text: b'U.S. Small Business Administration\nOffice of Inspector General\n\n _________________________________\n\n\n Semiannual Report to Congress \n\n Spring 2010 \n\n\n\n\n\n October 1, 2009 \xe2\x80\x93 March 31, 2010 \n\n\x0c Inspector General Act Statutory Reporting Requirements\n\n\nThe specific reporting requirements prescribed in the Inspector General Act of 1978, as amended, are\nlisted below.\n\n\nSource Page\n\nSection 4(a)(2) Review of Legislation and Regulations 22\n\nSection 5(a)(1) Significant Problems, Abuses, and Deficiencies 3-22\n\nSection 5(a)(2) Recommendations with Respect to Significant Problems,\n Abuses and Deficiencies 33-39\n\nSection 5(a)(3) Prior Significant Recommendations Not Yet Implemented 31-32\n\nSection 5(a)(4) Matters Referred to Prosecutive Authorities 52-56\n\nSections 5(a)(5) Summary of Instances Where Information Was Refused None\nand 6(b)(2)\n\nSection 5(a)(6) Listing of OIG Reports 25-26\n\nSection 5(a)(7) Summary of Significant Audits & Other Reports 3-22\n\nSection 5(a)(8) Audit Reports with Questioned Costs 27\n\nSection 5(a)(9) Audit Reports with Recommendations that Funds Be Put to\n Better Use 27\n\nSection 5(a)(10) Summary of Reports From Prior Semiannual Reports\n Where No Management Decision Was Made 28\n\nSection 5(a)(11) Significant Revised Management Decisions 19\n\nSection 5(a)(12) Significant Management Decisions with Which\n the OIG Disagreed 19\n\nSection 5(a)(13) Information Described Under Section 05(b) of the Federal\n Financial Management Improvement Act of 1996 N/A\n\x0c U.S. SI\\ I ALL BUSI NESS AOi\\IIN ISTRATION \n \n\n OFFICE OF l NsPEc.TOR GENERAL \n\n WASI-IINGTON, D.C. 204 16 \n \n\n\n\n\n\n April 20 10\n\n\n\n[ am pleased to present the U.S. Small BusiOl.:ss Administration (S BA) Office of Inspector General (OIG)\nSpring 2010 Semiannual Report to Congress, which provides a summ.1ry of thc OIG\'s activities from\nOctober I, 2009 through March 31 , 2010.\n\nThis semiannual pcriod corresponded with my first six months as SBA Inspector General-having been\nsworn in on October 2, 2009. I have quickly come to appreciate the outstanding work of the OIG \' s\nrnanagemcnt and staff in providing quality auditing, invcst iga tivc, and othcr scrvices to support and assist\nSBA in achieving its mission. During this rcporting period, thl\'Se efforts resulted in 22 reports containing\n93 recommendations for improving Agency opcrations, reduc ing fTaud and unnecessary losses in SBA\nprograms, and recovering improper payments. In addit ion, OIG investigations continued to focu s on\nwrongdoers who employ a variety of methods to fraudulentl y obtain loans from SBA and its lendcrs,\nresulting in 53 indictments and 14 convictions. Overall, thc OIG achieved monetary recoveries and\nsavings of ovcr $33 million from disallowed costs agreed to by management. recommendmions that funds\nbe put to better usc agrecd to by management, court ordered and other investigative recovcries and fi nes,\nand loans/contracts not nl.1de as a result of investigat ions and name checks.\n\nThe American Recovery and Rein vcstment Aet of2009 (Recovery Act), which was signed into law on\nFebruary 17, 2009, contains a number ofSBA provisions intellded to help unlock credit markets and\npromote economic recovery for the nation \'s snl.1 11 business sector. The OIG continued to work\nproactively with the Agency to identify risks and recommend cost effcctive controls to help prcvent fraud,\nwaste, and abuse, and ensure that program goa ls arc achieved and sti mulus funds arc accurately tracked\nand reported. During th is semiannua l reporting period, thc OIG issucd 12 Recovery Oversight\nMemorandum (ROM) reports, which provided the Agency with notification of deficiencies as problems\nwere identified during OIG audits and reviews.\n\nAlso during this reporting period, the OIG issued its Fiscal Year 20 I0 Report Oil the Mosl Serious\nManagement and Performance Challenges Facing SBA_ Thi!> year\'s report included two new challenges\ndealing with ( I) the Agency\' s Lo.:1n Management and Accounting System (LM AS) proj cct and\n(2) improper paymcnts in the Disaster and 7(a) loon programs. While the Agency has made considerable\nprogress in addressing its management challenges, much remains to be done.\n\n[ appreciate thc coopcrmion and support providcd by SBA\'s Administrator, Karen Mills, and the entire\nSBA leadership team, during my firs t six months as Inspector General. I look forward to continu ing to\nwork closcly with SBA \'s leadership to promote t:conomy, efficicncy, effcctivcness, and integrity in the\nAgency\'s prOb>Tams and operation.\n\n\n\n\nPeggy E. Gustafson\nInspector General\n\x0c Table of Contents\n\n\n\nOverview of SBA and the OIG ............................................................................................................................. 1 \n\n\nAgency Management Challenges ......................................................................................................................... 3 \n\n\nRecovery Oversight .............................................................................................................................................. 5 \n\n\nSmall Business Access to Capital ......................................................................................................................... 6 \n\n\nDisaster Loan Program ....................................................................................................................................... 13 \n\n\nSmall Business Development, Contracting, Education and Training ................................................................. 16 \n\n\nAgency Management .......................................................................................................................................... 18 \n\n\nOther Significant OIG Activities. ....................................................................................................................... 21 \n\n\nStatistical Highlights........................................................................................................................................... 23 \n\n\nAppendices\n\n\n\n I. OIG Reports Issued ........................................................................................................................ 25 \n\n\n II. OIG Reports with Questioned Costs .............................................................................................. 27 \n\n\n III. OIG Reports with Recommendations that Funds Be Put to Better Use ......................................... 27 \n\n\n IV. OIG Reports with Non-Monetary Recommendations .................................................................... 28 \n\n\n V. \t OIG Reports from Prior Semiannual Periods with Overdue Management\n\n Decisions as of September 30, 2008 ........................................................................................... 28 \n\n\n VI. OIG Reports Without Final Action as of March 31, 2010 ............................................................. 29 \n\n\n VII. \t Summary of Significant Recommendations from Prior Semiannual Reporting\n\n Periods Without Final Action as of March 31, 2010................................................................... 31 \n\n\n VIII.\t\t Summary of Significant Recommendations, \n\n October 1, 2009 through March 31, 2010 ................................................................................... 33 \n\n\n IX. \t Events/Activities Where SBA Used its Cosponsorship Authority,\n\n October 1, 2009 through March 31, 2010 ................................................................................... 40 \n\n\n X. Legal Actions Summary, October 1, 2009 through March 31, 2010.............................................. 52\n\n\n XI. OIG Organization ........................................................................................................................... 57 \n\n\n\n\n\n i\n\x0c Table of Contents\n\n\n\nAdditional Semiannual Legislative Reporting Requirements from the Small Business Act, as Amended:\n\n SBA Cosponsorship and Fee-Based Administration-Sponsored Events\xe2\x80\x94Small \n\n Business Act, Section 4(h) .................................................................................................. 20, 40-51 \n\n\n SBDC Surveys\xe2\x80\x94Small Business Act, Section 21(a)(7) ................................................................ 17 \n\n\n SBA Gift Authority\xe2\x80\x94Small Business Act, Section 4(g)(2) ........................................................... 20 \n\n\n\n\n\n ii \n\n\x0c Glossary of Abbreviations\n\n\n\nANC ................................................................................................................. Alaska Native Corporation \n\nBD ....................................................................................................................... Business Development \n\nCDC ....................................................................................................... Certified Development Company \n\nCID ........................................................................................................ Criminal Investigations Division \n\nCIO ................................................................................................................... Chief Information Officer\n\n\nCMOP ............................................................................................ Consolidated Mail Outpatient Pharmacy \n\nDO ..................................................................................................................................... District Office\n\n\ne200 ...................................................................................................................... Emerging 200 Initiative\n\n\nEIDL .......................................................................................................... Economic Injury Disaster Loan \n\nFAR .......................................................................................................... Federal Acquisition Regulation\n\n\nFBI ..........................................................................................................Federal Bureau of Investigation\n\n\nFPDS ......................................................................................................Federal Procurement Data System\n\n\nGAO ............................................................................................................ General Accountability Office\n\n\nHUBZone .......................................................................................... Historically Underutilized Business Zone \n\nHUD .............................................................................. Department of Housing and Urban Development\n\n\nIRS .................................................................................................................... Internal Revenue Service\n\n\nNCDF ..................................................................................................... National Center for Disaster Fraud \n\nNDI ........................................................................................................... Non-Disadvantaged Individual\n\n\nNFR ............................................................................................ Notice of Finding and Recommendation\n\n\nODA ..............................................................................................................Office of Disaster Assistance\n\n\nOIG ................................................................................................................ Office of Inspector General\n\n\nOMB .....................................................................................................Office of Management and Budget\n\n\nONDCP ............................................................................................. Office of National Drug Control Policy\n\n\nPCL .................................................................................................................... Premier Certified Lender\n\n\nPII .................................................................................................... Personally Identifiable Information\n\n\nQA ...............................................................................................................................Quality Assurance\n\n\nIV&V ............................................................................................ Independent Verification and Validation\n\n\nROM .....................................................................................................Recovery Oversight Memorandum\n\n\nSBA ...........................................................................................................Small Business Administration \n\nSBDC ..................................................................................................Small Business Development Center\n\n\nSBIC .................................................................................................Small Business Investment Company\n\n\nSBIR .................................................................................................. Small Business Innovation Research\n\n\nSCORE .................................................................................................. Service Corps of Retired Executives\n\n\nSDB ........................................................................................................... Small Disadvantaged Business \n\nSDM .................................................................................................. Systems Development Methodology \n\nSOP .......................................................................................................... Standard Operating Procedures \n\nSTTR ................................................................................................. Small Business Technology Transfer \n\nUSSS ............................................................................................................... United States Secret Service\n\n\nWBC .................................................................................................................. Women\'s Business Center \n\nWVDA .................................................................................... West Virginia Department of Administration \n\n\n\n\n\n iii\n\x0c Overview of SBA and the OIG \n\n\nThe Small Business Administration\n\nThe mission of the Small Business Administration (SBA) under the Small Business Act, as amended, is to\nmaintain and strengthen the Nation\xe2\x80\x99s economy by enabling the establishment and vitality of small\nbusinesses and assisting in the economic recovery of communities after disasters. The Agency\xe2\x80\x99s current\nstrategic plan has three programmatic strategic goals that broadly define what the Agency and its\nprograms are trying to accomplish.\n\n \xc2\xbe Expand America\xe2\x80\x99s ownership society, particularly in underserved markets.\n \xc2\xbe Provide timely financial assistance to homeowners, renters, nonprofit organizations and\n businesses affected by disaster.\n \xc2\xbe Improve the economic environment for small business.\n\nA fourth goal in SBA\xe2\x80\x99s strategic plan defines the responsibility of the Agency\xe2\x80\x99s executive leadership and\nsupport functions to help accomplish the three programmatic goals.\n\n \xc2\xbe Ensure management and organizational excellence to increase responsiveness to customers,\n streamline processes, and improve compliance and controls.\n\nSBA is organized around four key functional areas: financial assistance (e.g., loan programs); contracting\nassistance; technical assistance (e.g., entrepreneurial development); and disaster assistance. The Agency\nalso represents small businesses through an independent advocate and an ombudsman. SBA headquarters\nis located in Washington, D.C., while its business products and services are delivered with the help of\n10 regional offices, 68 district offices, 4 disaster field offices, and a vast network of resource partners in\nall 50 states, the District of Columbia, Puerto Rico, American Samoa, the U.S. Virgin Islands, and Guam.\nAs of March 31, 2010, SBA had 5,148 employees, including 119 Office of Inspector General (OIG)\npersonnel and 2,840 disaster-funded employees for disaster loan making and disaster loan servicing.\n\nThe Office of Inspector General\n\nPursuant to the Inspector General Act of 1978, as amended, the OIG adds value to SBA programs and\noperations by providing auditing, investigative, and other services to support and assist the Agency in\nachieving its mission. In addition to its responsibilities under the IG Act, the OIG carries out other\nsignificant statutory responsibilities and Government-wide mandates, including responsibilities under the\nSmall Business Act and the Small Business Investment Act.\n\nThe OIG seeks to improve SBA programs by identifying key issues facing the Agency, following up to\nensure that corrective actions are taken, and promoting a high level of integrity. The Office\xe2\x80\x99s efforts and\naccomplishments during the first half of Fiscal Year 2010, which are summarized in this report, focused\non the two strategic goals in the OIG\xe2\x80\x99s strategic plan.\n\n \xc2\xbe Improving the economy, efficiency, and effectiveness of SBA programs and operations.\n \xc2\xbe Promoting and fostering integrity in SBA programs and operations.\n\nUsing this framework, the OIG concentrated on critical risks facing SBA, including (1) risks of financial\nlosses due to limited oversight and controls; (2) risks to SBA\'s performance of its statutory mission to\n\n\n\n\n 1\n\n\x0c Overview of SBA and the OIG \n\n\npromote small business development and Government contracting; and (3) risks associated with SBA\'s\ninformation technology and financial management systems and other internal operations.\n\nAudit and other reports issued during this reporting period are listed in Appendix I. Investigative actions\nare summarized in Appendix X. Copies of OIG reports and other work products are available on the\nOIG\xe2\x80\x99s website at http://www.sba.gov/ig.\n\n\n\n\n 2\n\n\x0c Agency Management Challenges \n\n\nOverview\n\nIn accordance with the Reports Consolidation Act of 2000, the OIG each year identifies the most serious\nmanagement and performance challenges facing the Agency for inclusion in SBA\xe2\x80\x99s Performance and\nAccountability Report. The Management Challenges represent areas that the OIG considers to be\nparticularly vulnerable to fraud, waste, abuse, or mismanagement, or which otherwise pose significant\nrisk to the Agency, its operations, or its credibility. Each Management Challenge generally has originated\nfrom one or more OIG or Government Accountability Office (GAO) report(s). For each Management\nChallenge, the OIG provides the Agency with recommended remedial actions together with an assessment\nof Agency progress on each recommended action during the preceding fiscal year.\n\nSBA\xe2\x80\x99s Top Management Challenges\n\nThe Management Challenges identified in the OIG\xe2\x80\x99s Fiscal Year 2010 report, issued on October 16, 2009,\nwere as follows.\n\n \xc2\xbe Procurement flaws allow large firms to obtain small business awards and agencies to count\n contracts performed by large firms towards their small business goals.\n \xc2\xbe Weaknesses in information systems security controls pose significant risks to the Agency.\n \xc2\xbe Effective human capital strategies are needed to enable SBA to successfully carry out its mission\n and become a high-performing organization.\n \xc2\xbe SBA needs better controls over loan purchase and liquidation processes.\n \xc2\xbe SBA needs to further strengthen its oversight of lending participants.\n \xc2\xbe The Section 8(a) Business Development program needs to be modified so more firms receive\n business development assistance, standards for determining economic disadvantage are clear and\n objective, and SBA ensures that firms follow 8(a) regulations when completing contracts.\n \xc2\xbe Insufficient and outdated SBA controls contribute to excessive risk of the SBIC program.\n \xc2\xbe Effective tracking and enforcement would reduce financial losses from loan agent fraud.\n \xc2\xbe SBA needs to modernize its Loan Accounting System and migrate it off the mainframe.\n \xc2\xbe SBA needs to accurately report, significantly reduce, and strengthen efforts to recover improper\n payments in the Disaster and 7(a) loan programs.\n\nAs in prior years, the Fiscal Year 2010 report used a color-scoring scheme to show the Agency\xe2\x80\x99s progress\nin addressing the actions needed to resolve each Management Challenge. The chart on the next page\nprovides a summary of SBA\xe2\x80\x99s progress for each of the ten Management Challenges in the Fiscal\nYear 2010 report.\n\n\n\n\n 3\n\n\x0c Agency Management Challenges \n\n\n\n Summary of SBA\xe2\x80\x99s Fiscal Year 2010 Management Challenges\n Status Score\n Topic Green Yellow Orange Red Improved\n 1 Small Business Contracts 2 1 1\n 2 IT Security 4 0\n 3 Human Capital 3 0\n 4 Loan Guaranty Purchase 1 1 0\n 5 Lender Oversight 2 4 0\n 6 8(a) BD Program 1 4 3\n 7 SBIC Program 2 2 2\n 8 Loan Agent Fraud 2 -- 1\n Loan Management and\n 9 New\n Accounting System\n 10 Improper Payments New\n TOTAL 3 18 8 0 6\n Green-Implemented Yellow-Substantial progress Orange-Limited Progress Red-No progress\n \xe2\x80\x9cImproved\xe2\x80\x9d refers to an action item that showed progress this year over last year\xe2\x80\x99s score.\n\n\n\n\n1\n Management Challenge 8, Loan Agent Fraud, was revised in Fiscal Year 2009 to include two new recommended\nactions. Consequently, no color scores were shown for these two remaining recommended actions in last year\xe2\x80\x99s\nreport against which to measure progress.\n\n\n 4\n\x0c Recovery Oversight\n\n\n\nThe American Recovery and Reinvestment Act of 2009 (Recovery Act), which was signed into law on\nFebruary 17, 2009, contains a number of SBA provisions to help unlock credit markets and promote\neconomic recovery for the Nation\xe2\x80\x99s small business sector. These include reduced loan fees, higher\nguaranties, new SBA credit programs, secondary market incentives, and enhancements to current SBA\nprograms. To enhance transparency and accountability, the Recovery Act and related guidance require\nincreased reporting and oversight to deter and detect fraud, waste, and abuse and ensure that program\ngoals are met.\n\nThe OIG has worked proactively with the Agency to identify risks and recommend cost effective controls\nto help prevent fraud, waste, and abuse, and ensure that program goals are achieved and stimulus funds\nare accurately tracked and reported. The OIG has focused on determining whether (1) Recovery Act\nloans approved by lenders or SBA personnel have complied with Agency underwriting standards and loan\nprogram policies and procedures, and (2) SBA has planned for and awarded Recovery Act contracts in\ncompliance with Federal requirements, including the President\xe2\x80\x99s directive to promote competitive awards.\n\nDuring this semiannual reporting period, the OIG issued 12 Recovery Oversight Memorandum (ROM)\nreports, which provided the Agency with notification of deficiencies as problems were identified during\nOIG audits and reviews. Areas assessed by the OIG included the Recovery Act\xe2\x80\x99s impact on SBA lending;\ncontrols over reporting of Recovery Act job creation and retention statistics; SBA\xe2\x80\x99s administration of the\nMicroloan Program under the Recovery Act; origination and closing of Recovery Act loans; and SBA\xe2\x80\x99s\nreadiness to review recipient reports on the use of Recovery Act funds. In addition, the scope of the audit\nof SBA\xe2\x80\x99s financial statements was expanded to include testing of certain transactions and system\nenhancements related to SBA\xe2\x80\x99s implementation of the Recovery Act.\n\nThe ROMs issues during this reporting period are listed separately in Appendix 1. OIG reports on SBA\xe2\x80\x99s\nimplementation of the Recovery Act are summarized in the appropriate sections (i.e., Small Business\nAccess to Capital, Small Business Development, Contracting, Education and Training, and Agency\nManagement) of this semiannual report. Copies of the reports and other information regarding the OIG\xe2\x80\x99s\nRecovery Act oversight activities are on the OIG\xe2\x80\x99s website at www.sba.gov/ig/recovery.\n\n\n\n\n 5\n\n\x0c Small Business Access to Capital\n\n\n\nAs of March 31, 2010, SBA had a financial assistance portfolio of guaranteed and direct loans of more\nthan $90 billion. SBA\xe2\x80\x99s largest lending program, and the principal vehicle for providing small businesses\nwith access to credit that cannot be obtained elsewhere, is the Section 7(a) Loan Guaranty Program. This\nprogram relies on numerous outside parties (e.g., borrowers, loan agents, and lenders) to complete loan\ntransactions, with approximately 80 percent of loans being made by lenders to whom SBA has delegated\nloan-making authority. Additionally, SBA has centralized many loan functions and reduced the number\nof staff performing these functions. As SBA has placed more responsibility on, and given greater\nindependence to, its lenders, the need for oversight has increased significantly. The OIG continues to\nidentify weaknesses in SBA\xe2\x80\x99s lender oversight efforts.