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Resort chain Omni accused of misusing millions in federal relief funds

Resort chain Omni accused of misusing millions in federal relief funds
© Elijah Nouvelage/Getty Images

International luxury chain Omni Hotels & Resorts is facing accusations of improperly using millions of dollars in federal funds meant to benefit its employees amid the coronavirus pandemic. 

In a letter earlier this month to the Small Business Administration (SBA) and the Treasury Department, service workers union Unite Here, which has more than 300,000 members across North America, claimed that Omni received 32 loans totaling about $76 million as part of the Paycheck Protection Program (PPP), the federal government program meant to help businesses continue paying their workers amid the economic downturn prompted by the pandemic. 

According to Unite Here Executive Vice President Carlos Aramayo, approximately $23 million went to seven hotels in cities such as Chicago, Boston, Washington, D.C., and San Francisco, where the union represents more than 1,000 workers. 

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Despite these payments, Aramayo noted that three of the locations— Omni Providence, Omni San Francisco and Omni William Penn— are temporarily closed, and “none of our members have been rehired or paid by the hotel,” according to the letter. 

“The Omni New Haven and Omni Parker House only recently reopened without all of their facilities, and the hotels have failed to recall more than 80% of our members who work at the hotels,” the letter continued. 

NPR’s Pittsburgh, Pa., station, WESA, reported Tuesday that Quilcia Moronta, a health club attendant at the Omni Providence Hotel in Rhode Island, which requested a $2.6 million PPP loan, was laid off after working at the hotel for 21 years. 

"As I was struggling to provide for my family, I learned that the Omni had received some PPP money," Moronta, a single mother with two children, told the news outlet. "I said, 'Great, at least they're gonna help us get by when it comes to basic needs.'

"Right now, here we are in December, and we haven't heard anything about Omni using that money to help their employees," she added.

Unite Here also distributed letters to the general managers of the hotels where it represents workers, as well as the lending banks and local SBA district directors. 

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In a written statement to WESA, a spokesperson for the hotel chain owned by billionaire Robert Rowling said that workers at some of the hotels had not been retained because coronavirus restrictions forced them to close or operate at reduced capacity. 

While the PPP rules mandate that businesses may use funds to pay workers even if the company is closed, Omni said in its statement that "any amount of the PPP loans that are not forgiven will be returned or repaid with interest per program terms."

In a written statement to The Hill, Omni President Peter Strebel said, "All PPP funds have been used for approved expenses as outlined in the legislation, and more than $51 million, the vast majority of the loans, have been paid out as payroll and benefits to thousands of associates."

"Any contention to the contrary is false and defamatory," Strebel added.

He added that "any portions of the loans that are not forgiven will be repaid with interest and unused balances will be returned."

"On behalf of the thousands of associates who have benefited from the loans, we are grateful to have participated in the PPP program," the president continued. "It has been instrumental to our survival during this pandemic, enabling us to safely re-open hotels and bring several thousand associates back to work."

Strebel asserted that "any statements that falsely accuse Omni of misusing the funds or failing to use any of the loan proceeds for payroll costs appear to be designed solely to harm Omni’s business, which will only further harm our associates."

SBA data released this month showed that about 5.2 million businesses had secured a total of $523 billion in PPP loans since it was signed into law as part of the CARES Act in March. 

While the PPP loans were initially meant to help small businesses, it has received criticism from many for also giving support to larger corporations that have been accused of mismanaging the funds.

Updated on Wednesday at 3:18 p.m.