Scoop: Defunct events company EatWorkPlay got $50K in COVID relief

What’s happening: The now-defunct lifestyle brand and events company was not eligible for the U.S. Small Business Administration’s Shuttered Venue Operators Grant, according to the program details.

• The grant rules say an applicant must be in operation as of Feb. 29, 2020, but EWP has not posted on social media nor held any known events since late 2019.
• EWP’s LLC is no longer active, according to the N.C. secretary of state’s registration database. Records indicate the LLC was dissolved this June 15 after founder Davon Bailey failed to file an annual report.

“This looks like fraud,” local attorney Larry Shaheen tells Axios Charlotte. Shaheen advised local venues applying for the grant, which could be used for expenses like payroll and rent.

Axios attempted to reach Bailey by phone, but his number appears to have been changed. We also knocked on his door Wednesday and left our contact information, but he didn’t appear to be home and he hasn’t responded.

Why it matters: These relief funds were crucial for concert venues, theater owners and others in the arts and entertainment industry to survive the pandemic as part of the stimulus aid package approved by Congress in December 2020. As with other government relief programs, the speed with which the funding got pushed out the door allowed some people and businesses to exploit the system.

“This was landmark legislation,” says Gregg McCraw, owner of Maxx Music, which books the talent for Neighborhood Theatre. “It was the first time that any of us are aware that for-profit arts organizations have been given grants by the U.S. government, and should we ever need this again … we don’t want there to have been fraud in the system.”

• McCraw also worked with the National Independent Venue Association to help local companies apply for funding. Venues qualified for funding equivalent to 45% of revenue up to $10 million.

The big picture: EatWorkPlay and Bailey have a history of questionable business practices.

• In October 2019, Bailey abruptly canceled EWP’s much-anticipated black-tie gala with days notice. In a Charlotte magazine investigation, Emma then learned EWP had routinely hosted charitable events without donating the promised proceeds.
• In the months that followed, guests struggled to obtain ticket refunds for the gala. Twenty-two filed complaints with the North Carolina attorney general’s office. As of December 2020, those complaints had been resolved and guests received refunds, a spokesperson tells Axios.
• Last March, in the early weeks of the COVID-19 pandemic, an Instagram page associated with EWP began price gouging for face masks and gloves. We purchased a mask using the website as part of our investigation, but it never arrived in the mail.
• The FBI got involved, WSOC first reported and a source with direct knowledge of these investigations confirmed to Axios. An FBI spokesperson would neither confirm nor deny the existence of investigations on Wednesday.

Zoom out: Federal and state governments rolled out hundreds of billions of dollars since the start of the pandemic to aid businesses struggling to stay afloat. But as officials rushed to distribute the aid to avert a financial collapse, some of the money ended up in the wrong hands, from criminals to companies that didn’t meet the requirements.

• Researchers estimate that 15% of Paycheck Protection Program loans could be fraudulent, totaling some $76 billion, The New York Times reported.

The result was a system that allowed those with resources to take advantage of the funding, but locked out others, particularly small businesses.

• “There was a lot of speed, and there was some verification, but for a lot of these programs, there was rampant evidence of fraud throughout the program that was made evident very quickly,” Shaheen says.

Flashback: Bailey started EWP in 2015 when he was in his early 20s as a way for young professionals to connect at networking mixers and luxury events. At its peak, the company had at least a dozen writers creating hundreds of stories a month about restaurants and things to do in Charlotte.

• Its audience grew over the years to more than 85,000 people across its social media platforms.

That all came crashing down in late 2019. Bailey, once a prominent figure in Charlotte’s media scene, has laid low ever since.

The bottom line: The entertainment industry made a sacrifice when it put business on hold to help keep people safe from COVID-19, McCraw says.

• “This grant was intended to help us because we were willing to make that sacrifice,” he adds. “This was not just the government giving out free money and everybody who thought they could make some money to make a money grab.”

Join us: This coverage is made possible and free to all (no paywall) with the help of Axios Charlotte Members. If you’d like to support more reporting like this, become an Axios Charlotte Member.