\n\nSBA\xe2\x80\x99s 504 Loan Program provides small businesses with long-term, fixed-rate financing for the purchase\nof land, buildings, machinery, and other fixed assets. Local economic development organizations\napproved by SBA, and known as Certified Development Companies (CDCs), package, close and service\nthese loans, which are funded through a mix of funds from private sector lenders, proceeds from the sale\nof SBA-guaranteed debentures, and borrower equity investment.\n\nThe Microloan Program provides small ($35,000 or less), short-term loans and technical assistance to\nsmall business concerns as well as non-profit child-care centers. The assistance is provided by SBA-\nfunded, intermediary lenders, which are non-profit community-based organizations with experience in\nlending and providing businesses with management and technical assistance. .\n\nThrough the Small Business Investment Company (SBIC) Program, SBA licenses and makes funds\navailable to venture capitalists known as SBICs. SBICs lend or otherwise invest in small businesses\nusing participating securities made up of contributions from SBA and private investors or funds generated\nthrough the sale of SBA-guaranteed debentures.\n\nRecovery Act\xe2\x80\x99s Impact on SBA Lending\n\nDuring an initial review of the Recovery Act\xe2\x80\x99s impact on SBA lending, the OIG determined that both 7(a)\nand 504 lending increased sharply under the Recovery Act\xe2\x80\x94from March 2009 to July 2009, 7(a) and 504\nloan approvals jumped 39 percent and 73 percent, respectively. While this improvement was significant,\nboth 7(a) and 504 loan approvals remained below 2008 and 2007 levels. Small and medium-sized lenders\nin the 7(a) program recovered more quickly\xe2\x80\x94with loan activity returning to previous-year levels\xe2\x80\x94and\ntook on a larger share of SBA lending. As a result, loan activity was more widely dispersed under the\nRecovery Act, with the top 20 lenders accounting for only 38 percent of all 7(a) loans (excluding loans\nmade under the SBAExpress Program), as compared to 53 percent in 2007.\n\nThe OIG also found that a higher percentage of loans were made with SBA prior approval, rather than on\na delegated basis, than in previous periods. This trend could strain Agency staffing resources and impact\nprogram risk. In the 7(a) program, the number of SBA-approved loans more than doubled from March to\nJuly. Without adequate training and supervision, the increased demands on SBA loan center staff could\nlessen the quality of Agency loan reviews. The shift towards SBA-approved loans was also substantial in\nthe 504 program, with the share of Agency-approved loans jumping to 94 percent of total loan approvals,\nfrom 80 percent two years prior. Efficiency gains in Agency processing times, combined with weaker\neconomic conditions, may have reduced the incentive for CDCs to use their delegated authority to\napprove loans.\n\n\n\n\n 6\n\n\x0c Small Business Access to Capital\n\n\n\nSBA management generally agreed with the report\xe2\x80\x99s findings and noted that, in anticipation of the\nincreased loan transactions under the Recovery Act, the Agency recruited staff with previous lending\nexperience and expertise that would be able to process loans faster than less experienced new hires.\nAdditionally, the Agency noted that it would continue to actively monitor 504 program performance in\nlight of increases in SBA-approved loans.\n\nControls over Reporting of Recovery Act Job Creation and Retention Statistics\n\nThe Recovery Act provided SBA with $730 million to expand the Agency\xe2\x80\x99s lending and investment\nprograms and create new programs to stimulate lending to small businesses. The additional funding was\nintended to stimulate the economy by promoting job creation and preserving existing jobs. SBA selected\njob creation and retention as one of its performance measures to assess the success of its Recovery Act\nprograms.\n\nBased on a review of the job creation and retention statistics for Recovery Act loans approved in July\n2009, the OIG estimated that the SBA-reported number of jobs created and/or retained may have been\noverstated by at least 16 percent. Job data was self-reported by borrowers on SBA 7(a) loan applications\nand SBA did not require lenders to validate the borrower-reported information. The OIG\xe2\x80\x99s report\nincluded recommendations that SBA implement better controls to check the reasonableness of job data\nand a data quality review and testing process to determine if job data is properly recorded, classified, and\nreported.\n\nSBA\xe2\x80\x99s Administration of the Microloan Program under the Recovery Act\n\nUnder the Recovery Act, SBA received $6 million for direct loans and $24 million for marketing,\nmanagement, and technical assistance grants for the Microloan Program. These funds were in addition to\nthe $22.5 million that SBA was appropriated for the Microloan Program in Fiscal Year 2009. The OIG\nconducted an initial review of SBA\xe2\x80\x99s administration of the Microloan Program under the Recovery Act to\ndetermine the adequacy of the Agency\xe2\x80\x99s (1) oversight of intermediaries, (2) performance data, and\n(3) program metrics for managing the Recovery Act funds authorized for the Microloan Program. The\nOIG found that SBA had not conducted adequate program oversight, validated the reliability of program\ndata, accurately reported program performance, or established meaningful outcome-oriented performance\nmeasures. The OIG made a number of recommendations to promote more effective monitoring of and\nperformance measures for microloans made with Recovery Act funds.\n\nOrigination and Closing of Recovery Act Loans\n\nThe OIG reviewed a statistical sample of 30 SBA-approved and 30 lender-approved 7(a) loans that were\nmade under the authority of the Recovery Act to (1) determine whether loans were originated and closed\nin compliance with SBA policies and procedures, and (2) identify any evidence of suspicious activity. In\norder to provide the Agency with early notification of deficiencies as problems were identified, the OIG\nissued four Notices of Finding and Recommendation (NFRs), which are summarized below.\n\n \xe2\x80\xa2\t\t Recovery Act Loans Involving Change of Ownership Transactions. The OIG identified\n deficiencies in SBA\xe2\x80\x99s approval of four Recovery Act loans\xe2\x80\x94totaling approximately\n $2.1 million\xe2\x80\x94 that involved change of ownership transactions. One loan was not eligible for an\n SBA guaranty because it did not result in the borrower owning 100 percent of the business.\n\n\n\n 7\n\n\x0c Small Business Access to Capital\n\n\n\n Eligibility for the other three loans was questionable due to the excessive amount of goodwill\n financed in each transaction. Based on a statistical projection of these loans, the OIG estimated\n that the Agency inappropriately approved at least $6.6 million in SBA loans between\n February 17, 2009 and May 31, 2009.\n\n \xe2\x80\xa2\t\t Recovery Act Loans Disbursed Without Required Borrower Immigration Certifications. The\n OIG found that 14\xe2\x80\x94or 47 percent\xe2\x80\x94of lender-approved loans reviewed did not contain the SBA-\n required borrower immigration certifications. Based on a statistical projection of these loans, the\n OIG estimated that at least $215 million in SBA Recovery Act loans were approved between\n February 17, 2009 and May 31, 2009, without obtaining the required borrower certifications of\n compliance with immigration laws.\n\n \xe2\x80\xa2\t\t Ineligible Lender-Approved Recovery Act Loans. The OIG identified three lender-approved\n loans that were not eligible for SBA guaranties. One lender canceled a portion of an SBA-\n guaranteed loan approved prior to the Recovery Act and, without SBA approval, reissued it as a\n Recovery Act loan with a higher SBA guaranty. A second loan was ineligible for an SBA\n guaranty because (1) it resulted in the borrower\xe2\x80\x99s maximum outstanding loan balance exceeding\n the SBA limit, and (2) the interest rate on the loan was higher than allowed by SBA. Finally, a\n third loan was not eligible for an SBA guaranty because the lender did not comply with SBA\xe2\x80\x99s\n change of ownership requirements. Specifically, the lender did not (1) perform a business\n valuation, (2) conduct a site visit of the assets being purchased, or (3) verify the seller\xe2\x80\x99s financial\n information. Based on a statistical projection of these loans, the OIG estimated that lenders\n inappropriately approved at least 63 SBA-guaranteed loans between February 17, 2009 and\n May 31, 2009.\n\n \xe2\x80\xa2\t\t Material Origination and Closing Deficiencies in Recovery Act Loans. The OIG identified\n miscellaneous material origination and closing deficiencies in three SBA-approved loans and\n one lender-approved loan. The inappropriate approval of these loans, which totaled $2.4 million,\n both increased the risk of loss to SBA should the loans default and reduced the availability of\n SBA loans to other borrowers.\n\nUnderwriting Practices and Compliance of Premier Certified Lenders (PCL) in the CDC/504 Loan\nProgram\n\nAs discussed previously, under the CDC/504 Loan Program, SBA relies on non-profit CDCs to facilitate\nlong-term financing for small businesses to acquire or expand capital assets. Although most loans under\nthis program are subject to prior SBA approval, SBA has delegated underwriting authority to certain\nCDCs known as Premier Certified Lenders (PCL). The OIG initiated a review of PCL underwriting\npractices and compliance based on concerns that certain CDCs were engaging in risky underwriting\npractices and that some CDCs were paying their executives excessive compensation.\n\nThe OIG reviewed a statistical sample of loans disbursed in Fiscal Year 2008 by three of the largest PCLs\nand found that the PCLs may not have used prudent practices in approving and disbursing 68 percent of\nthe sampled loans\xe2\x80\x94totaling nearly $8.9 million\xe2\x80\x94due to poor loan underwriting and eligibility or loan\nclosing issues. Projecting the sample results to the universe of CDC/504 loans disbursed in Fiscal Year\n2008 by the three PCLs, the OIG estimated that at least 572 loans\xe2\x80\x94totaling nearly $254.9 million in\nCDC/504 loan proceeds\xe2\x80\x94had similar deficiencies. Of this amount, the OIG estimated that at least 183\n\n\n 8\n\n\x0c Small Business Access to Capital\n\n\n\nloans\xe2\x80\x94totaling $56.4 million or more\xe2\x80\x94were made to borrowers based on faulty repayment analyses.\nSome of the poor underwriting and eligibility issues occurred because SBA\xe2\x80\x99s guidance was unclear. The\nOIG also estimated that at least $209 million in PCL loans involved borrower- eligibility issues and/or\nloan closing problems.\n\nRegarding CDC executive compensation, the OIG found that eight CDCs paid more than 20 percent\nof their gross receipts towards executive compensation, and that one of these CDCs paid almost\n44 percent. SBA regulations require that any excess funds remaining after payment of staff and\noverhead expenses be retained by the CDC as a reserve for future operations or for investment in other\nlocal economic activity. Therefore, high compensation expenditures reduce the amount of funds for the\nreserve or for economic development activity.\n\nThe OIG recommended several policy and procedural changes to address the deficiencies identified\nduring the review.\n\nExtensive Loan Fraud Investigation Results in More Convictions and Guilty Pleas\n\nIn 2007, the OIG and the U.S. Secret Service (USSS) agents arrested 18 individuals, including a lender\xe2\x80\x99s\nformer executive vice president, for conspiring to use fraudulent information to qualify loan applicants for\nSBA-guaranteed loans, mainly for the purchase of gas stations across several Midwestern states. The\nscheme involved at least 89 fraudulent loans\xe2\x80\x94totaling about $85 million\xe2\x80\x94approved before the fraud was\ndiscovered. The investigation is continuing with more indictments expected, but thus far 37 individuals\nhave been indicted or otherwise charged and 28 have been convicted. Four of those individuals are\ninternational fugitives. To date, court-ordered restitution, SBA recoveries of loan guaranties from the\nlender, and potential cost savings from the withdrawal of loan guaranties total approximately $72 million.