The plaintiff in a lawsuit seeking to overturn President Joe Biden’s student debt forgiveness program has herself been a beneficiary of debt cancellation, in the form of a Paycheck Protection Program business loan worth over twice the maximum amount covered under Biden’s program.

Myra Brown, one of two plaintiffs in the Texas lawsuit, owns Desert Star Enterprises Inc. Desert Star, which appears to be a sign-making business, was granted a $48,000 loan, of which $47,996 was forgiven on April 27, 2022. By comparison, Biden’s student debt forgiveness program provides a maximum of $20,000 in forgiveness if the person seeking relief received a federal Pell Grant and $10,000 if it wasn’t a Pell Grant. Brown argues in her case that she is being harmed by Biden’s debt relief order because she is not eligible for it because her student loans were originally funded by private companies.

Brown’s case is one of a flurry of right-wing lawsuits aimed at ending Biden’s student debt forgiveness program. Though many have been dismissed due a lack of standing, this one has not. A Donald Trump-appointed judge, Mark T. Pittman of the U.S. District Court for the Northern District of Texas, has indicated he wants to fast track it.

Student debt relief advocates say the lawsuits are astroturf efforts by right-wing political organizations. “These sham lawsuits are blatantly manufactured by billionaire-funded right-wing organizations whose only purpose is to play dirty politics,” Braxton Brewington, spokesperson for the Debt Collective, told The Intercept. “These plaintiffs aren’t actually harmed by student debt cancellation, they’re simply willing to be political pawns for dark-money groups who will do anything to prevent working people from having financial breathing room.”

When The Intercept contacted Brown for comment, she responded via text message with a picture of a printout reading “we have no comment” and directing any inquiries to the Job Creators Network, a conservative advocacy organization bankrolling the lawsuit. The Job Creators Network was founded by the CEO of Home Depot and funded by the conservative Mercer Family Foundation.

“The Paycheck Protection Program is not comparable to Biden’s bailout,” Elaine Parker, president of the Job Creators Network, told The Intercept. “Congress passed PPP, making it a legal program; Biden bypassed Congress, making it illegal. PPP was an emergency measure to help small businesses survive government-imposed lockdowns. PPP was always designed to be forgiven if certain parameters were met.”

The Intercept also promptly received an email from TJ Winer, who identified himself as an employee of the Job Creators Network Foundation, from an email address bearing the domain name CRC Advisors, a crisis communications firm. CRC’s top funder is the Federalist Society, the powerful conservative legal group whose members include all six conservative Supreme Court justices — many of whom the Federalist Society advocated for and helped shepherd their appointments; Pittman, the federal judge presiding over this case, is himself vice president and a founding member of the Tarrant County Federalist Society.

In 2019, CRC found itself in hot water over its attempts to clear then-Supreme Court nominee Brett Kavanaugh of sexual misconduct allegations by Christine Blasey Ford. After working with conservative legal activist Ed Whelan to float claims of a doppelganger Blasey Ford mistook for Kavanaugh, Whelan retracted the claims and apologized for what he called “an appalling and inexcusable mistake of judgment.”

Advocates of student debt relief have criticized the hypocrisy of business owners who are comfortable with debt relief for their own companies but not for students. “Like the Republican members of Congress who took out PPP loans while denouncing student borrowers seeking relief, Myra Brown believes in ‘debt relief for me but not for thee,’” Brewington told The Intercept. “This hypocrisy only underscores the cynical motives of the plaintiffs and the baselessness of their case, which should be dismissed.”

In August, Biden took a swipe at Georgia Rep. Marjorie Taylor Greene, saying, “I find it absolutely fascinating that some of the folks who are talking about, ‘This is big spending,’ are the same people that got $158,000 in PPP money including the, what’s her name, that woman who believes in the — anyway.” The White House’s official Twitter account later called out Greene by name, clarifying that the figure was actually a bit higher: $183,504 in PPP loans forgiven.

Brewington also called on Biden to use additional authorities to block these types of lawsuits. “Instead of letting student debt relief be subverted by these bad-faith actors and Trump-appointed judges, President Biden should use his compromise and settlement authority to cancel student debt, thereby pulling the rug out from under these bogus lawsuits and delivering on his promise,” he said.

Pittman is one of 200 Trump-appointed federal judges, a group that includes nearly as many appeals court judges as Barack Obama appointed in both his terms. Given Pittman’s right-wing associations, student debt relief proponents are concerned that his conservative bent could lead to the case being upheld. This summer, Pittman struck down a Texas law banning people under age 21 from carrying handguns, citing “founding-era history and tradition.”

