Joe Biden needed to talk to a family member, and the message, Politico later reported, was blunt. “For Christ’s sake,” the then-presidential candidate told his younger brother, Frank, “watch yourself. Don’t get sucked into something that would, first of all, hurt you.”
The Biden family, like other political families before it, had and still has assorted business interests. If not properly set apart from official government actions, these interests can present the appearance of impropriety. Caution was in order during the 2020 campaign, and so too now.
On Inauguration Day, Biden issued a sweeping executive order that outlined ethics requirements for executive branch personnel, and as the federal government continues to pump trillions of dollars into the economy to combat the pandemic and its impact, his administration has put in place guardrails to ensure that the relief money gets into the right hands. His family, meanwhile, continues to go about its business.
Enter Howard Krein.
A doctor and the president’s son-in-law, Krein advised Biden during the campaign on issues related to the coronavirus while simultaneously running a venture capital firm. That entity, called Startup Health, has invested in entrepreneurs eager to combat the pandemic. Krein is listed on its website as the chief medical officer.
As Bloomberg and the New York Times noted, Krein was a regular participant during health care policy calls with the campaign due to his medical expertise. At the same time, Startup Health announced plans to invest $1 million in at least 10 different ventures addressing COVID-19. And while investing in the fight against the pandemic, the company itself struggled with the economic fallout.
According to publicly available data compiled by ProPublica, Startup Health was approved for a $340,290 loan through the Paycheck Protection Program in April 2020. (PPP loans are forgivable if the company meets certain requirements, including keeping their employees on the payroll at preexisting compensation levels.) The next month, Biden criticized the very program that his son-in-law's business was benefiting from “because of what I’d call a corrupt recovery that’s focused on helping the wealthy, the well-connected, not the millions of mom-and-pops facing financial ruin,” he said during a virtual town-hall meeting last May. “The warning signs are flashing.”
And there were concerns early on that relief funding was flowing to the particularly well-connected. As the Washington Post later reported after a Freedom of Information Act request and lawsuit, more than half the money the Treasury Department doled out from its small business emergency fund went to just 5% of recipients.
Startup Health seemed to have had a clean bill of fiscal health before the pandemic. When the company closed its second round of funding in September 2018, industry journal MedCity News reported that Startup Health had amassed $31 million in investments backed by the likes of Swiss pharmaceutical giant Novartis, California-based medical technology company Masimo, and notably the venture capital arm of the Chinese insurance company Ping An.
Part of an effort dubbed “Health Transformers Fund II,” Startup Health announced that the money would focus on medical innovations to fight cancer, expand access to health care for women, and improve overall nutrition and fitness and brain health. Each investment, an attempt to help people throughout the world, was dubbed “a health moonshot.”
But like so many other companies affected by the pandemic, Startup Health applied for PPP funding two years later in 2020. It also applied for, and was approved for, a second federal PPP loan, this one worth $318,522, less than two months ago.
Startup Health did not return RealClearPolitics’ request for comment, but there is no evidence the allocations were improper or that the president knew that his son-in-law was taking advantage of the program that candidate Biden criticized. He has, however, taken a keen interest in the company before.
As vice president, Biden helped put Startup Health in contact with the White House. “He knew about Startup Health and was a big fan of it,” Krein told the Philadelphia Business Journal in 2015. “He asked for Steve’s number and said, ‘I have to get them up here to talk with Barack.’” And as the Washington Post later reported, a subsequent meeting took place between the group -- which included Krein’s brother, Steven -- and President Obama. They chatted in the Oval Office.
A White House official told RCP that the administration was not involved in any way in either federal loan. “Consistent with our ethics policy,” the official said in a written statement, “the White House did not interact with any family members about this loan, nor with the SBA.”
The White House directed RCP to a spokesperson, Carol Wilkerson, for the Small Business Administration, who declined to offer specific details on the Startup Health funding, citing the Privacy Act. Wilkerson did note, however, that once a lender approves a PPP loan, the SBA conducts a number of compliance checks, “including verifying that the borrower is not on Treasury's Do Not Pay list, that the borrower is not listed as deceased, that the borrower is not using a duplicate tax identification number, and other checks.” The applicant must also, while applying for additional PPP funds, demonstrate a 25% reduction in revenue from 2019 to 2020.
“These compliance checks are part of a new process established for PPP loans made in 2021,” Wilkerson explained. “Unlike in the first rounds of PPP in 2020, SBA loan guarantees are contingent on passing these front-end SBA compliance checks during the application process.”
The Biden administration has taken significant steps to ensure relief funds go to small businesses. According to the SBA, the percentage of loans approved for companies with fewer than 20 employees is up by as much as 94% when compared to previous rounds of aid.
“SBA conducted an aggressive outreach campaign targeting underserved communities and lenders,” Wilkerson told RCP. “The effort yielded strong results and further demonstrated the Biden-Harris Administration's commitment to reaching low- and moderate-income, rural, urban, and other underserved small business owners.”
Biden, as president, has heralded the program. “We’re pushing lenders to raise their game and provide more help to many small businesses,” he said before signing legislation extending the program in March. “As you know, particularly Hispanic, as well as African American, small businesses, are just out of business because they got bypassed the first time around.”
He called that extension “a bipartisan accomplishment.”