BREAKING: Gallatin County Business Owners Release Letter Calling For Investigation Into Sheehy’s Business Practices
FOR IMMEDIATE RELEASE
Thursday, August 29, 2024
CONTACT
rehm@mtdems.org
Helena, MT – Today, Gallatin County business owners, financial experts, and taxpayers sent a letter to the Gallatin County Commission and Small Business Administration’s (SBA) Office of the Inspector General urging them to investigate Tim Sheehy’s business practices, in light of breaking investigative reporting from NBC News and the Washington Post.
The letter outlines concerns from the Gallatin County residents about “Sheehy’s use of $160M in Gallatin County bonds largely to repay out-of-state investors instead of building hangars and investing in aircraft,” and his company falsely designating itself as a “socially and economically disadvantaged business” in a government program that offers preferential treatment for federal contracting.
The letter raises two key questions:
“Did Bridger intend from the beginning to use the bond revenue to primarily pay back a private investment firm based in New York? Did any of the funds result in job creation in keeping with the purpose of the bond program?”
The vast majority of a Gallatin County bond Bridger Aerospace secured – $134 million of the $160 million – ended up going to paying investors, even though it was marked to go to funding planes and hangars.
“[Falsely certifying itself] raises serious questions about Bridger’s misuse of governmental programs. Why did the employee seek certification as a socially and economically disadvantaged business in the first place and why did it take years to discover the ‘mistake’?”
Bridger Aerospace falsely certified itself as a “socially and economically disadvantaged company” in “seeking to win contracts.”
The full letter is here and below:
We are small business owners, financial experts, and taxpayers in Gallatin County.
Today, we write to ask the Gallatin County Commission and the Small Business Administration’s (SBA) Office of Inspector General to investigate Tim Sheehy’s business practices. Mr. Sheehy is the founder of Bridger Aerospace Group (“Bridger”), a company largely in business with government entities. He served as its CEO and on the Board of Directors from 2014 until July, 2024.
Recent public reporting has sounded the alarm on troubling practices of Bridger in relation to governmental programs designed to aid small businesses and create jobs in Montana. This letter details our concerns with two of them in particular: Sheehy’s use of $160M in Gallatin County bonds largely to repay out-of-state investors instead of building hangars and investing in aircraft, and his company falsely designating itself as a “socially and economically disadvantaged business” in a government program that offers preferential treatment for federal contracting. As Montanans and small business owners who have worked hard to build our businesses with integrity and commitment to the communities we serve, we implore you to look into these matters.
First, public reporting indicates that Tim Sheehy’s company used governmental bonds issued by Gallatin County to repay out-of-state private investors.
Montana law allows counties to issue and secure bonds to help finance industrial development projects, provided that such projects: (1) are in the public interest of the county; and (2) give preference to employing Montana residents.1 Put plainly, a county in Montana can dedicate public resources to help private companies raise money when doing so will help build up local infrastructure and create jobs for Montanans.
In 2020, Sheehy’s company asked Gallatin County to do just that. Bridger proposed that the county issue $160 million dollars’ worth of bonds to help it finance the construction of airplane hangars in Gallatin County and to purchase firefighting aircraft to be kept in the hangars.
Bridger’s proposal also included, among other things, the ability to refinance existing loans on aircraft already owned by the company. Gallatin County held a public hearing on the proposal where Bridger’s officers boasted about the public benefits that would be provided to the Bozeman area, including more jobs, increased tax revenue, and even that additional firefighting capacity would benefit the health of the county’s citizens.3
Responding to these promises of forthcoming public benefits, the county approved the issuance of the bonds, which provided an attractive deal to investors, offering a hefty interest rate.4
Despite the company’s public promises, NBC News recently revealed that $134 million of the $160 million raised from the bonds went to repay a New York City-based private equity firm that financed the company’s early activities.5 According to the reporting, “less than $20 million in fresh capital from the bond offering went to Bridger for new infrastructure.”6
Gallatin County taxpayers and the County Commission deserve to know the truth about exactly how Bridger spent the money raised through county-issued bonds and whether that use complies with the promises it made to Gallatin County.
