Exhibit C (Polakis Declaration) — DV Diamond Club (E.D. Mich.)
Summary
Exhibit C in DV Diamond Club of Flint, LLC v. U.S. Small Business Administration (E.D. Mich.), Case No. 4:20-cv-10899, filed April 26, 2020 as ECF No. 26-3, marked as a redacted version. It is the declaration of a manager of plaintiff Polmour, Inc., who states that a PPP loan application for Polmour was submitted on April 3, 2020 and that the declarant was later informed the lender would not be able to assist because of the type of business. The declaration states that on a call-back Polmour was said to be indeed eligible, but that the same day a caller said it was not eligible due to SBA regulations. Exhibit 1 is a letter from attorney Brad Shafer stating the opinion that denying a PPP loan under 13 C.F.R. § 120.110(p) would be unconstitutional. Exhibit 2 is the declarant's email correspondence.
Summary drafted by a model from the text of the original file linked on this page and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“Exhibit C (Polakis Declaration) — DV Diamond Club (E.D. Mich.).”
Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/exhibit-c-dv-diamond-club-of-flint-llc-v-u-s-small-business-administra-33de6718b1/
, SHA-256 d004a8651cb4b5ed90e2384f4662712c6ef728be6a3f22f6c46a8eb8628d85a3.Full text
Case 4:20-cv-10899-MFL-DRG ECF No. 26-3 filed 04/26/20 PageID.824 Page 1 of 15
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
DV DIAMOND CLUB OF FLINT, LLC
d/b/a Little Darlings, et al.
Plaintiffs, Case No. 4:20-cv-10899
Hon. Matthew F. Leitman
v. Hon. David R. Grand
by referral
UNITED STATES SMALL BUSINESS
ADMINISTRATION, et al.
Defendants.
__________________________________________________________________
DECLARATION OF GEORGE POLAKIS
I, George Polakis, hereby declare as follows:
1. I make this declaration upon my personal knowledge, unless
specifically stated to the contrary.
2. I am employed as a manager of Polmour, Inc. (“Polmour” or the
“Club”), a plaintiff in this above-captioned suit. Polmour is what is colloquially
described as a gentlemen’s club or an “adult business.” Polmour presents female
performance dance entertainment which is fully clothed and, at times topless.
EXHIBIT C
REDACTED VERSION OF DOCUMENTS TO BE SEALED PAGE 1
Case 4:20-cv-10899-MFL-DRG ECF No. 26-3 filed 04/26/20 PageID.825 Page 2 of 15
3. I have acted on behalf of Polmour in its attempt to secure a Paycheck
Protection Program (“PPP”) loan.
4. On Friday, April 3, 2020, I submitted PPP loan application for Polmour
with . The application then changed and I
resubmitted Polmour’s application for a PPP loan, on or about the same day.
5. On or about Monday, April 6, 2019, I was contacted by
- , who identified herself as a Lending Assistant with
requested that I submit additional items in support of the PPP loan application. I
and
supplied
6.
• and
Later that day,
•
with all the requested materials.
contacted me and informed me that “
-
- will not be able to assist with the Paycheck Protection Program Loan. This is
because of the type of business Polmour, Inc [sic] is categorized under.”
7. On or about Tuesday, April 7, 2020, I responded by providing
•
a letter drafted by Bradley J. Shafer of Shafer and Associates, P.C., explaining
with
Polmour’s position that it did not present or derive income from performances or
services that are “prurient,” so as to disqualify Polmour from receiving a PPP loan.
A true and accurate copy of that letter is attached hereto as Exhibit 1.
8. responded back to me and asked that I contact
President, .
Page 2 of 4
EXHIBIT C
REDACTED VERSION OF DOCUMENTS TO BE SEALED PAGE 2
Case 4:20-cv-10899-MFL-DRG ECF No. 26-3 filed 04/26/20 PageID.826 Page 3 of 15
9.
-
Also on or about Tuesday, April 7, 2020, I called
who had instructed me to call him. I responded that
•
, who asked
had requested I call him.
- - stated he would call me back in ten minutes.
10. called me a back a short time later, stated that Polmour, Inc. was
indeed eligible for a PPP loan, and instructed me to work with a bank employee,
11. Also on or about Tuesday, April 7, 2020, I called
- who stated
that she was overwhelmed and would call me back. Before she could call me back
and also that same day,
- called me back and informed me that Polmour was
not eligible for a PPP loan due to SBA regulations.