\n\nThe following cases demonstrate the scope of the criminal activity.\n\n \xe2\x80\xa2\t\t A Michigan man pled guilty to conspiracy to commit wire fraud. He and a co-conspirator were\n previously charged with conspiracy, conspiracy to commit wire fraud, false statements, and\n aiding and abetting for falsifying equity injections and other documentation on twelve SBA-\n guaranteed loans. The man acted as a broker to recruit \xe2\x80\x9cstraw buyers\xe2\x80\x9d to falsely obtain the loans,\n and the co-conspirator, an escrow agent, conducted the loan closings. Upon completion of the\n closings, the fraudulently obtained loan proceeds were wired from the lender to accounts held by\n the co-conspirator\xe2\x80\x99s escrow companies. Prosecution of the co-conspirator is continuing, with\n additional indictments expected. SBA OIG is conducting this investigation jointly with the\n USSS.\n\n \xe2\x80\xa2\t\t A Michigan man was sentenced to 24 months incarceration and ordered to pay an SBA lender and\n another financial institution $4,572,929 and $1,100,000, respectively, in restitution. The\n restitution is to be paid jointly with other co-conspirators charged in the case. The man\n previously pled guilty to two counts of conspiracy to defraud SBA and a Michigan financial\n institution. The first count involved false statements on SBA-guaranteed loans made by lenders\n in Michigan and Tennessee. The false statements included counterfeit bank documents and\n checks used to verify the equity injection on at least nine SBA-guaranteed loans. The second\n count related to a scheme to use a non-sufficient funds credit card convenience check to obtain an\n official check of $1,680,000 from the financial institution. The official check was used to close\n\n\n 9\n\n\x0c Small Business Access to Capital\n\n\n\n on the purchase of a Michigan house with the intent to promptly resell or \xe2\x80\x9cflip\xe2\x80\x9d the property to a\n straw buyer who would use 100 percent financing to pay a substantially inflated price for the\n house.\n\n \xe2\x80\xa2\t\t An Illinois man was sentenced to two years imprisonment, three years supervised release, and\n restitution of $2,008,964. He had previously pled guilty to making a false statement in\n connection with a scheme to induce a lender to approve three separate loans (including an SBA-\n guaranteed loan) totaling more than $4 million to purchase three Iowa gas stations. The\n investigation revealed that the individual and another man enlisted \xe2\x80\x9cfront\xe2\x80\x9d borrowers and\n provided the lender with fraudulent documentation on behalf of the borrowers in order to\n influence the approval of the three loans. The second individual previously pled guilty after\n being charged in relation to this matter. The OIG is conducting this investigation jointly with the\n Federal Bureau of Investigation (FBI).\n\n \xe2\x80\xa2\t\t The former owner of an Illinois finance company was sentenced to 135 months imprisonment,\n five years supervised release, and restitution of $7.4 million. He previously pled guilty to\n providing false bank entries, reports, and transactions. Moreover, because he is not an American\n citizen, U.S. Immigration and Customs Enforcement planned to issue a \xe2\x80\x9cdetainer\xe2\x80\x9d that would\n result in his deportation back to India after his imprisonment. The investigation revealed his\n involvement in a scheme to induce a lender and SBA to approve a $1.35 million SBA-guaranteed\n loan to one of his companies. He provided a false bank account verification letter and fraudulent\n cashier\xe2\x80\x99s checks at the loan closing. In addition to obtaining an SBA loan for himself, he\n brokered 46 SBA-guaranteed loans\xe2\x80\x94totaling $44,314,371\xe2\x80\x94for others. He admitted that he\n provided false information to the lender on these loans. The OIG conducted this investigation\n jointly with the FBI.\n\nCriminals Use a Range of Methods to Defraud Loan Guaranty Programs\n\nCriminals use an array of methods to fraudulently obtain\xe2\x80\x94or induce others to obtain\xe2\x80\x94SBA-guaranteed\nloans. Such methods include submitting fraudulent documents; making fictitious asset claims;\nmanipulating property values; using loan proceeds contrary to the terms of the loans; and failing to\ndisclose debts or prior criminal records. The result is a greater likelihood of financial loss to SBA and its\nlenders. The following examples demonstrate some of these methods.\n\n \xe2\x80\xa2\t\t The former owner of a defunct Washington State disaster restoration contractor was sentenced to\n 48 months in prison, 60 months supervised release, nearly $4,936,000 in restitution, and\n 120 hours of community service after having pled guilty to mail fraud, bank fraud, money\n laundering, and criminal forfeiture charges. Over several years, he had submitted inflated and/or\n falsified invoices and false competitors\xe2\x80\x99 estimates to an insurance company for disaster\n restoration work performed by his company. Consequently, the company received more than $3\n million in excess payments, and its financial statements reflected highly inflated profits. When\n the business was subsequently sold, the buyer obtained a $1,999,800 SBA-guaranteed loan to\n fund part of the sale, and the inflated financial statements were submitted to support the value of\n the business and the purchase price. The former owner then used the fraudulently obtained loan\n proceeds to purchase a $1.785 million home in Florida, which he has agreed to criminally forfeit.\n This investigation was conducted jointly with the Internal Revenue Service (IRS) Criminal\n Investigation Division (CID).\n\n\n 10 \n\n\x0c Small Business Access to Capital\n\n\n\n \xe2\x80\xa2\t\t The part owner of a Colorado construction company was sentenced to 37 months in prison,\n 60 months supervised release, and $975,424 in restitution after having pled guilty to submitting a\n false loan application. In order to receive two SBA-guaranteed loans totaling $1.35 million, he\n hid his criminal history. However, criminal history records showed that he had pled guilty to\n embezzling over $115,000 from a New Mexico industry group while serving as its executive\n director, and he also had pled guilty to a third-degree assault charge in 1994. The total estimated\n loss on the two loans was $970,000. The OIG conducted this investigation jointly with the FBI,\n which made the initial referral.\n\n \xe2\x80\xa2\t\t The president of a sports bar and mortgage brokerage firm in Georgia was indicted for bank fraud\n and for making false statements. The indictment alleges that, in conjunction with an application\n for a $1.8 million SBA-guaranteed loan, he submitted falsified IRS and SBA documents showing\n (1) gross sales of approximately $23 million for the mortgage brokerage firm, when actual\n reported sales were only about $250,000, and (2) no previous criminal history, when in fact he\n had been arrested and convicted on numerous occasions.\n\nIndictment Unsealed in Complex Loan Fraud Scheme\n\nA previously sealed indictment in Texas was unsealed as it relates to 13 defendants. The indictment\noriginally charged the individuals for their involvement in a complex loan fraud scheme. They allegedly\nobtained numerous loans by making false statements and submitting fraudulent documents to SBA-\napproved lending institutions. The defendants were charged with conspiracy to commit money\nlaundering, conspiracy to commit wire fraud, and/or money laundering/aiding and abetting. The\nindictment also included a criminal forfeiture count of nearly $7,081,000. One defendant, a loan broker,\npled guilty to wire fraud. According to the investigation, he fraudulently represented himself as a\nlicensed insurance agent by signing a letter to induce a lender to issue an $870,000 SBA-guaranteed loan.\nThe loan subsequently defaulted. He also made fraudulent representations that induced two other\nfinancial institutions to wire transfer funds related to residential mortgages. The OIG is conducting this\ninvestigation jointly with the FBI and IRS CID.\n\nFalse Equity Injection Continues to Affect Loan Programs\n\nEquity (or capital) injection is a borrower\xe2\x80\x99s own financial stake in a business. An individual is less likely\nto default on a loan if he or she personally has something at risk in the business. SBA requires that\nborrowers inject such available money into projects financed by guaranteed loans. Some borrowers\ncircumvent this requirement by falsifying the amount or source of such injections. For example, a\npetroleum company (a Louisiana corporation) pled guilty in Texas to money laundering and was ordered\nto pay a $200,000 fine for falsifying the true source of funds to support its required $120,000 equity\ninjection in order to secure a $480,000 SBA-guaranteed loan to purchase property. Before receiving the\nloan, company representatives provided documentation purporting to show that the firm had met the\ncondition of providing an equity injection with the company\'s own money. These representations were\nknowingly false, and the company never had the required funds. Instead, the $120,000 was actually\nloaned to the company by the seller of the property. The OIG conducted this investigation jointly with\nthe IRS CID.\n\n\n\n\n 11 \n\n\x0c Small Business Access to Capital\n\n\n\nSBA Official, Bank Executive, and Others Conspire to Commit Fraud\n\nEleven individuals were charged in a 185-count indictment with various Federal crimes for their\ninvolvement in a scheme to defraud a bank and SBA. The charges involve at least 31 fraudulent business\nloans, totaling more than $10 million, issued by a Missouri bank. The defendants were charged with\nvarious combinations of false entries in bank records, false statements to a bank, false statements to SBA,\nbank bribery, bank fraud, theft by a bank officer, and money laundering. Four of these individuals\xe2\x80\x94a\nformer executive vice president and chief lending officer of the bank, a former SBA branch manager, and\ntwo Missouri business consultants\xe2\x80\x94were also charged with conspiracy for allegedly making false\nstatements to the bank and SBA to induce them to approve loans and lines of credit under false pretenses,\nmaking false entries in the bank\xe2\x80\x99s records and structuring loans to avoid scrutiny by the bank\xe2\x80\x99s Board of\nDirectors, and diverting loan proceeds. Six other individuals have been charged separately in this case,\nwith two of them having pled guilty. The OIG is conducting this investigation jointly with the FBI.\n\n\n\n\n 12 \n\n\x0c Disaster Loan Program \n\n\nThe Disaster Loan Program plays a vital role in the aftermath of disasters by providing long-term,\nlow-interest loans to affected homeowners, renters, businesses of all sizes, and non-profit organizations.\nThere are two types of disaster loans: (1) physical disaster loans for permanent rebuilding and\nreplacement of uninsured disaster-damaged privately-owned real and/or personal property, and\n(2) economic injury disaster loans to provide necessary working capital to small businesses until normal\noperations resume after a disaster. The Disaster Loan Program is particularly vulnerable to fraud and\nunnecessary losses because loan transactions are expedited in order to provide quick relief to disaster\nvictims.\n\nAs of March 31, 2010, SBA had approved nearly 120,000 disaster loans\xe2\x80\x94totaling almost $6.8 billion\xe2\x80\x94to\nassist victims of the Gulf Coast Hurricanes Katrina, Rita, Wilma in 2005, and nearly 24,000 disaster\nloans\xe2\x80\x94 totaling over $1.2 billion\xe2\x80\x94as a result of Hurricanes Gustav and Ike and flooding in the Midwest\nduring 2008. The OIG\xe2\x80\x99s audits and reviews continue to focus on loan origination, disbursement,\nrepayment, servicing, and liquidation activities related to these loans, including whether loan applications\nwere processed in accordance with SBA procedures; uses of loan proceeds were verified before loans\nwere fully disbursed; duplicate benefits were appropriately identified and recovered; and loan servicing\nand liquidation activities were effectively staffed and managed. The OIG also continues to investigate\nallegations of unauthorized use of loan proceeds, overstatement of financial losses, material false\nstatements in the application process, false/counterfeit supporting documentation, and false assertions\nregarding primary residency in affected areas at the times of the disasters.