Did Bridger intend from the beginning to use the bond revenue to primarily pay back a private investment firm based in New York? Did any of the funds result in job creation in keeping with the purpose of the bond program?
Perhaps even more troubling than Bridger’s use of the bond proceeds, Mr. Sheehy has personally benefited from the county’s bond issuance and its generous interest rate.
Senate Financial Disclosure reports reveal Mr. Sheehy owns between $1 and $5 million of value in Gallatin County bonds, which have generated interest income for him of up to $1 million.7 Presumably these bonds are the very same bonds issued on behalf of Bridger—and he should clarify the record if not. While legitimate questions remain about the public interest benefits that Gallatin County received from its partnership with Bridger on these bonds, there is no doubt county-issued revenue bonds have handsomely benefitted Mr. Sheehy personally.
Concerns about the use of the bond proceeds and Mr. Sheehy’s personal financial gain are further exacerbated by Bridger’s current financial condition and bonus payouts. In the company’s own July SEC filing, the company stated its “liquidity position raises substantial doubt about our ability to continue as a going concern. We have incurred significant losses since inception, and we may not be able to achieve, maintain or increase profitability or positive cash flow.”8
As the Washington Post reports, the company lost $42.1 million in 2022, $77.4 million in 2023 and $20.1 million in the first three months of 2024.9 But, apparently, to the loser goes the spoils. Mr.Sheehy’s company awarded him a $4.4 million bonus in 2022 and a $2.3 million bonus in 2023.10
Second, Bridger filed paperwork falsely claiming status as a socially and economically disadvantaged business to obtain certification under the Small Business Administration (SBA) Section 8(a) Business Development Program.
In the Small Business Act, Congress authorized the Small Business Administration to operate a business development program to assist companies owned and controlled by socially and economically disadvantaged individuals (the Section 8(a) Business Development Program).
Under the program, businesses that take the steps to become certified as socially and economically disadvantaged get preferential treatment in government contracting, as well as other valuable benefits like training and technical assistance.11 According to news reporting, a representative of Bridger filed paperwork with the SBA to obtain certification of a unit of Bridger as a socially and economically disadvantaged business.
Such certification requires claiming that the company is 51% owned and controlled by U.S. citizens who are socially and economically disadvantaged.12 The current version of the certification form clearly warns filers that federal law prohibits making a false statement to influence the certification process or to obtain a contract awarded under Section 8(a).13
And there is no dispute that Bridger’s certification makes false statements. A Bridger spokeswoman recently claimed the certification of the Bridger unit was an employee “mistake” that went undiscovered for four years and declined to provide details about why it took the firm so long to identify the error.14
This conduct again raises serious questions about Bridger’s misuse of governmental programs.
Why did the employee seek certification as a socially and economically disadvantaged business in the first place and why did it take years to discover the “mistake”?
As Gallatin taxpayers and longtime residents of Bozeman and the surrounding communities, we have a vested interest in the operations of Bridger. The company is largely in business with government entities, operating in reliance on funds provided by hardworking taxpayers like ourselves.
We have all worked hard as business owners and community members to build our companies the right way: with honesty, accountability, and a commitment to our community. We ask the Gallatin County Commission and Small Business Administration to investigate Sheehy’s business practices so that we can ensure that he and his businesses are adhering to those same values.
SEE ALSO:
NBC News: Tim Sheehy may turn the Senate red. But is he really a successful businessman?; Washington Post: Montana GOP Senate candidate touts his business. It’s losing millions; Billings Gazette: Tim Sheehy vacates leadership roles at Bridger Aerospace; Montana Free Press: U.S. Senate hopeful’s company reported losses of more than $77 million in 2023; Daily Montanan: Tim Sheehy’s former employees sue over alleged breach of contract; NBC Montana: Unpacking criticism of Sheehy’s blind trust pledge; Bloomberg Gov: Key GOP Senate Recruit Seeks Job Overseeing His Largest Customer; Daily Beast: GOP Star Tim Sheehy Forgot to Mention the Family Money in His ‘Self-Made’ Success Story
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