12. I understood
- statement to me to mean that Polmour was not
eligible for a PPP loan because it was a gentlemen’s club. No
employee has instructed me, nor am I otherwise aware, of any other reason Polmour
is not eligible to receive a PPP loan.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
Page 3 of 4
EXHIBIT C
REDACTED VERSION OF DOCUMENTS TO BE SEALED PAGE 3
Case 4:20-cv-10899-MFL-DRG ECF No. 26-3 filed 04/26/20 PageID.827 Page 4 of 15
13. A true an accurate copy of my email correspondence with
•
is attached hereto as Exhibit 2. Except, my email correspondence
at
with my attorney is redacted from the very top of Exhibit 2.
I CERTIFY UNDER PENALTY OF PERJURY THAT THE FOREGOING IS
TRUE AND CORRECT.
Executed on:
By: George Polakis
Page 4 of 4
EXHIBIT C
REDACTED VERSION OF DOCUMENTS TO BE SEALED PAGE 4
Case 4:20-cv-10899-MFL-DRG ECF No. 26-3 filed 04/26/20 PageID.828 Page 5 of 15
LAW OFFICES
SHAFER & ASSOCIATES, P.C.
A PROFESSIONAL CORPORATION
3800 CAPITAL CITY BLVD., SUITE 2
LANSING, MI 48906
E-MAIL info@bradshaferlaw.com
BRADLEY J. SHAFER PHONE: 517-886-6560 MATTHEW J. HOFFER
ALSO MEMBER, AZ BAR FAX: 517-886-6565 Matt@bradshaferlaw.com
Brad@bradshaferlaw.com
To whom it may concern:
The purpose of this letter is to briefly discuss one aspect of the Payroll Protection Program
(“PPP”) loan application process as it is currently being administered under the recently enacted
CARES Act; that being the particular provision found in 13 C.F.R. § 120.110(p), that could be
construed (I believe incorrectly) to prohibit SBA loans to any and all “adult” businesses under the
belief that they present entertainment of a “prurient sexual nature.”
The term “prurient” is one part, of one element, of the three-prong legal test of “obscenity,”
which is the topic of my comments below. But before I discuss that in detail, I’d like to first share
with you some of my credentials so that you can make your own evaluation of my qualifications
to speak on this topic.
I have been an attorney since 1984 and am licensed in both Michigan and Arizona. I am
also fully admitted to practice law before, and has actually practiced in, the United States District
Courts for both the Eastern and Western Districts of Michigan, for both the Southern and Central
Districts of Illinois, the Northern District of Indiana, the Western District of Texas, the Third,
Fourth, Sixth, Seventh, Eighth, and Ninth Circuits of the United States Court of Appeals, as well
as the United States Supreme Court.
My practice concentrates on two primary areas of the law: First Amendment (Free Speech
and expression) litigation -- which I believe to be particularly relevant to the subject of this letter
-- and labor law. I am a past President of the First Amendment Lawyers Association (a national
organization of trial lawyers who specialize in the protection of First Amendment rights) and am
Chairman Emeritus of that group, and was one of the attorneys in the Supreme Court case of
Barnes v. Glen Theatre, which established the constitutional protections of nude performance
dance entertainment.
Because of my qualifications regarding Free Speech and expression rights, I have also
received special permission to litigate and argue cases before various appellate courts across the
country, including the:
Kentucky Supreme Court North Carolina Supreme Court
Nevada Supreme Court Tennessee Supreme Court
New Jersey Supreme Court
Declaration of EXHIBIT 1
Polakis REDACTED VERSION OF DOCUMENTS TO BE SEALED Page 1
Case 4:20-cv-10899-MFL-DRG ECF No. 26-3 filed 04/26/20 PageID.829 Page 6 of 15
April 24, 2020
Page 2
__________________________________
New York Court of Appeals (that state’s North Carolina Court of Appeals
highest court) Ohio Court of Appeals
Florida Court of Appeals Tennessee Court of Appeals
Iowa Court of Appeals Texas Court of Appeals
Kentucky Court of Appeals Washington Court of Appeals
Similarly, I have received special permission to litigate such cases in various federal district
courts, including the Central District of California; the District of Connecticut; the Middle District
Florida; the Middle District of Georgia; the Northern District of Illinois; the Southern District of
Indiana; the Southern District of Iowa; the Western District of Kentucky; the Western District of
Missouri; the Western District of North Carolina; the Northern District of Ohio; the Southern
District of Ohio; the District of South Dakota; the Western District of Tennessee; the Middle
District of Tennessee; the Western District of Washington; and the Northern District of West
Virginia.
Along the same lines, I have also received special permission to appear in various state
trial courts in such states as California, Florida, Indiana, Kentucky, Massachusetts, Minnesota,
Missouri, Nevada, New Jersey, North Carolina, Ohio, Tennessee, Texas, and Washington.