The charges also aren’t acting like typical interest payments. According to several bank statements that six small business owners shared with The Intercept, the finance charges vary widely from month to month, even for the same borrower: One business owner was charged $233.27 on a November statement and $10.36 the next month. On another statement, the entire $238.47 payment went to a finance charge and nothing went to the principal, while the previous and following month’s statements only put some of the payment to the finance charge. Another borrower’s charges keep increasing each month, rather than shrinking as would be expected if she were paying off the interest.

Bank of America spokesperson Bill Halldin said that the 1 percent interest began accruing as soon as borrowers received their funds, and for those whose loans haven’t been forgiven and are making payments, “their initial payments were applied to accrued interest first and then principal,” he said. “The finance charge is the amount of their payment that was applied to accrued interest.”

The SBA confirmed this. “If the borrower did not receive full forgiveness due to an excess loan amount, then the borrower must repay the remaining balance with the 1% accrued interest,” said Christalyn Solomon, a spokesperson for the agency in a statement. “The bank is correct that interest began to accrue as of the date of disbursement.  SBA generally requires that 7(a) loan payments be applied first to accrued interest and then to principal.”

Halldin did not explain why the charges are not listed as interest payments, why they are taken as lump sums rather than added to the amount owed, or why they are widely variable month by month.

Because the bank has listed the sums as finance charges on statements, not interest payments, business owners have been assuming that Bank of America is taking extra fees, adding to their confusion and anger over the entire process. “How is Bank of America allowed to make a 3 percent fee off of this and now they’re charging these ridiculous finance charges?” said Amy Yassinger, owner of events entertainment company Yazz Jazz in Illinois, who has a PPP loan with Bank of America that the bank has refused to forgive despite her assertion that the bank itself helped her apply for the loan and that she used the money solely to pay employees when her work dried up.

The SBA has made it clear that banks are not allowed to “charge small businesses any fees,” especially since banks that issued PPP loans were already compensated for doing so. Together, PPP issuers stood to make $18 billion in processing fees from the government; in mid-2020, Bank of America in particular was forecast to make $755 million, or 2 percent of its pre-pandemic revenue, based on the assumption that it would reap an average 3 percent fee from each loan from the government.

Mark Cobb, owner of Premier Pressure Washing & Concrete Cleaning in Georgia, only applied for a PPP loan because he was assured so many times — by not just the government, but Bank of America itself — that it would be forgiven. But now that Bank of America has refused to forgive his $20,362 loan, he’s had to start making payments. His was the statement in which Bank of America took $423.13 as a finance charge from a recent $569.79 payment, leaving just $146.66 to go toward the principal.

“This is crazy,” he said. “If I’m going to pay the damn loan off, I want every bit of it to go to principal.”

But he knows that he has to keep making payments, even if so much of it isn’t even going toward paying off the loan. “I can’t afford to get my credit ruined,” he said. “They’ve got you. If you don’t pay it, they’ll come get everything.”

Cobb’s business has been pressure washing the outside of restaurants for 22 years. When the pandemic hit, the work “overnight stopped,” he said. So when Bank of America, where he’s banked since 1978, started sending him notifications urging him to apply for small business loans, he decided to apply for a PPP loan to be able to keep paying the people who do the work for him, whom he hires as 1099 contractors. “That’s what I did with the money — I paid them,” he said. Within eight weeks, the money was spent.

Cobb said that when he applied for a PPP loan, contract workers were still covered by the terms of the program — it was only a week after he received the money, he said, that the rules changed to exclude payments to 1099 workers. But his forgiveness application was denied because he had used the money to pay 1099 employees.

“It doesn’t sound like a lot to a lot of people, but it is to me,” he said. “I would never have taken a $20,000 loan … unless I was assured multiple times it was going to be forgiven.”

Cobb’s business has rebounded since the start of the pandemic, but it’s still depressed compared with before the crisis. “I’m not making technically any more at all; I’m just paying subcontractors right now,” he said. If he doesn’t, he knows that in the tight labor market they’ll leave him and go work somewhere else.

So the money taken from his payments as finance charges is coming right out of his empty pockets. “Six hundred dollars a month could go toward paying a car off, for paying my mortgage down,” he said. “It makes everything a lot tighter.” It also depresses his business: If he weren’t making PPP payments, he would have enough money to buy another rig and put another person to work, taking on more clients. “I turn down business all the time because I don’t have the money,” he said.

