CloudCommerce, a company with a close relationship with Donald Trump’s campaign manager Brad Parscale, received $ 780,680 from the Paycheck Protection Program, as part of the federal government’s efforts to protect small businesses during the coronavirus pandemic. Although the company’s executives were prosecuted or pleaded guilty to fraud charges, Parscale nonetheless entered into a financial relationship with the company which enabled it to own a significant portion of its shares.
When Parscale was brought out of obscurity to lead Trump’s digital operation in 2016, he was a part-owner of a marketing firm in San Antonio. Following the success of the campaign, Parscale and its business partner split their business and sold the two halves to CloudCommerce. Parscale also sold a second company it controlled to CloudCommerce. ProPublica reported last year that he hoped the association of the company with his name would increase its stock price, earning him far more than the reported $ 10 million he made from the sale . Parscale has joined the company’s board of directors and has been heavily involved in the business. He moved to Florida and opened his current business, Parscale Strategy, redirecting some business to his old business at CloudCommerce.
But Parscale had partnered with a company with a difficult track record, and the expected windfall never happened. In 2019, according to an April filing with the Securities and Exchange Commission, CloudCommerce’s net losses totaled more than $ 10 million. In December, Parscale resigned from the company’s board of directors. Most of the $ 10 million he made selling his business ended up being paid off in the form of generally worthless penny stock, which he still holds.
Parscale’s partnership with CloudCommerce has confused financial experts given its history. Prior to joining CloudCommerce, company chairman Andrew Van Noy filed for bankruptcy, during which time he was sued for fraud, agreeing to pay a large settlement. His predecessor at CloudCommerce pleaded guilty to conspiring to commit securities fraud. In March of this year, Facebook removed CloudCommerce ads promoting investments in the business, claiming they violated the platform’s ban on “tactics that mislead people with exaggerated promises of. guaranteed financial success ”.
“Brad has absolutely no role in the business,” Trump campaign communications director Tim Murtaugh told CBS News in May, when CloudCommerce reported his loan to the SEC. “He only has preferred shares. He does not have the right to vote. Murtaugh added, “He has no idea what the company is doing. He doesn’t talk to them, they have nothing to do with the campaign or any business Brad is related to.
According to a document filed in April with the SEC, Parscale’s 34.9% stake makes him the largest shareholder in the company. Documents filed with the SEC for 2019 show that the work done by companies belonging to CloudCommerce for Parscale Strategy, which in turn works for the Trump campaign and the National Republican Party, was only a few thousand dollars. Records show Parscale was guaranteed 5% of the revenue generated for CloudCommerce from its old company, a deal that could have earned it up to $ 1.3 million. It is not known if the money ever materialized. In June, CloudCommerce said it had no political clients.
Parscale is now distancing itself from CloudCommerce, but the sentiment seems to be mutual. CloudCommerce, which recently praised its purchase of a large dataset and reoriented its business model around analyzing data for customers, found its association with Parscale to be a financial loser. While CloudCommerce initially estimated its association with Parscale and the “goodwill” of its companies to be worth millions of dollars, in its last annual filing with the SEC, it announced that these properties had negative goodwill and dismissed them. written off as losses. “All intangible assets and goodwill related to the acquisitions of Parscale Media and Parscale Creative have been written off, amounting to $ 744,444 for Parscale Media and $ 6,016,323 for Parscale Creative,” the company told regulators. CloudCommerce has not reported any goodwill devaluation for its other subsidiaries.
In June, CloudCommerce announced that it was forecasting $ 14 million in revenue in 2020 despite the pandemic and economic downturn, and despite years of losses, it was forecasting net income of $ 1 million. This press release did not mention that he also received a loan of nearly that amount from the federal government.