Texas-based Hotelier Monty Bennett and his affiliated companies came under public scrutiny in the spring when they received $68 million in coronavirus-related federal funding, despite having paid out millions in preferred dividends.
Now, the U.S. Securities and Exchange Commission has opened an investigation into at least three companies tied to Bennett, the Wall Street Journal reported. They are: Ashford Inc., along with subsidiaries Ashford Hospitality Trust and Braemar Hotels & Resorts Inc.
The investigation targets related-party deals, including an agreement real estate investment trust Ashford Hospitality signed with a subsidiary of parent company Ashford Inc. The deals involved renegotiating mortgage debt while Ashford Inc. said it could no longer afford interest payments on debts, the Journal reported.
The agreement could have paid Ashford Inc. up to $20 million to renegotiate mortgages and ask for forbearance from lenders. Bennett is a major shareholder in Ashford Inc.
The SEC also asked for “accounting policies, procedures, and internal controls related to such related party transactions,” according to the Journal.
Shortly after having received the PPP funding, and following public backlash, the companies tied to Bennett said they would return the money, which was meant to help businesses pay necessary expenses including payroll, rent, mortgage interest, and utilities. The total forgivable loan amount was among the most received by any public company.
Ashford Inc. and its subsidiaries laid off around 7,000 workers during the pandemic. Regarding the PPP funding, the firms blamed the government on what it called “inconsistent federal guidance that put the companies at compliance risk.” [WSJ] — Dennis Lynch