He’d love to just sell his business and retire, but knows he can’t with the loan hanging over him. “If I could declare bankruptcy and it wouldn’t ruin my credit, I’d have done it already,” he said.

Cobb got no explanation about the finance charges ahead of time, so he contacted the bank about them. “I’ve called so many times. It drives me crazy,” he said. One person told him that the charges were for accrued interest, but he claims that the math doesn’t add up, and “none of them could really explain it.”

Yassinger, the Yazz Jazz owner, is still fighting to get her loan forgiven, but in January she made her first payment, and she’s regularly made payments since. A finance charge has been taken out of every single one, including $769.78 from a $2,000 payment.

She says she didn’t actually get a statement showing her payment and the finance charges until May. “I started freaking out,” she said. Her monthly payment was $885.86, but she decided to pay $2,000 a month in the hopes of paying it down faster. “I was thinking that in 18 months it’ll be pretty much paid off,” she said. When she saw that instead so much was going toward finance charges, “it was just crushing,” she said. “I’m suffocating with this debt.” She received no explanation for why and when such charges would be taken out.

Yassinger is part of a group of small business owners who got their PPP loans through Bank of America and haven’t had them forgiven. The solution they’re pressing for, in any meeting they can get with members of Congress, is legislation saying that small business owners who were overfunded but used their loans properly should have them forgiven and converted into grants. “None of us want millions of dollars. We just want to get this fixed,” she said. “We just want these forgiven.”

In the meantime, she has to keep paying, just like Cobb, or risk impacting her credit. “I’m trying to do what I think is right,” she said. “But at the same time, I don’t want to give them any more money right now, because what’s the point?”

Groups representing the franchises claimed credit in aiding their members get in on the PPP loans early, after McDonald’s corporate refused to grant rent relief. “[W]e helped prepare our Owners to be first in line, perhaps knowing the government, less solvent than our global company, was at least attempting to provide the desperately needed liquidity,” wrote Blake Casper, chair of the National Owners Association, another group representing McDonald’s franchisees, in a letter sent to company executives, on April 7, 2020.

PPP loans were in many ways an ideal solution for store owners. The program offered up to $10 million per franchise to pay for immediate expenses. And if business owners spent the money as Congress intended — mostly on payroll — then the loans were eligible for forgiveness.

In response to a March inquiry from The Counter and The Intercept, McDonald’s global communications manager Joseph LaPaille said that the company “never asked for assistance from any government entity.” While McDonald’s may not have requested direct Covid-19 relief, the analysis of PPP data shows it did collect federal dollars — in the form of rent checks funded by the taxpayer-backed small business program.

All told, 2,389 McDonald’s franchises collected approximately $1.3 billion in PPP dollars, according to data released in January by the Small Business Administration, or SBA, the agency that administers the program. That makes McDonald’s stores the second largest franchise recipient by total dollar amount. Only General Motors businesses, whose car dealerships are franchises, took in more total PPP dollars.

Of the loans to McDonald’s franchisees, 421 include rent figures, which totaled more than $31 million. The Counter and The Intercept attempted to reach the owners of each of these franchises. Two owners, who applied on behalf of multiple restaurants, confirmed that they used the loans as indicated: to pay a total of over $450,000 in rent to McDonald’s. Another said he wound up using all of the money on payroll costs instead. The vast majority declined to comment or did not respond to phone calls, emails, or fax messages. Those who agreed to speak with The Counter and The Intercept asked for anonymity, citing fear of corporate retaliation.

No Solid Spending Data

The $31 million in rent payments is a substantial figure, but the actual amount may be higher, said Sean Moulton, a senior policy analyst at the Project on Government Oversight, an independent watchdog. That’s because the dollar amount breakdowns released by the government reflect only what was listed in borrowers’ loan applications — nonbinding estimates of how the money would be used. Around three in four franchisee applications showed plans to spend 100 percent of the funding on payroll costs, a trend Moulton said is consistent with application data for the program as a whole.

“It strikes me as unusual that, even in the early days, almost everyone was claiming, ‘It’s all going toward payroll,’” said Moulton. “As far as the lenders and the SBA were concerned, it was a nonissue if you were getting those fields wrong.”

The nonbinding spending estimates point at a key caveat to SBA’s data: It only reveals how borrowers intended to spend their PPP money. Loan forgiveness data would provide a more accurate reflection of actual spending breakdowns. However, in response to a Freedom of Information Act request from The Counter and The Intercept, the SBA said it does not collect specific category breakdowns from forgiveness applications, which lenders process and keep the records on.