\n\nMonitoring of Insurance Coverage for Disaster Loan Recipients\n\nThe National Flood Insurance Act of 1968, combined with the Flood Disaster Protection Act of 1973,\nprovides that no Federal agency lender may extend a loan secured by real estate that is located in a\nSpecial Hazard Flood Area unless that real estate is covered for the term of the loan by flood insurance.\nThe amount of coverage must be at least equal to the outstanding balance of the loan, or the maximum\nlimit of coverage available, whichever is less. The 1973 Act further provides that if a Federal agency\nlender determines that a borrower has failed to maintain adequate flood insurance coverage, the agency\nmust instruct the borrower to obtain the required coverage. If the borrower fails to purchase the required\ninsurance coverage within 45 days of the notification, the agency must purchase the insurance on behalf\nof the borrower and charge the borrower for any associated costs. Although no applicable Federal\nrequirements regarding hazard insurance exist, SBA\xe2\x80\x99s standard operating procedures provide that\nborrowers must maintain hazard insurance coverage in accordance with their Loan Authorization and\nAgreements. In contrast to the procedures regarding flood insurance, as a general policy the Agency does\nnot purchase or maintain hazard insurance on property securing a loan and the Agency\xe2\x80\x99s procedures do\nnot indicate what actions should be taken when a borrower fails to maintain the required hazard\ninsurance.\n\nTo determine whether SBA\xe2\x80\x99s disaster loan servicing centers adequately monitored required insurance\ncoverage on properties collateralized by SBA disaster loans, the OIG reviewed a statistical sample of\nfully-disbursed disaster loans resulting from the Gulf Coast hurricanes in 2005, Hurricanes Ike and\nGustav in 2008, and the Midwest floods in 2008, that required flood and hazard insurance coverage until\nmaturity. The OIG found that SBA did not ensure that borrower insurance policies provided adequate\ncoverage and were continuously reviewed, and the Agency did not comply with statutory requirements to\npurchase policies for borrowers who let their flood insurance policies lapse. As a result, $3.8 million in\noutstanding loan balances for loans in the sample may not have been adequately protected. Projecting the\n\n\n\n 13 \n\n\x0c Disaster Loan Program \n\n\nsample results to the universe of 23,068 fully-disbursed loans from the above disasters, the OIG estimated\nthat at least 5,341 loans, with approximately $510 million in outstanding loan balances, lacked evidence\nof adequate insurance coverage. Similar non-compliance rates could exist for loans associated with other\nmajor disasters.\n\nThe OIG recommended that SBA inform borrowers identified by the OIG as having lapsed policies or\ninsufficient insurance coverage that they must provide evidence of adequate insurance coverage. The\nOIG also recommended that SBA determine what actions were needed to achieve compliance with\nstatutory flood insurance requirements, as well as the cost implications of achieving compliance, and\ndevelop and execute a plan for achieving compliance on existing and future loans. If achieving\ncompliance is determined not to be cost effective, the Agency should take steps to seek additional funding\nor a legislative change to this requirement.\n\nApplication of Insurance Offsets for Gulf Coast Disaster Loans\n\nUnder the Stafford Act, Federal agencies administering disaster benefits must ensure that individuals\nreceiving assistance have not already been compensated for their losses from insurance or other sources.\nThe OIG reviewed a statistical sample of 100 Gulf Coast hurricane loans\xe2\x80\x94totaling nearly $6 million\xe2\x80\x94to\ndetermine whether SBA properly reduced loan balances to reflect flood and hazard insurance offsets. The\nOIG found that SBA did not correctly identify or offset insurance payments on 21 of these loans,\nresulting in $385,610 of offset errors, primarily duplicate benefits. The majority of the errors occurred\nbecause SBA loan officers did not check with insurance companies prior to each disbursement to\ndetermine the amount of insurance that had been paid, as required. Based on the sample results, the OIG\nprojected that SBA did not appropriately adjust loan eligibility by at least $80.2 million in insurance\nrecoveries, of which at least $20.3 million were duplicate benefits, for 119,162 Gulf Coast hurricane loans\ndisbursed between October 2005 and October 2007. In response to a prior OIG review, SBA agreed to\nrevise its standard operating procedures to require confirmation of all insurance recovery amounts prior to\nloan approval and before each loan disbursement. As a result of this review, the OIG recommended that\nthe Agency implement procedures to require timely re-verification of insurance recoveries during the\nservicing of loans.\n\nMulti-Agency Initiative Fights Gulf Coast Hurricane Fraud\n\nThe OIG, along with other law enforcement organizations working with the National Center for Disaster\nFraud (formerly the Hurricane Katrina Fraud Task Force), thus far has produced 63 arrests,\n77 indictments, and 69 convictions related to wrongdoing in SBA\xe2\x80\x99s Disaster Loan Program. OIG Gulf\nCoast disaster loan investigations have yielded over $3 million in court-ordered restitution and related\nrecoveries, while assisting the Agency in proactively denying over $2 million in loans to potentially\nfraudulent borrowers.\n\nThe following examples illustrate OIG cases associated with the Gulf Coast hurricanes.\n\n \xe2\x80\xa2\t\t After a jury trial, a Louisiana woman was sentenced to 69 months in federal prison, 3 years of\n supervised release, and nearly $157,000 in restitution for theft of government funds, making false\n statements, and wire fraud. She had submitted an application to SBA for a Hurricane Katrina\n disaster loan for property that she falsely claimed to have owned. She also submitted a fraudulent\n quitclaim deed stating that she had acquired the property from the City of New Orleans in\n\n\n\n 14 \n\n\x0c Disaster Loan Program \n\n\n exchange for the back taxes owed on the property. In addition to receiving $75,000 from SBA,\n she received $132,000 from the Louisiana Road Home Program by using the same property\n address and quitclaim deed. The SBA OIG conducted this investigation jointly with the FBI and\n the Department of Housing and Urban Development (HUD) OIG.\n\n \xe2\x80\xa2\t\t A Louisiana man was charged with theft of government funds. He allegedly filed an application\n for an SBA disaster assistance loan using an address that was not his primary residence when\n Hurricane Katrina struck New Orleans. He also allegedly submitted fraudulent receipts to induce\n SBA to approve the $117,000 loan. Only $50,000 was actually disbursed. The man also received\n $56,000 in Louisiana Road Home Program grant funds by using the same address. The SBA OIG\n is conducting this investigation jointly with HUD OIG.\n\n \xe2\x80\xa2\t\t A Louisiana man pled guilty to theft of government funds. The investigation disclosed that he\n made false statements and submitted altered and fictitious documents to SBA in order to receive a\n $68,400 disaster home loan and a $70,000 disaster business loan. After the loans were approved,\n he submitted altered and fictitious contracts and invoices for home repairs purporting to show that\n the work had been completed in order to obtain disbursement of the loan funds. He also\n misrepresented that his used car dealership was reopening in order to obtain disbursement of the\n disaster business loan funds. However, the investigation revealed that the State of Louisiana had\n revoked his auto dealership license. The OIG is conducting this investigation jointly with the\n FBI.\n\n \xe2\x80\xa2\t\t The co-owner of a Louisiana day care business was sentenced to 36 months probation and a fine\n of $1,500 after having pled guilty to wire fraud. She and her husband (who was previously\n sentenced) applied for and received a $94,000 SBA disaster home loan and a $125,500 SBA\n disaster business loan, claiming Hurricane Katrina damage to their residence and her business,\n which was located at the same address. Moreover, she transmitted via facsimile bogus inflated\n receipts to SBA as supporting documentation for repairs completed. Based upon these fraudulent\n receipts, SBA approved additional installment payments from the approved loans and transferred\n more funds into the couple\xe2\x80\x99s checking accounts. Nearly $176,000 in disaster funds were\n recovered as a result of this investigation. The OIG conducted this investigation jointly with the\n National Center for Disaster Fraud.\n\nFalsified Documents Allegedly Used in Disaster Loan Scheme\n\nA Florida man was charged with making a false statement in connection with his application for a\n$239,300 SBA disaster loan for his construction company. In the wake of Tropical Storm Fay, he\nallegedly misrepresented the status of several pending foreclosures to obtain loan approval and then\nprovided SBA with altered title reports to hide those foreclosures and other adverse actions. He was able\nto obtain an initial $50,000 loan disbursement. The OIG is conducting this investigation jointly with the\nFBI.\n\n\n\n\n 15 \n\n\x0c Small Business Development, Contracting, Education and Training\n\n\n\nThrough its government contracting programs, SBA works to maximize opportunities for small, woman\nand minority-owned, and other disadvantaged businesses to obtain Federal contract awards. These\nprograms include, among others, the Historically Underutilized Business Zone (HUBZone)\nEmpowerment Contracting Program and the Small Disadvantaged Business (SDB) Certification Program.\nSBA also negotiates with other Federal agencies to establish procurement goals for contracting with\nsmall, disadvantaged, women-owned, service-disabled veteran-owned, and HUBZone businesses. The\ncurrent government-wide goal is for small businesses to receive 23 percent of the total value of prime\ncontracts awarded each fiscal year.\n\nTo help small disadvantaged businesses gain access to Federal and private procurement markets, SBA\xe2\x80\x99s\nSection 8(a) Business Development Program offers a broad range of business development support, such\nas mentoring, procurement assistance, business counseling, training, financial assistance, surety bonding,\nand other management and technical assistance. SBA also provides assistance to existing and prospective\nsmall businesses through a variety of counseling and training services offered by partner organizations.\nAmong these are Small Business Development Centers (SBDCs), the Service Corps of Retired\nExecutives (SCORE), and Women\xe2\x80\x99s Business Centers (WBCs). Most of these are grant programs that\nrequire effective and efficient management, outreach, and service delivery.\n\nUnconditional Ownership Requirements for Indian Tribes\n\nDuring a review of a tribally-owned 8(a) firm, the OIG found that SBA\xe2\x80\x99s business development\nregulations do not clearly implement the Small Business Act\xe2\x80\x99s statutory requirement that the ownership\nof firms by Indian tribes be unconditional. In addition, SBA\xe2\x80\x99s regulatory definition of unconditional\nownership appears to be inconsistent with restrictions discussed in the legislative history of the Act.\n\nThe Small Business Act requires that small business concerns be at least 51 percent unconditionally\nowned or controlled by a socially or economically disadvantaged individual or Indian tribe. The purpose\nof unconditional ownership is to ensure that disadvantaged owners are the primary beneficiaries of the\n8(a) program. Under SBA\xe2\x80\x99s regulations, however, Indian tribes are not clearly subject to the\nunconditional ownership requirement.\n\nThe tribally-owned 8(a) firm reviewed by the OIG was started with self-valued goodwill representing the\nvalue of the expertise and contacts of a non-disadvantaged individual (NDI). The NDI contributed\n49 percent of the goodwill to the 8(a) firm. The remaining goodwill was sold to the Indian tribe to be\ncontributed to the formation of the 8(a) firm, and the tribe agreed to pay for the goodwill from its share of\nfuture profits from the firm. Although the NDI\xe2\x80\x99s company and the tribe agreed that the tribe would own\n51 percent of the 8(a) firm, this seller-financed transaction effectively reduced the tribe\xe2\x80\x99s share of profits\nto 25 percent, while the NDI\xe2\x80\x99s company received 75 percent.