Moreover, I am a published author on the topic of legal obscenity. See, for example,
Shafer, Patent Offensiveness: The Black Hole of Miller, 10 Thomas M. Cooley Law Review 1, 1-
69 (1993) (this is the most comprehensive law review article ever published on this topic, and is
particularly relevant to the issues I discuss below); Shafer, Sex, Lies, and Videotape: In Critique
of the Miller Test of Obscenity, 70 Michigan Bar Journal No. 10, 1038-1045 (October 1991);
Shafer, Jurisprudence of Doubt: Obscenity, Indecency and Morality at the Dawn of the 21st
Century, 84 Michigan Bar Journal No. 6, 22-26 (June 2005); Linz, Donnerstein, Land, McCall,
Scott, Shafer, Klein, and Lance, Estimating Community Standards: The Use of Social Science
Evidence in an Obscenity Prosecution, 55 Public Opinion Quarterly 1, 80-112 (Spring 1991); and
Linz, Shafer, Donnerstein, Land, Graesser, and McCall, Discrepancies Between the Legal Code
and Community Standards for Sex and Violence: An Empirical Challenge to Traditional
Assumptions in Obscenity Law, 29 Law & Society Review 1, 127-168 (1995).
That having been said and without getting into an esoteric analysis with full legal citations,
the most important thing I believe that I can impart to you is that the concept of “prurience” has
no legal recognition except as part of legal test of obscenity, which looks at whether:
The average person, applying contemporary community standards, would find that
the work, taken as a whole, appeals to the prurient interest;
[Type here]
Declaration of EXHIBIT 1
Polakis REDACTED VERSION OF DOCUMENTS TO BE SEALED Page 2
Case 4:20-cv-10899-MFL-DRG ECF No. 26-3 filed 04/26/20 PageID.830 Page 7 of 15
April 24, 2020
Page 3
__________________________________
Applying contemporary community standards, the work depicts or describes, in a
patently offensive way, sexual conduct specifically defined by applicable state law;
and
A reasonable person would find that the work lacks serious literary, artistic,
political, or scientific value.
This comes from three Supreme Court cases: Miller v. California, Smith v. United States, and
Pope v. Illinois.
Moreover, the Supreme Court has been clear that all three test elements must be found to
exist before the expression can be found to be devoid of constitutional protection (the case of Reno
v. ACLU). Simply put, constitutional protections do not evaporate based on a finding of just one
of these test elements. In that regard, I would point out that the PPP regulations distributed on
Thursday even specifically state that all loans guaranteed by the SBA pursuant to the CARES Act
will be made consistent with constitutional protections, including the First Amendment.
You should also understand that the Supreme Court has specifically defined “prurient
appeal.” It means a “shameful or morbid,” and “unhealthy” interest in sex, as opposed to a normal,
healthy, interest in sex. This comes from two other Supreme Court decisions: Roth v. United
States and Brockett v. Spokane Arcades, with the Court noting in Brockett that government cannot
ban entertainment that, “taken as a whole, does no more than arouse ‘good, old fashioned, healthy’
interest in sex.” This definition certainly does not encompass all “adult” entertainment. And, the
Supreme Court has been clear that mere nudity in-and-of-itself does not make an entertainment
performance legally obscene.
With these fundamental legal concepts in mind, it should be clear that performance dance
entertainment, whether it be clothed, “topless,” or even fully nude, does not satisfy these legal
precepts, and indeed there is absolutely no history here whatsoever of any performances being
charged with, let alone being convicted of, being legally obscene.
First, the performances at issue are not legally obscene in that they do not satisfy the three
tests of obscenity (all of which are constitutionally required, and there has never been even an
allegation that they do). Second, the performances at issue do not satisfy even the single prong of
being of a “prurient” sexual nature because they do not appeal to a “shameful or morbid,” and
“unhealthy” interest in sex as specifically defined by the Supreme Court -- particularly when
applying the “contemporary community standards” which must be done in these legal
circumstances.
Consequently, it is my opinion that the denial of a PPP loan based upon these regulatory
provisions (which are not found in the PPP, nor are they contained in the PPP loan applications
themselves) would be an unconstitutional action in-and-of itself.
