Clemens Brothers Construction, No. 200 (December 10, 2003)
Docket No. BDPT-2003-09-22-07

 
                                
                    UNITED STATES OF AMERICA
                  SMALL BUSINESS ADMINISTRATION
                 OFFICE OF HEARINGS AND APPEALS
                        WASHINGTON, D.C.



                                )    
IN THE MATTER OF:               )    Docket No.  BDPT-2003-09-22-07
                                )     
Clemens Brothers Construction   )    Decided:  December 10, 2003
                                )     
     Petitioner                 )
                                )

                                
           ORDER GRANTING MOTION FOR SUMMARY DECISION

                                
                       Facts and Arguments

                                
     On    November   24,   2003,   Respondent   Small   Business
Administration   (SBA)  moved  for  dismissal  or   for   summary
decision.   Motion  to  Dismiss  or  for  Summary  Decision  (SBA
Motion);  Memorandum  in Support of SBA Motion  (SBA  Memorandum)
(Nov. 24, 2003).


     In  support of the motion, the SBA offered copies of  Steven
A.  Clemens's Statement of Personal History (SBA Form 912), dated
November  11,  2000; and Report-Indeterminate Sentence  or  Other
Sentence  Choice  (California Form CR  291),  dated  November  3,
1992.   SBA  Motion Ex. 2, 4.  On the SBA Form 912,  Mr.  Clemens
answered in the negative the following questions:  "7.  Have  you
ever been charged with or arrested for any criminal offense other
than  a  minor motor vehicle violation?" and "8.  Have  you  ever
been  convicted  .  .  .  or placed on  any  form  of  probation,
including  adjudication  withheld  pending  probation,  for   any
criminal  offense  other  than a minor vehicle  violation?"   SBA
Motion Ex. 2.  The California Form CR 291 states that, on October
16, 1992, Mr. Clemens was, pursuant to guilty pleas, convicted of
resisting   an  executive  officer  and  reckless  driving-felony
criminal  offenses  not  involving a minor vehicle  violation-and
placed on probation.  SBA Motion Ex. 4.


     The  SBA terminated Petitioner Clemens Brothers Construction
(Petitioner) for submitting false information in its  application
for    the   8(a)   Program,   in   violation   of   13    C.F.R.
Section  124.303(a)(1).   Amended Appeal  Petition  (Amend.  App.
Pet.)  Ex.  1 (SBA Determination), at 1.  Specifically,  the  SBA
alleged,   Mr.  Clemens,  Petitioner's  president,  had  provided
negative   responses   on  SBA  Form  912,  notwithstanding   his
convictions.  Id.  The SBA stated that, in Petitioner's March 31,
2003,  response to the SBA's March 17, 2003, Letter of Intent  to
Terminate,  Petitioner had not disputed the  record  of  arrests,
charges, and convictions, and had indicated that Mr. Clemens  was
serving  a  sentence; but claimed that he had  assumed  that  the
questions  related to business activities only and,  because  his
conviction  did  not relate to business activities,  he  had  not
intentionally provided incorrect responses to them.  Id.  The SBA
found  that  Petitioner's contention did not  appear  reasonable,
given the wording of the questions, and that Petitioner thus  had
not overcome the grounds for termination.  Id. at 1-2.

     The SBA contends its motion should be granted because either
(1)  the  petition does not assert facts that,  if  proven  true,
would  warrant reversal or modification of the SBA Determination;
or (2) there is no genuine issue as to any material fact, and the
SBA  is  entitled to a decision in its favor as a matter of  law.
SBA  Memorandum  at  1 (citing 13 C.F.R. Sections  134.405(a)(1),
134.212,   134.408).   The  SBA  reasons:   (1)   Mr.   Clemens's
misunderstanding  was unreasonable because nothing  in  the  form
could  lead a reasonable person to believe its scope was  limited
to  criminal activity involving business, id. at 3; and  (2)  the
SBA's  decision  was  therefore  not  arbitrary,  capricious,  or
contrary to law, id. at 4.

     On   December  3,  2003,  Petitioner  opposed  the   motion.
Opposition to SBA Motion (Petitioner Opposition) (Dec. 8,  2003).
Petitioner  claimed on appeal that (1) because  Mr.  Clemens  was
completing  SBA paperwork, he assumed all questions  referred  to
business  activities and the questions asked if he had personally
committed  business-related crimes such as fraud or embezzlement,
App.  Pet.  at  2; (2) the questions, as Mr. Clemens  reads  them
"with  new understanding[,] are vague, ambiguous[, and]  open  to
interpretation," App. Pet. at 3; (3) on May 6, 2002, Petitioner's
general  manager advised its SBA business opportunity  specialist
(BOS),  about Mr. Clemens's pending incarceration, id. at 2,  Ex.
1;  and  (4)  the BOS took no action and continued to  correspond
with  Petitioner  as an 8(a) participant for  more  than  a  year
until,  on  March  5,  2003, Mr. Clemens  wrote  to  another  SBA
official  to complain about the BOS's failure to help  Petitioner
become  competitive and requested that another  SBA  employee  be
assigned as Petitioner's BOS, id. at 2-3, Ex. 2-4.