With borrowers declining to specify how they used the money, it’s unclear precisely how many taxpayer dollars were ultimately paid to McDonald’s Corporation or its real estate affiliates in the form of rent. According to the SBA, individual lenders were responsible for collecting detailed forgiveness information. The Counter and The Intercept contacted 88 lenders who processed loans on behalf of McDonald’s franchisees, but none provided additional detail.

The lack of concrete data also makes it impossible to understand the impact of a relaxation of the rules, passed by Congress in June 2020, that allowed businesses to direct a greater percentage of the money — 40 percent instead of 25 percent — to nonpayroll expenses, including rent. The change came after most of the McDonald’s franchisee loan applications were filed. Franchise associations representing both McDonald’s and its franchisees were involved in lobbying efforts to loosen the restrictions.

“The PPP loan program was designed as a lifeline for small businesses, but the program’s limitations imposed by regulators were sinking them,” said Matt Haller, a senior vice president at the International Franchise Association, in a press release the week before the flexibility legislation passed.

McDonald’s initially responded to a set of general inquiries from The Counter and The Intercept but did not respond to a subsequent list of detailed questions and a final request for comment. A company spokesperson issued the following statement: “As the Paycheck Protection Program intended, some independent small business owner franchisees independently applied for and used PPP loans to support payroll for the continued employment of the nearly 800,000 local restaurant employees who work in McDonald’s-brand restaurants throughout the U.S.” The SBA did not respond to a list of questions and requests for comment.

“This is practically a black hole,” said Moulton, referring to PPP loan forgiveness data. “We’ve gotten almost no information about what these companies are claiming, and it makes it impossible then for any kind of outside evaluation [of whether] the forgiveness makes sense.”

A Real Estate Empire

In the 1950s, when the McDonald’s real estate empire was born, the business model that put the young chain’s growth into hyperdrive was not a small cut of the burger sales. Instead, the parent company buys or leases the land on which its restaurants sit, then charges its franchisees a base rent plus additional rent based on a percentage of sales. At the end of 2020, McDonald’s Corporation held $37.9 billion in real estate assets before depreciation.

“McDonald’s is a real estate company,” said Marcia Chatelain, author of “Franchise: The Golden Arches in Black America.” “It’s able to use the profits of McDonald’s, the hamburger company, to maintain an incredible portfolio of wealth in real estate.” Owning property, Chatelain said, has provided the company extra stability in times of crisis.

Yet in the spring of 2020, when the National Franchisee Leadership Alliance asked for the two-week rent forgiveness, McDonald’s refused.

“Owners were furious,” wrote one former McDonald’s executive familiar with the negotiations in an email. “They couldn’t believe the world’s largest restaurant company couldn’t give them some support … when you read about all the other smaller restaurant chains doing it every week.”

The company ultimately deferred — but did not forgive — the collection of $490 million in rental income, plus nearly half a billion dollars in royalty payments. The company’s business filings later revealed it recouped more than 80 percent of deferrals by the end of 2020 and was on track to collect the rest in 2021. Despite pandemic-related instability, McDonald’s collected $6.8 billion in rent payments in 2020.

McDonald’s is likely not the only corporation that collected taxpayer dollars in the form of PPP rent payments. Other fast-food chains like Wendy’s and Restaurant Brands International — parent company to Burger King and Tim Hortons — own franchise real estate, though their rental revenues are a fraction of McDonald’s.

If the arrangement of having megacorporations collect federal aid money bears further scrutiny, it’s not likely to come from the Small Business Administration.

To run the massive $789 billion program, the SBA offloaded the administrative task of processing PPP paperwork to lenders, like private banks and credit unions. As a result, the agency said it doesn’t have forgiveness records related to any particular PPP loan.

The lack of transparency surrounding PPP forgiveness data raises key questions about whether or not the program actually achieved its core aim: keeping workers on payroll. Left unanswered, it’s possible, based on existing SBA data, that a significant portion of the taxpayer funds were simply used to support landlords and utility companies.

“The stated purpose of this program from the beginning was to try and preserve jobs,” Moulton said. “It’s the name of the program. The more you dilute that with the authorization to use it on rent or mortgage payments or utilities, it really dilutes its impact.”

“Did we save jobs?” he said. “We spent a lot of money, and it’s very hard to answer that very simple question.”

Questions about how McDonald’s was able to bounce back from the early days of the pandemic are easier to answer. In January, the company’s chief executive called 2021 a “banner year” for the company, despite the public health crisis. The McDonald’s corporation reported $23.2 billion in revenue worldwide — its highest total since 2016.