[Type here]
Declaration of EXHIBIT 1
Polakis REDACTED VERSION OF DOCUMENTS TO BE SEALED Page 3
Case 4:20-cv-10899-MFL-DRG ECF No. 26-3 filed 04/26/20 PageID.831 Page 8 of 15
April 24, 2020
Page 4
__________________________________
As you are aware, Thursdays’ regulations make clear that these loans are to be issued on a
“first come, first served” basis. The wrongful denial of a PPP loan application based upon the
“prurient sexual nature” regulation (again, not adopted in the PPP itself) could then result in
irreparable harm both to the applying business and, even more importantly, its innocent employees
who are engaged in a perfectly legal – and indeed constitutionally protected – occupation, if the
loan funds are exhausted before this matter can be rectified.
Finally, let me point out SBA Standard Operating Procedure, Lender Development
Company Loan Programs, Doc. No. SOP 50 10 5(J) (January 1, 2018), which states, at Section
15(c) thereof (p. 93), that in the event you have an applicant that “may have a business aspect of a
prurient sexual nature,” you are to “submit your analysis and supporting documentation to the SBA
at PSMReview@sba.gov for an eligibility determination.”
I’d be happy to discuss these matters in further detail with you and/or provide to you any
supporting materials that you may desire in order to verify my comments above. Should you have
any further questions, please feel free to call me currently on my cell at 517-285-5222 (I’m home-
bound right now because of the pandemic), or email me at brad@bradshaferlaw.com. Thank you
for your consideration in this matter.
Sincerely:
Brad Shafer
[Type here]
Declaration of EXHIBIT 1
Polakis REDACTED VERSION OF DOCUMENTS TO BE SEALED Page 4
Case 4:20-cv-10899-MFL-DRG ECF No. 26-3 filed 04/26/20 PageID.832 Page 9 of 15
From:
Date: ue, pr ,
Subject: RE: tax returns pouhn ore
To: George Polakis
Cc:
Hi George,
Please give our AI·ea President a call in regards to this. His info is below.
President
Thank you,
1
Declaration of EXHIBIT2
Polakis REDACTED VERSION OF DOCUMENTS TO BE SEALED Page 1
Case 4:20-cv-10899-MFL-DRG ECF No. 26-3 filed 04/26/20 PageID.833 Page 10 of 15
From: George Polakis
Sent: Tuesday, April 7, 2020 9:08 AM
To:
Subject: Fwd: tax returns poulmore
"Finally, let me point out SBA Standard Operating Procedure, Lender Development
Company Loan Programs, Doc. No. SOP 50 10 5(J) (January 1, 2018), which states, at Section
15(c) thereof (p. 93), that in the event you have an applicant that “may have a business aspect of a
prurient sexual nature,” you are to “submit your analysis and supporting documentation to the SBA
at PSMReview@sba.gov for an eligibility determination.”"
---------- Forwarded message ---------
From: George Polakis
Date: Tue, Apr 7, 2020 at 9:05 AM
Subject: Re: tax returns poulmore
To:
please read the second to last paragraph.
2
Declaration of EXHIBIT 2
Polakis REDACTED VERSION OF DOCUMENTS TO BE SEALED Page 2
Case 4:20-cv-10899-MFL-DRG ECF No. 26-3 filed 04/26/20 PageID.834 Page 11 of 15
On Mon, Apr 6, 2020 at 6:58 PM wrote:
Hi George,
Upon further review, will not be able to assist with the Paycheck Protection Program Loan. This is
because of the type of business Polmour, Inc is categorized under.
I apologize for any inconvenience this causes.
Thank you,
3
Declaration of EXHIBIT 2
Polakis REDACTED VERSION OF DOCUMENTS TO BE SEALED Page 3
Case 4:20-cv-10899-MFL-DRG ECF No. 26-3 filed 04/26/20 PageID.835 Page 12 of 15
From: George Polakis
Sent: Monday, April 0 , 2
To:
Subject: Re: tax returns poulmore
approximate business staii date 8-1-2001
contact Theo Polakis
Name of the control person who performs the day to day operations of the business : George Polakis
# of employees w ho w ill be compensated during current pay period:53
# of employees who will be hired/ rehired as a result of the PPP loan : 53
# of employees who w ou ld be let go if you didn' t receive the PPP loan : 35
_by laws articles of incorporation.od1_ _ _ _ ___,
On Mon, Apr 6, 2020 at 10: 17 AM
Hello,
Below is the list of what is needed. I will need all the information listed below to process the request. Please send in
one email once you have gather everyth ing, and Ashley Raabe on the reply as well. Thank you so much for your
patience during this process!
Things to note:
Business must have been operating on Feb 15th, 2020 and have employees that you paid salaries &
payroll taxes on.