\n\nThe OIG recommended that SBA revise its regulations to mandate that tribally-owned firms be\nunconditionally owned, as required by the Small Business Act. The OIG also recommended that SBA\nstudy the effect of allowing seller-financed transactions to encumber ownership shares and, if appropriate,\nrevise its regulations to provide that stock or other ownership interest pledged or encumbered not qualify\nas unconditional ownership unless the pledge or encumbrance occurs as part of an arms-length transaction\nwith a legitimate financial institution.\n\n\n\n\n 16 \n\n\x0c Small Business Development, Contracting, Education and Training\n\n\n\nSBA\xe2\x80\x99s Accounting of Fiscal Year 2009 Drug Control Funds and Performance Summary Report\n\nAgencies are required by the Office of National Drug Control Policy (ONDCP) Circular, Drug Control\nAccounting, to annually provide a detailed accounting of all funds expended on National Drug Control\nProgram activities and the results associated with those activities. However, when drug-related\nobligations are less than $50 million and a detailed accounting would constitute an unreasonable burden,\nagencies are permitted to submit an alternative report, as long as it is accompanied by agency and OIG\nstatements that full compliance with the circular would constitute an unreasonable burden. Because\nSBA\xe2\x80\x99s Fiscal Year 2009 drug-related obligations were less than $50 million, it submitted an alternative\nreport for the year ended September 30, 2009. An OIG\xe2\x80\x99s review of the alternative report found nothing to\nindicate that it was not presented, in all material respects, in conformity with the ONDCP Circular, or that\nmanagement\xe2\x80\x99s assertions were not fairly stated, in all material respects, based on the criteria set forth in\nthe ONDCP Circular.\n\nOfficial Sentenced for Crimes Related to Former 8(a) Firm Bid Manipulation\n\nA former West Virginia Department of Administration (WVDA) occupational health and safety\ncoordinator was sentenced to 12 months and one day incarceration, 6 months home confinement, 3 years\nsupervised release, and a $3,000 fine. He admitted that he caused a check to be mailed from the WVDA\nto a Maryland environmental and demolition services company (a former SBA 8(a) firm) as payment for\nlead abatement work on a West Virginia state contract with the intent of accepting a gratuity in violation\nof the West Virginia Bribery and Corrupt Practices Act. He also provided the company with confidential\nbid information, which enabled it to be the lowest bidder on contracts, and then awarded contracts to the\ncompany in return for money and other things of value. SBA OIG conducted this investigation jointly\nwith the Environment Protection Agency CID, Naval Criminal Investigative Service, IRS CID, and the\nFBI.\n\nLegislation Requires Approval of SBDC Surveys\n\nIn December 2004, Congress amended section 21(a)(7) of the Small Business Act to restrict the\ndisclosure of information regarding individuals or small businesses that have received assistance from an\nSBDC, and further restricts the Agency\xe2\x80\x99s use of such information. The provision also requires the\nAgency to issue regulations regarding disclosures of such information for use in conducting financial\naudits or SBDC client surveys. To date, however, SBA has not issued these regulations. In addition,\nparagraph 21(a)(7)(C)(iii) states that, until the issuance of such regulations, any client survey and the use\nof such information shall be approved by the Inspector General, who shall include such approval in the\nOIG\xe2\x80\x99s Semiannual Report to Congress. In 2009, the Agency identified that it was conducting surveys of\nsmall businesses that had received assistance from SBDCs. The OIG advised that it had no objection to\nthese surveys based upon the Agency\xe2\x80\x99s ability to demonstrate that it was taking steps to ensure that\nacquisition and use of information derived from these surveys met the requirements of section 21(a)(7).\nThe Agency has also represented that it would issue regulations in the near future as required by the\nstatute.\n\n\n\n\n 17 \n\n\x0c Agency Management\n\n\n\nSBA\xe2\x80\x99s Efforts to Improve the Quality of Acquisition Data in the Federal Procurement Data System\n\nIn 2007, the Office of Management and Budget (OMB) issued a directive requiring Federal agencies to\nannually certify to the accuracy of the procurement data reports in the Federal Procurement Data System\n(FPDS). Data in FPDS must be accurate because it is used to report on Government contracting actions,\nprocurement trends, achievement of small business goals, and to report contract activity under the\nRecovery Act. In 2008, OMB also required that agencies annually implement data quality plans.\n\nThe OIG found that SBA certified to the accuracy of its Fiscal Year 2008 contracting data even though\n92 percent of a random sample of contract actions reviewed by the OIG contained one or more inaccurate\nor incomplete data elements in FPDS. Of 648 individual FPDS data elements reviewed, 156\n(24.1 percent) did not agree with the contract file or the information was missing from the contract file.\nWhile SBA had developed a data quality plan for Fiscal Year 2008, it did not fully implement the plan,\nwhich contributed to the errors identified by the OIG. Further, due to the volume of errors identified in\nFPDS, it appears that contracting personnel did not review FPDS data inputs to ensure they reflected\naccurate information, as required by the Federal Acquisition Regulation (FAR). While the accuracy of\nsome data elements improved in Fiscal Year 2009\xe2\x80\x94of 630 individual FPDS data elements reviewed,\n141 (22.4 percent) did not agree with the contract file or the information was missing from the contract\nfile\xe2\x80\x94overall there was a higher rate of error in the Fiscal Year 2009 data. Approximately 97 percent of\nthe contract actions in an OIG sample contained one or more inaccurate or incomplete data elements,\nindicating again that SBA contracting personnel were not properly reviewing data entries.\n\nThe OIG recommended that SBA either update its Fiscal Year 2008 data quality plan or revise applicable\nprocedures to include explicit steps to be taken to ensure data is reviewed for accuracy and completeness;\nconduct an independent review to ensure that the data quality plan or procedural requirements have been\nfully implemented; and ensure that contracting personnel are held accountable for the accuracy of FPDS\ndata. In response to the OIG\xe2\x80\x99s recommendations, the Agency stated that it would revise the data quality\nplan to further delineate specific steps that must be taken to ensure data is properly reviewed for accuracy\nand completeness, and would provide training to contracting specialists/officers to reinforce this effort. In\naddition, the Agency awarded a contract to conduct an independent review of the FPDS data.\n\nAudit of SBA\xe2\x80\x99s Fiscal Year 2009 Financial Statements\n\nPursuant to the Chief Financial Officer\xe2\x80\x99s Act of 1990, the audit of SBA\xe2\x80\x99s Fiscal Year 2009 financial\nstatements was performed by KPMG LLP under a contract with the OIG. The scope of the audit was\nexpanded to include testing of certain transactions and system enhancements related to SBA\xe2\x80\x99s\nimplementation of the Recovery Act. The audit found that SBA\xe2\x80\x99s consolidated financial statements\npresented fairly, in all material respects, the financial position of the Agency as of and for the years\nending September 30, 2009 and 2008. The financial statements also presented fairly, in all material\nrespects, SBA\xe2\x80\x99s net costs, changes in net position, budgetary resources, and combined statements of\nbudgetary resources for the years then ended. With respect to internal control over financial reporting, the\nindependent auditors reported a material weakness over financial reporting, and continued to report a\nsignificant deficiency related to information technology security controls. KPMG\xe2\x80\x99s test for compliance\nwith certain laws, regulations, contracts, and grant agreements determined that SBA did not fully comply\nwith the Debt Collection Improvement Act of 1996 because the Agency did not consistently follow\nTreasury guidelines for referring delinquent debts for collection.\n\n\n\n\n 18 \n\n\x0c Agency Management\n\n\n\nSBA\xe2\x80\x99s Readiness to Review Recipient Reports on the Use of Recovery Act Funds\n\nSection 1512 of the Recovery Act requires recipients of assistance under the statute to provide certain\nreports. Guidance issued by OMB requires Federal agencies to perform limited data quality reviews of\nrecipient reports and notify the recipients of two key data problems \xe2\x80\x93 material omissions and significant\nreporting errors. For SBA, OMB has determined that Section 1512 reporting requirements apply only to\nthe Agency\xe2\x80\x99s contract awards, the Microloan Program, and the 7(a) Broker/Dealer Direct Loan Program\n(which, at the time of the OIG review, SBA had not yet implemented). As of September 30, 2009, SBA\nhad issued 15 Recovery Act-related contracts totaling $5.8 million and had obligated $15 million in\nRecovery Act funds for the Microloan Program.\n\nAn OIG review of SBA\xe2\x80\x99s plans for ensuring that recipients of Recovery Act funds submit accurate,\ncomplete, and timely data on the use of the funds found that the Agency had established processes for\nperforming data quality reviews for contract and Microloan recipient data and for notifying recipients of\nthe need to make appropriate and timely changes. However, the Agency had not adequately defined the\nreview process it would use to identify material omissions and/or significant reporting errors in contract\nrecipient data, and had not yet drafted a policy for reviewing Microloan recipient data. The OIG\nrecommended that SBA issue detailed procedures for performing data quality reviews over contract\nrecipient reports and define its process for reviewing Microloan intermediary reports.\n\nAgency Management Decisions\n\nThe Inspector General Act requires Federal agencies to make decisions on all audit findings and\nrecommendations within 6 months of report issuance. Agency officials may agree, disagree, or propose\nalternative actions to the recommendations. The Agency\xe2\x80\x99s response becomes a management decision\nwhen the OIG agrees that the proposed action(s) will implement the audit recommendation. During this\nreporting period, management decisions were made for 83\xe2\x80\x94or 89 percent\xe2\x80\x94of the 93 recommendations\nthat were issued. At the end of the semi-annual reporting period, SBA had not made decisions on\n2 recommendations that were made in prior reporting periods.\n\nDuring this reporting period, the OIG received revised management decisions for two recommendations.\n\n \xe2\x80\xa2\t\t Audit Report 9-10, SBA\xe2\x80\x99s Fiscal Year 2007 Improper Payment Rate for the Disaster Loan\n Program. The OIG recommended that SBA report to OMB the improper payment rate calculated\n by the OIG for Fiscal Year 2007. The Agency concurred with the recommendation when the\n report was issued; however, since that time, the Chief Financial Officer has decided not to take\n the action outlined in the management decision.\n\n \xe2\x80\xa2\t\t Audit Report 9-15, Participation in the 8(a) Program by Firms Owned by Alaska Native\n Corporations. SBA agreed to conduct a program review to evaluate whether the growth in Alaska\n Native Corporation (ANC) 8(a) obligations has adversely impacted, or will adversely impact,\n other 8(a) firms and the overall effectiveness of the 8(a) program. While the Agency conducted a\n review, it was not sufficiently thorough to address the intent of the recommendation. The review\n focused only on dollar increases in awards to 8(a) participant groups and small businesses, and\n did not address whether ANCs were getting a disproportionate share of 8(a) contracts and the\n impact this was having on other 8(a) firms as a whole and by industry group.\n\n\n\n\n 19 \n\n\x0c Agency Management\n\n\n\nSBA Gift Authority\n\nSection 4(g)(2) of the Small Business Act, as amended, provides that any gift, devise, or bequest of cash\naccepted by the Administrator under Section 4(g) shall be held in a separate account and shall be subject\nto semiannual audits by the Inspector General, who shall report his findings to Congress. According to\nthe information provided by SBA\xe2\x80\x99s Office of Strategic Alliances, SBA did not accept any cash gifts\nduring this semiannual reporting period.