Stacey Abrams-tied loan firm shifted its liabilities to U.S. taxpayers, and it paid off handsomely
Once portrayed as person of modest means, Georgia activist now a millionaire who earned $300k from loan business in single year, ethics disclosure shows.
Stacey Abrams' net worth skyrocketed over 2,800% in just three years thanks in part to her holdings in a company called Now Corp. (previously called NowAccount or "Now"), a Government Accountability Institute study has found.
In 2018, Abrams reported a net worth of just $109,000 in her personal financial disclosure ahead of her failed 2018 gubernatorial bid in Georgia. Now, as she heads into the 2022 gubernatorial race, Abrams' campaign filings show her net worth is more than $3.17 million after making more than $6 million in book advances, speaking deals and growing corporate investments like NowAccount.
Abrams cofounded the NowAccount financial technology ("fintech") start-up in 2010 with business partners Lara Hodgson and John Hayes. Their business got off to a slow start, but NowAccount was able to pay Abrams $80,000 in salary in her first year as senior vice president and $60,000 per year in subsequent years.
In 2013, Abrams' fintech company pulled in just $100,000 in annual revenue, but thanks to a federal small business loan program overseen by the state of Georgia, NowAccount would soon have the power to distribute nearly $10 million in taxpayer funds to its network of applicants. By 2016, NowAccount's applicants were defaulting on their loans, and taxpayers were left to bail out more than $1.5 million in bad loans.
In 2018, the year Abrams ran for Georgia governor the first time, NowAccount paid her nearly $300,000—a dramatic increase—her financial disclosure shows.
NowAccount's value spiked in October 2021 after a $29 million financing and investment deal that the company made with two private equity firms. Abrams, who has owned as much as 16% of NowAccount, announced her 2022 bid for governor on Dec. 1 — less than eight weeks after the $29 million windfall.
Abrams was the minority leader of the Georgia House from 2011 until she resigned ahead of her 2018 run for governor. The fact that her business got federally backed state contracts while she held high-level positions in the state Legislature drew sharp criticism during her first gubernatorial campaign in 2018. Abrams told the Atlanta Journal-Constitution that she "played no role in securing the state contracts" for NowAccount and that she "scrupulously avoided conflicts of interest," the outlet reported in 2018.
The decision to apply for taxpayer funding under the 2010 Jobs Act was Abrams' idea. "I read the Jobs Act," Abrams said. "I brought the provision to" NowAccount's cofounders. Abrams was aware that her role as minority leader of the Georgia House might pose a conflict so she "talked about it" with her cofounders and said, "Here's what we can do," but she emphasized that she "did not want there to be any conflict at all."
One of the firms associated with Abrams' NowAccount was Happy Faces Personnel Group, Inc. Happy Faces was the election night staffing firm hired to scan and count ballots in Atlanta's Fulton County on election night, Nov. 3, 2020.
According to a devastating 29-page witness report by election observer Carter Jones, Happy Faces presided over a "massive chain of custody problem" when absentee ballots came "in rolling bins 2k at a time" rather than "in numbered, sealed boxes to protect [the ballots]."
Hired by the Georgia Secretary of State's office to report on any voting or counting irregularities, Jones was shocked when he found out that one Happy Faces employee revealed his election night intention to "f-ck sh-t up."
Happy Faces has denied consummating any financial relationship with the company cofounded by Abrams, but financial records indicate that NowAccount was listed as a "secured party" for Happy Faces.
The Jobs Act program was administered in the state by the Georgia Department of Community Affairs (DCA). A spokesperson for DCA claims there were public hearings and the agency sought input from professionals "who could help deploy the federal funds to small businesses."
"At no time did Stacey Abrams participate in any meetings or discussions with DCA about NowAccount," according to the DCA. Nonetheless, NowAccount was apparently the only private lender that "showed interest," and the company was specifically named in the Georgia application for U.S. Treasury Department funds.
The state of Georgia ultimately received $48 million from the federal program, which included $10 million for credit guarantees. NowAccount's network of applicants received $9.1 million, or 90% of those funds.
By 2016, the DCA was growing frustrated with the Now Account contract, which restricted the DCA to a five-day approval window after which the loans would be approved automatically. The DCA's deputy director met with Abrams' and Hodgson's cofounder, John Hayes, regarding the DCA's growing backlog of applications from Now Accounts clients.
"While our backlog is unacceptable, it is still necessary that we approve the loans they make," the DCA deputy wrote in an email, noting that Hayes "sees things differently and acts entitled to these funds, which may play an important role in the business model." According to the DCA deputy, Hayes "advanced several challenging points of view, as well as threats to engage the legislature, his high-profile board, and his attorneys."
The DCA deputy even invoked Stacey Abrams' name in a warning to his colleagues about the Now Account "headache," stating that they "should be aware that Stacey Abrams is a co-founder and SVP in the company. (I expect she is smart enough not to weigh in, but John [Hayes] is otherwise well-connected)." Now Account appeared to have political sway only in Georgia, which may be why, according to Abrams' cofounder, they "were never successful in getting other states to adopt a Georgia-like program."
Other DCA emails and public records show that Abrams' company was recommending ineligible companies for loans, including at least one company that had multiple tax liens and an open court judgment. "This loan is a classic example of files we received that are incomplete," one DCA email says. "You can see that once the business owner was asked for proof of payment, he withdrew the loan." The DCA "spent valuable time with research and internal documentation on a loan that was obviously not eligible to begin with."
Given just five days to approve or deny the loans to Now Account's applicants, the DCA understandably made loans to companies that could not pay them back, and taxpayers were left holding the bag. All told, the total losses incurred by Abrams' Now Account network exceed $1.5 million.
When news broke that taxpayers had bailed out Now's clients, Abrams went into damage control mode and claimed that she had "walled myself off" from NowAccount's operations. Abrams' name is suspiciously absent from the "About Us" tab which describes the beginnings of the company (Abrams was previously listed as Senior Vice President but her name was removed sometime before June 20, 2016).
GAI's investigation has found that rather than "wall [herself] off," Abrams was actually an integral part of the plan to use the federal program to benefit NOW (which Abrams previously admitted).
When Abrams first ran for governor in 2018, she had a small retirement account of less than $5,000 and a mountain of IRS tax debt, student loans, and credit card debt. Now, she has paid off all her debts, has a large retirement nest egg of more than $725,000 in stocks and bonds, and more than $3 million in personal net worth.
Seamus Bruner is director of research at the Government Accountability Institute, which produces investigations at the Drill Down with Peter Schweizer.
The Facts Inside Our Reporter's Notebook
- Government Accountability Institute study has found
- $3.17 million
- was able to pay Abrams $80,000 in salary in her first year
- $100,000 in annual revenue
- $1.5 million
- financing and investment deal
- told the Atlanta Journal-Constitution
- election night staffing firm hired to scan and count ballots
- devastating 29-page witness report
- Happy Faces presided over a "massive chain of custody problem"
- financial records indicate
- Abrams' company was recommending ineligible companies for loans
- exceed $1.5 million
- "walled myself off"
- the "About Us"
- June 20, 2016
- Drill Down with Peter Schweizer