4
Declaration of EXHIBIT2
Polakis REDACTED VERSION OF DOCUMENTS TO BE SEALED Page4
Case 4:20-cv-10899-MFL-DRG ECF No. 26-3 filed 04/26/20 PageID.836 Page 13 of 15
‐ Full loan amount is not eligible for forgiveness
‐ Knowingly making a false statement to get a loan under this program is punishable by law
‐ Business has under 500 employees
‐ The application is the only hard copy that will be needed, please drop off via our drive thru at any time as
it is not needed to send in your loan request
Items needed:
‐ PPP Application Form (must use the latest version attached; please use black ink if possible)
‐ 2019 3rd party payroll provider’s detailed report for all employees OR 2019 Business prepared detail
report for all employees if not using a 3rd party payroll provider (Provide Jan 2020‐Feb 2020 if not operating
for full 2019)
‐ Detail or Summary report of Feb 2020 payroll from an authorized representative of the applicant
certifying the # of employees & certifying the business was operating Feb 15th, 2020
‐ IRS Forms 940 & 941 for 2019
‐ Name, title, address (including zip code), Tax ID/SNN, % ownership of all owners who make up the entity
(business applicant)
‐ Name of the control person who performs the day to day operations of the business
‐ Entity documents for the business/applicant, including a Borrowing Resolution which states who can
borrow money for the business
‐ Evidence of an existing EIDL loan if you have taken one out
‐ Beneficial Ownership Form (attached)
‐ Picture of driver license for all business owners & the control person
‐ Last year’s tax return (2019 or 2018)
‐ Mailing & physical address of the entity/applicant (include the zip code)
‐ Name & address of all authorized signers for the business/entity & whether or not they will be signing for
this loan
‐ Approximate date business was established
5
Declaration of EXHIBIT 2
Polakis REDACTED VERSION OF DOCUMENTS TO BE SEALED Page 5
Case 4:20-cv-10899-MFL-DRG ECF No. 26-3 filed 04/26/20 PageID.837 Page 14 of 15
‐ # of employees who will be compensated during current pay period, # of employees who will be
hired/rehired as a result of the PPP loan, # of employees who would be let go if you didn’t receive the PPP
loan
‐ Borrower/applicant name must match your entity documents
‐ Cell phone # of primary contact for this loan
From: George Polakis
Sent: Friday, April 03, 2020 12:22 PM
6
Declaration of EXHIBIT 2
Polakis REDACTED VERSION OF DOCUMENTS TO BE SEALED Page 6
Case 4:20-cv-10899-MFL-DRG ECF No. 26-3 filed 04/26/20 PageID.838 Page 15 of 15
To:
Subject: Fwd: tax returns poulmore
*****Security Note: EXTERNAL EMAIL - Please exercise caution
and DO NOT open attachments or click on links from unknown or unexpected emails .
polmour inc two years tax return
---------- Fo1warded message ---------
From: george polakis
Date: Fri, Apr 3, 2020 at 12:18 PM
Subject: Fwd: tax returns poulmore
To:
---------- Fo1warded message---------
From: Jimmy Thompson
Date: Fri, Apr 3, 2020 at 10:29 AM
Subject: tax returns poulmore
To: george polakis
This transmission may contain info1mation that is privileged, confidential and or exempt from disclosure
under applicable law. If you are not the intended recipient, you are hereby notified that any disclosure,
copying, distribution or use of the infonnation contained herein (including any reliance thereon) is
STRICTLY PROHIBITED. If you received this transmission in eITor, please immediately contact the sender
and destroy the material in its entirety, whether in electronic or hard copy fo1mat. Thank you.
This transmission may contain infonnation that is privileged, confidential and or exempt from disclosure under
applicable law. If you are not the intended recipient, you are hereby notified that any disclosure, copying,
distribution or use of the infonnation contained herein (including any reliance thereon) is STRICTLY
PROHIBITED. If you received this transmission in eITor, please immediately contact the sender and destroy
the material in its entirety, whether in electronic or hard copy format. Thank you.
This transmission may contain info1mation that is privileged, confidential and or exempt from disclosure under
applicable law. If you are not the intended recipient, you are hereby notified that any disclosure, copying,
distribution or use of the info1mation contained herein (including any reliance thereon) is STRICTLY
PROHIBITED. If you received this transmission in eITor, please immediately contact the sender and destroy the
material in its entirety, whether in electronic or hard copy fonnat. Thank you.
7
Declaration of EXHIBIT2
Polakis REDACTED VERSION OF DOCUMENTS TO BE SEALED Page7
File and source
- File
- 26-att3-exhibit-c-declaration-of-polakis-redacted.pdf
- Size
- 2,136,906 bytes
- SHA-256
- d004a8651cb4b5ed90e2384f4662712c6ef728be6a3f22f6c46a8eb8628d85a3
- Original
- archive.org