\n\nCosponsorships and Fee-Based Administration Sponsored Events\n\nSection 4(h) of the Small Business Act, as amended, requires the OIG to report to Congress on a semi-\nannual basis regarding the Agency\xe2\x80\x99s use of its authority in connection with cosponsorships and fee-based\nAdministration-sponsored events. SBA\xe2\x80\x99s Office of Strategic Alliances provided information to the OIG\nrelated to cosponsorships, including the names, dates, and locations of the cosponsored events and the\nnames of the cosponsors. This information was not verified by the OIG. As shown in Appendix IX,\nbetween October 1, 2009 and March 31, 2010, there were 83 cosponsored events.\n\n\n\n\n 20 \n\n\x0c Other Significant OIG Activities \n\n\nCharacter Screening Lessens Potential Program Fraud\n\nParticipants in SBA programs involving business loans, disaster assistance loans, Section 8(a)\ncertifications, surety bond guarantees, SBICs, and Certified Development Companies must meet Agency\ncharacter standards. To help ensure that this occurs, the OIG\xe2\x80\x99s Office of Security Operations utilizes\nname checks and, where appropriate, fingerprint checks to determine criminal background information.\nDuring this reporting period, the OIG processed 1,933 external name check requests for these programs.\n\nThe OIG also refers applicants who appear ineligible because of character issues to program officials for\nadjudication. The referrals are based on data from the OIG\xe2\x80\x99s on-line connection with the FBI. As a result\nof OIG referrals during this reporting period, SBA business loan program managers declined 39\napplications totaling over $12.5 million, and disaster loan program officials declined 12 applications\ntotaling nearly $1.4 million. In addition, the Section 8(a) program declined 11 applications for admission.\n\nDuring this reporting period, the OIG also initiated 186 background investigations and issued 12 security\nclearances for Agency employees and contractors. The OIG also adjudicated 165 background\ninvestigative reports and coordinated with SBA\xe2\x80\x99s Office of Disaster Assistance (ODA) to adjudicate\n85 derogatory background investigation reports. Finally, the OIG processed 1,712 internal name check\nrequests for Agency activities such as success stories, \xe2\x80\x9cSmall Business Person of the Year\xe2\x80\x9d nominees, and\ndisaster assistance new hires.\n\nOIG Promotes Debarment and Administrative Enforcement Actions\n\nThe OIG continues to promote debarment as a means to protect Federal agencies from program\nparticipants that have engaged in fraud or otherwise exhibited a lack of business integrity. The OIG\nregularly identifies candidates for debarment and submits detailed recommendations with supporting\ndocuments to SBA debarment officials.\n\nDuring this reporting period, SBA issued 19 proposed debarments based upon OIG recommendations,\nand continues to consider 20 others for possible debarment. Among these, the OIG recommended, and\nSBA issued, five proposed debarments based upon improper conduct in SBA\xe2\x80\x99s HUBZone programs. The\nfacts underlying those proposed debarments were discovered as a result of a GAO audit and joint OIG\nand Department of Justice investigation. The OIG also recommended debarment of an individual and\ncompany the OIG believes took advantage of the Service-Disabled Veteran-Owned Small Business\nProgram, as well as an individual who made false statements in order to obtain waivers necessary to\nparticipate in the 8(a) Business Development Program. Additionally, in response to OIG\nrecommendations, SBA issued several proposed debarments based upon fraudulent conduct in SBA loan\nprograms, such as asset overvaluation, falsified equity injections, and improper use of funds. Finally, the\nOIG has recommended debarment of an SBIC manager who falsified documents to disguise the fact that\nSBIC funds had been converted for personal use. Debarment statistics for the reporting period are in the\nStatistical Highlights section later in this report.\n\nAdditionally, the OIG working with SBA so the Agency can develop a more robust debarment and\nsuspension program. The OIG believes the Agency needs to be more aggressive in pursuing debarments\nand other enforcement activity against companies that wrongfully obtain preferential contracting benefits.\nIn addition to its work on suspension and debarment issues, the OIG has continued working with SBA to\ndevelop a comprehensive set of procedures for administrative enforcement actions against loan agents and\n\n\n\n 21 \n\n\x0c Other Significant OIG Activities \n\n\npackagers who commit fraud or other wrongdoing. These procedures would effectively implement\nSBA\xe2\x80\x99s regulations at 13 C.F.R. Part 103, which authorize the Agency to suspend or revoke a loan agent\xe2\x80\x99s\nprivilege to conduct business with SBA. SBA has prepared draft internal guidance based upon the OIG\nrecommendations and is continuing to work with OIG on refinements to those procedures.\n\nOIG Reviews of Proposed Agency Regulations and Initiatives Lead to Improved Program Controls\nto Reduce Fraud, Waste, Abuse and Inefficiencies\n\nAs part of the OIG\xe2\x80\x99s proactive efforts to promote accountability and integrity and reduce inefficiencies in\nSBA programs and operations, the OIG reviews Agency-proposed changes to program management\ndirectives such as regulations and internal operating procedures, forms that SBA asks program applicants\nand other members of the public to complete, and proposed agency reorganizations. Frequently, the OIG\nidentifies material weaknesses in these initiatives and recommends revisions to the Agency to promote\nmore effective controls. During this reporting period, the OIG reviewed 35 proposed revisions of\nprogram management or Agency reorganization documents and provided comments on 15 of these\ninitiatives.\n\nThe OIG provided comments on a wide variety of SBA initiatives and, through Agency adoption of OIG\nrecommendations, prompted more robust controls in and enhancements to these documents. For example,\nthe Agency agreed to make changes to its regulations governing the women-owned small business\ncontracting program to reduce the potential for fraud and to promote accountability in the program. The\nOIG also reviewed and commented on material weaknesses on regulations pertaining to the 8(a) Business\nDevelopment program, for which the Agency has historically experienced weaknesses in its oversight\ncapabilities. Additional recommendations were made to improve internal operating procedures for an\nSBA business loan program and various forms used in financial assistance programs.\n\nFraud Awareness Briefings\n\nDuring this reporting period, the OIG conducted 4 fraud awareness presentations for approximately\n115 representatives of lending institutions, government agencies, and law enforcement organizations.\nTopics included fraud associated with government contracting as well as with other SBA programs.\n\n\n\n\n 22 \n\n\x0c Statistical Highlights\n\n\n\n\n 6-Month Productivity Statistics \n\n October 1, 2009 through March 31, 2010 \n\n\nSummary of Office-Wide Dollar Accomplishments\t\t Totals\n\nA. \t Potential Investigative Recoveries and Fines ..................................................................... $18,037,642* \n\nB. \t Loans/Contracts Not Approved or Canceled as Result of Investigations.................................. $553,800 \n\nC. \t Loans Not Made as a Result of Name Checks ..................................................................... $13,943,422 \n\nD. \t Disallowed Costs Agreed to by Management ........................................................................ $1,060,470\n\n\nE. \t Recommendations that Funds Be Put to Better\n Use Agreed to by Management ........................................................................................................... $0\n\n Total ................................................................................................................................... $33,595,334*\n\n\n\nEfficiency and Effectiveness Activities Related to Audit and Other Reports\n\nA.\t\t Reports Issued ...................................................................................................................................... 22 \n\nB.\t\t Recommendations Issued ..................................................................................................................... 93 \n\nC. \t Dollar Value of Costs Questioned ............................................................................................. $314,363\n\n\nD. \t Dollar Value of Recommendations that Funds\n Be Put to Better Use ............................................................................................................................ $0\nE. \t Collections as a Result of Questioned Costs ............................................................................. $269,882 \n\n\nAudit and Report Follow-up Activities\n\nA. \t Recommendations for which Management Decisions were made\n During the Reporting Period ................................................................................................................ 90\nB. \t Disallowed Costs Agreed to by Management ........................................................................ $1,060,470\n\n\nC. \t Dollar Value of Recommendations that Funds Be Put to Better Use\n Agreed to by Management ................................................................................................................... $0\nD. \t Recommendations without a Management Decision at End of Reporting Period ............................... 12 \n\n\nLegislation/Regulations/Standard Operating Procedures (SOPs)/Other Reviews\n\nA. \t Legislation, Regulations, Standard Operating Procedures, and Other Issuances ** Reviewed ........... 35 \n\n\n* \t May include actions from earlier reporting periods.\n** \tThis category includes policy notices, procedural notices, Administrator\xe2\x80\x99s action memoranda, and other\n Agency initiatives, which frequently involve the implementation of new programs and policies.\n\n\n\n\n 23 \n\n\x0c Statistical Highlights\n\n\n\n 6-Month Productivity Statistics \n\n October 1, 2009 through March 31, 2010 \n\n\nIndictments, Convictions, and Case Activity\n\nA. \t Indictments from OIG Cases .............................................................................................................. 53* \n\nB. \t Convictions from OIG Cases................................................................................................................ 14 \n\nC.\t\t Cases Opened ....................................................................................................................................... 35 \n\nD.\t\t Cases Closed......................................................................................................................................... 39 \n\n\nRecoveries and Management Avoidances as a Result of Investigations and Related Activities\n\nA Potential Recoveries and Fines as a Result of\n OIG Investigations ............................................................................................................ $18,037,642*\nB. \t Loans/Contracts Not Approved or Canceled as Result of Investigations.................................. $553,800 \n\nC. \t Loans Not Approved as a Result of the Name\n Check Program .................................................................................................................... $13,943,422\n\n Total ................................................................................................................................... $32,534,864*\n\n\n\nSBA Personnel Actions Taken as a Result of Investigations\n\nA D\n \t ismissals............................................................................................................................................... 0 \n\nB.\t\t Resignations/Retirements ....................................................................................................................... 0 \n\nC.\t\t Suspensions ............................................................................................................................................ 0 \n\nD.\t\t Reprimands ............................................................................................................................................. 0 \n\nE.