     Petitioner  argues  the  motion  should  be  denied  because
(1)  contrary to the SBA's assertion in its motion,  Mr.  Clemens
has  never been to prison and has never admitted to making  false
statements; (2) Mr. Clemens is a good role model in the community
who  has  helped  the  poor  go to college,  given  work  to  the
homeless,  and  fed the needy; and (3) the BOS  terminated  [sic]
Petitioner  from  the 8(a) Program only after Mr.  Clemens  asked
that  the  SBA  replace  him  as  Petitioner's  BOS.   Petitioner
Opposition at 2.

                           Discussion
                                
     To  prevail on a motion for summary decision, the  SBA  must
establish  both  the absence of a genuine issue of  any  material
fact  and the SBA's entitlement to a decision in its favor  as  a
matter  of  law.  13 C.F.R. Sections 134.212(a),  134.408(a).   I
find that the SBA has met these requirements and is entitled to a
decision in its favor as a matter of law.

     SBA  regulations permit the SBA to terminate  a  participant
from    the   8(a)   Program   for   good   cause.    13   C.F.R.
Section  124.303(a).  Examples of good cause  include  submitting
false   information  in  the  concern's  8(a)   BD   application,
regardless  of whether correct information would have caused  the
SBA  to  deny the concern admission to the program and regardless
of  whether  correct information was given to SBA in accompanying
documents  or  by other means.  13 C.F.R. Section  124.303(a)(1).
There  is  no requirement that the applicant willfully  submitted
false information.  Further, the SBA makes clear to applicants on
the  SBA  Form  912  that (1) "[i]t is against  SBA's  policy  to
provide   assistance   to  persons  not   of   good   character";
(2)  "consideration  is given to a person's behavior,  integrity,
candor,   and   disposition   toward   criminal   actions";   and
(3)  therefore, "it is important that [questions 6, 7, and 8]  be
answered  truthfully and completely," because "[a]n  arrest  o[r]
conviction  record will not necessarily disqualify you;  however,
an   untruthful  answer  will  cause  your  applicatio[n]  to  be
denied."

     Petitioner does not deny that Mr. Clemens knew that  he  had
been  charged  with, arrested for, convicted  of,  or  placed  on
probation  in  connection with a criminal offense  other  than  a
minor  vehicle  violation.   See  SBA  Motion  Ex.  2.   Further,
Petitioner does not dispute that the documents are correct.

     Petitioner  claims  that  Mr. Clemens  assumed  all  of  the
questions  referred  to business activities;  thus,  he  made  an
honest  mistake concerning the meaning of the questions  and  did
not   willfully  submit  a  false  statement.   This  is  of   no
consequence because any such mistake is unreasonable and does not
excuse  the falsehood.  The grounds for termination in 13  C.F.R.
Section  124.303(a)(1) require only that the responses be  false.
There is no requirement that Mr. Clemens must have willfully made
a  false  statement.   Contrary  to  Mr.  Clemens's  claims,  the
questions  cannot be reasonably considered vague,  ambiguous,  or
open  to reasonable interpretation, particularly in light of  the
accompanying instructions, which caution applicants that that  it
is  against SBA's policy to provide assistance to persons of  bad
character;  that  SBA  considers a person's behavior,  integrity,
candor, and disposition toward criminal actions; and that  it  is
important   that   the  questions  be  answered  truthfully   and
completely, because, although an arrest or conviction record will
not  necessarily  disqualify the applicant, an untruthful  answer
will  cause  the  application to be denied.   Thus,  Petitioner's
assertion  that  Mr. Clemens's responses were the  result  of  an
honest mistake is unreasonable and does not raise a "defense"  to
the  grounds for termination.  Accordingly, no genuine  issue  of
material fact exists.

     The  SBA  reasonably found that Petitioner had not  overcome
the  ground for termination.  Thus, the SBA Determination was not
arbitrary, capricious, or contrary to law.  Therefore, the SBA is
entitled to judgment in its favor.[1]

                           Conclusion
     Accordingly,  the Motion for Summary Decision  is  GRANTED,[2]
and the appeal is DISMISSED.

     Subject  to 13 C.F.R. Section 134.409(c), this is the  final
decision  of  the Small Business Administration.  See  15  U.S.C.
Section 637(a)(9)(D); 13 C.F.R. Section 134.409(a).
                                 
                                 


                                 
                                 RICHARD S. ARKOW
                                 Administrative Law Judge





_______________________________
     1  Petitioner's remaining arguments are irrelevant to the
motion and merit no discussion.
     2  Because of this disposition, I need not decide whether to
decline jurisdiction.

                                                                 
                                                                 
                                                                 
                                           Posted: December, 2003