insurance, launched an online fundraising campaign. Dachroeden reportedly received little to no support from the band and passed away shortly after his diagnosis.

© Getty Images

Aftermath -

Although the SBA states it has a team focused on recovering wrongfully awarded grants, no staff had been assigned to it as of late September. Overall, some $6 billion in grants remain under review. According to the SBA, some grants mentioned in the Business Insider's report are still under review due to ongoing third-party audits.

© Shutterstock

No comment -

None of the artists mentioned by Business Insider responded to requests for comment on the allegations. When contacted via text, Lil Wayne made a sexually explicit overture to a reporter and failed to respond to any inquiries, according to Business Insider.

Source: (Business Insider)

See also: The most shocking arrests in music history

© Getty Images