\t\t Other ....................................................................................................................................................... 0 \n\n\nDebarment and Suspension Actions\n\nA.\t\t Debarments Recommended to the Agency .......................................................................................... 19 \n\nB. \t Debarments Pending at the Agency ..................................................................................................... 20 \n\nC. \t Proposed Debarments Issued by the Agency ....................................................................................... 16 \n\nD. \t Final Debarments Issued by the Agency ................................................................................................ 3 \n\nE. \t Proposed Debarments Declined by the Agency ..................................................................................... 3 \n\nF. \t Suspension/Debarment Actions by Other Agencies\n Resulting from Investigations in which the OIG Participated .............................................................. 31\n\nOIG Hotline Operation Activities\n\nA. \t Total Fraud Line Complaints.............................................................................................................. 247 \n\nB. \t Total Complaints Referred to Investigations Division ....................................................................... 132\n\n\nC. \t Total Complaints Referred to SBA or Other Federal Investigative Agencies........................................ 1 \n\nD. \t Total Complaints Referred to Other Entities .......................................................................................... 1 \n\nE. \t Total Complaints Needing No Action ................................................................................................ 113 \n\n\n* \t May include actions from earlier reporting periods.\n\n 24 \n\n\x0c Appendices\n\n\n\n Appendix I \n\n OIG Reports Issued \n\n October 1, 2009 through March 31, 2010\n\n\n\n Report Issue Questioned Funds for\n Title\n Number Date Costs Better Use\n Recovery Act\nSBA Readiness for Reviewing Recipient\nReports on the Use of Recovery Act ROM 10-01 10/30/2009 $0 $0\nFunds\nReview of Recovery Act\xe2\x80\x99s Impact on\n ROM 10-02 11/25/2009 $0 $0\nSBA Lending\nRecovery Act Loans Involving Change of\n ROM 10-03 12/2/2009 $0 $0\nOwnership Transactions\nReview of Controls over Job Creation and\nRetention Statistics Reports by SBA\n ROM 10-04 12/4/2009 $0 $0\nUnder the American Recovery and\nReinvestment Act of 2009\nNotice of Finding and Recommendation\non Recovery Act Loans Disbursed\n ROM 10-05 12/10/2009 $0 $0\nWithout the Required Borrower\nImmigration Certifications\nInadequate Documentation to Support a\nLoan Approved Under Section 504 of the ROM 10-06 12/15/2009 $0 $0\nRecovery Act\nEnhancements Needed in Processing\n ROM 10-07 12/15/2009 $0 $0\nPayroll Funded Under the Recovery Act\nLack of Controls to Ensure Recovery Act\n ROM 10-08 12/15/2009 $0 $0\nPayroll is Complete and Accurate\nLack of Approval for a Recovery Act\n ROM 10-09 12/15/2009 $0 $0\nSurety Bid Bond Guarantee\nSBA\xe2\x80\x99s Administration of the Microloan\n ROM 10-10 12/28/2009 $0 $0\nProgram under the Recovery Act\nNotice of Finding and Recommendation\non Ineligible Lender-Approved Recovery ROM 10-11 1/22/2010 $0 $0\nAct Loans\nNotice of Finding and Recommendation\non Material Origination and Closing\n ROM 10-12 3/31/2010 $0 $0\nDeficiencies Identified in SBA and\nLender-Approved Recovery Act Loans\n Program Subtotal 12 $0 $0\n Small Business Access to Capital\nAudit of Premier Certified Lenders in the\n 10-10 3/23/2010 $0 $0\nSection 504 Loan Program\n Program Subtotal 1 $0 $0\n\n\n\n\n 25 \n\n\x0c Appendices\n\n\n\n Appendix I \n\n OIG Reports Issued \n\n October 1, 2009 through March 31, 2010\n\n\n\n Report Issue Questioned Funds for\n Title\n Number Date Costs Better Use\n Disaster Loans\nMonitoring of Insurance Coverage for\n 10-01 10/20/2009 $0 $0\nDisaster Loan Recipients\nReview of Borrower Eligibility for Gulf\n 10-03 10/21/2009 $314,363 $0\nCoast Disaster Loans\n Program Subtotal 2 $314,363 $0\n Small Business Development, Contracting, Education, and Training\nSBA Regulations Relating to\nUnconditional Ownership Requirements 10-07 1/25/2010 $0 $0\nfor Indian Tribes\nReview of SBA\xe2\x80\x99s Accounting of Fiscal\nYear 2009 Drug Control Funds and 10-09 2/26/2010 $0 $0\nPerformance Summary Report\n Program Subtotal 2 $0 $0\n Agency Management\nFiscal Year 2010 Report on the Most\nSerious Management and Performance\n 10-02 10/16/2009 $0 $0\nChallenges Facing the Small Business\nAdministration\nAudit of SBA\xe2\x80\x99s Fiscal Year 2009\n 10-04 11/13/2009 $0 $0\nFinancial Statements\nGFRS for Fiscal Year 2009 10-05 11/13/2009 $0 $0\nAudit of SBA\xe2\x80\x99s Fiscal Year 2009\n $0 $0\nFinancial Statements \xe2\x80\x93 Management 10-06 12/15/2009\nLetter\nSBA\xe2\x80\x99s Efforts to Improve the Quality of\nAcquisition Data in the Federal 10-08 2/26/2010 $0 $0\nProcurement Data System\n Program Subtotal 5 $0 $0\n TOTALS (all programs) 22 $314,363 $0\n\n\n\n\n 26 \n\n\x0c Appendices\n\n\n\n Appendix II\n OIG Reports with Questioned Costs\n\n Recommend- Questioned Unsupported\n Reports\n ations* Costs** Costs**\n No management decision made\nA. 2 2 $339,643 $1,250,088\n by September 30, 2009\n Issued during this reporting 1 1 $0 $314,363\nB.\n period\n Universe from which\n management decisions could be\n 3 3 $339,643 $1,564,451\n made in this reporting period \xe2\x80\x93\n Subtotals\n Management decision(s) made\nC. 3 3 $339,643 $1,564,451\n during this reporting period\n (i) Disallowed costs 2 2 $0 $1,060,470\n (ii) Costs not disallowed 3 3 $339,643 $503,981\n No management decision made\nD. 0 0 $0 $0\n by March 31, 2010\n*\t\t Reports may have more than one recommendation.\n** Q\t uestioned costs are those which are found to be improper, whereas unsupported costs may be proper, but lack\n documentation.\n\n\n\n\n Appendix III \n\n OIG Reports with Recommendations that Funds Be Put to Better Use\n\n Recommended\n Recommend-\n Reports Funds For Better\n ations*\n Use\n No management decision made by\nA. 0 0 $0\n September 30, 2009\nB. Issued during this reporting period 0 0 $0\n Universe from which management decisions\n could be made in this reporting period \xe2\x80\x93 0 0 $0\n Subtotals\n Management decision(s) made during this\nC. 0 0 $0\n reporting period\n (i) Recommendations agreed to by SBA\n 0 0 $0\n management\n (ii) Recommendations not agreed to by SBA\n 0 0 $0\n management\n No management decision made by March\nD. 0 0 $0\n 31, 2010\n* Reports may have more than one recommendation.\n\n\n** Information is different from what was previously reported due to database corrections. \n\n\n\n\n\n 27 \n\n\x0c Appendices\n\n\n\n Appendix IV\n OIG Reports with Non-Monetary Recommendations\n\n Reports Recommendations\nA. No management decision made by September 30, 2009 4 7\nB. Issued during this reporting period 22 92\n Universe from which management decisions could be made in this\n 26 99\n reporting period \xe2\x80\x93 Subtotals\n Management decision(s) made (for at least one recommendation in\nC. 22 87\n the report) during this reporting period\n\nD. No management decision made by March 31, 2010* 5 12\n\n\n* Adding the number of reports for C. & D. will not result in the subtotal of A. & B. because any single report may have\n recommendations that fall under both C. & D.\n** Information is different from what was previously reported due to database corrections.\n\n\n\n\n Appendix V \n\n OIG Reports From Prior Semiannual Periods\n with Overdue* Management Decisions as of March 31, 2010\n\n Report Date\n Title Status\n Number Issued\nSBA\xe2\x80\x99s Fiscal Year 2008 Improper\n The Agency has not responded to two\nPayment Rate for the 7(a) Guaranty Loan 9-16 7/10/2009\n recommendations in the report.\nProgram\n\n* \xe2\x80\x9cOverdue\xe2\x80\x9d is defined as more than 180 days from the date of issuance.\n\n\n\n\n 28 \n\n\x0c Appendices\n\n\n\n Appendix VI \n\n OIG Reports Without Final Action as of March 31, 2010\n\n Final\n Date of\nReport Date Action\n Title Management\nNumber Issued Target\n Decision\n Date\n 0-14 7(a) Service Fee Collections 3/30/00 8/22/00 3/31/09\n SBA\xe2\x80\x99s Oversight of the Fiscal Transfer Agent for\n 3-08 1/30/03 4/15/07 3/31/10\n the 7(a) Loan Program\n 3-26 Microloan Program 5/12/03 * 12/31/07\n Audit of SBA\'s Process for Complying with the\n 4-34 Federal Managers\' Financial Integrity Act 7/29/04 9/9/04 3/31/09\n Reporting Requirements\n Fiscal Year 2005 Financial Statements -\n 6-10 1/18/06 3/3/06 3/31/10\n Management Letter\n Audit of SBA\'s Fiscal Year 2006 Financial\n 7-03 11/15/06 12/20/06 10/30/09\n Statements\n SBA\xe2\x80\x99s Use of the Loan and Lender Monitoring\n 7-21 5/2/2007 9/5/08 12/31/09\n System\n 7-28 SBA\'s Oversight Of Business Loan Center, LLC 7/11/07 9/27/07 12/31/09\n 7-29 Quality Assurance Reviews of Loss Verification 07/23/07 8/30/08 9/30/10\n Audit of SBA\'s Fiscal Year 2007 Financial\n 8-06 12/14/07 * 6/30/10\n Statements - Management Letter\n Loan Classification and Overpayments of\n 8-09 3/26/08 * **\n Secondary Loans\n 8-12 Oversight of SBA Supervised Lenders 5/9/08 * **\n Planning for the Loan Management and\n 8-13 Accounting System Modernization and 5/14/08 * **\n Development Effort\n Acceptance of VBP Group into the 8(a) Program\n 8-16 7/18/08 8/11/08 8/30/09\n and Subsequent Contract Award by SBA\n Audit of SBA\xe2\x80\x99s Fiscal Year 2008 Financial\n 9-03 11/14/08 * **\n Statements\n Audit of SBA\xe2\x80\x99s Fiscal Year 2008 Financial\n 9-05 12/17/08 * 6/30/10\n Statements \xe2\x80\x93 Management Letter\n Improper Payment Rate for the Disaster Loan\n 9-10 3/26/09 5/20/09 11/30/09\n Program\n Review of SBA National Guaranty Purchase\n 9-12 3/31/09 3/31/09 10/15/09\n Center Furniture Contract\n Office of Business Operations Contracting\n 9-14 7/6/09 6/15/09 8/1/10\n Personnel Qualifications and Warrant Authority\n* Management decision dates vary with different recommendations.\n** Target dates vary with different recommendations.\n\n\n\n\n 29 \n\n\x0c Appendices\n\n\n\n Appendix VI \n\n OIG Reports Without Final Action as of March 31, 2010\n\n Final\n Date of\nReport Date Action\n Title Management\nNumber Issued Target\n Decision\n Date\n Participation in the 8(A) Program by Firms Owned\n 9-15 7/10/09 8/02/09 **\n by Alaska Native Corporations\n SBA\xe2\x80\x99s Fiscal Year 2008 Improper Payment Rate\n 9-16 7/10/09 * **\n for the 7(A) Guaranty Loan Program\n Review of Allegations Concerning How the Loan\n 9-17 Management and Accounting System 7/30/09 * **\n Modernization Project is Being Managed\n SBA\xe2\x80\x99s Management of the Backlog of Post-\n 9-18 Purchase Reviews at the National Guaranty 8/25/09 * **\n Purchase Center\n Monitoring of Insurance Coverage for Disaster\n 10-01 10/20/09 11/6/09 **\n Loan Recipients\n Application of Insurance Offsets for Gulf Coast\n 10-03 10/21/09 1/20/10 3/31/10\n Disaster Loans\n Audit of SBA\'s Fiscal Year 2009 Financial\n 10-04 11/13/09 * **\n Statements\n Audit of SBA\'s Fiscal Year 2009 Financial\n 10-06 12/15/09 * **\n Statements - Management Letter\n SBA Regulations Relating to Unconditional\n 10-07 1/25/10 3/12/10 10/31/10\n Ownership Requirements for Indian Tribes\n SBA\xe2\x80\x99s Efforts to Improve the Quality of\n 10-08 Acquisition Data in the Federal Procurement Data 2/26/10 3/29/10 **\n System\n ROM Recovery Act Loans Involving Change of\n 12/2/09 11/24/09 3/31/10\n 10-03 Ownership Transactions\n Review of Controls Over Job Creation and\n ROM\n Retention Statistics Reports by SBA Under the 12/4/09 * **\n 10-04\n American Recovery and Reinvestment Act of 2009\n ROM Recovery Act Loans Disbursed Without Required\n 12/10/09 1/19/10 5/31/10\n 10-05 Borrower Immigration Certifications\n ROM SBA\xe2\x80\x99s Administration of the Microloan Program\n 12/28/09 * **\n 10-10 Under the Recovery Act\n ROM NFR on Ineligible Lender-Approved Recovery Act\n 1/22/10 1/26/10 5/31/10\n 10-11 Loans\n\n* Management decision dates vary with different recommendations.\n** Target dates vary with different recommendations.\n\n\n\n\n 30 \n\n\x0c Appendices\n\n\n\n Appendix VII \n\n Summary of Significant Recommendations\n From Prior Semiannual Reporting Periods\n Without Final Action as of March 31, 2010*\n\n Date of\nReport Date Final Action\n Recommendation Management\nNumber Issued Target Date\n Decision\n Revise current procedures for classifying loans\n in the Loan Accounting System to ensure that\n 8-09 3/23/08 9/3/08 9/30/09\n loan currency is not solely based on the next\n installment due date.\n Discontinue the practice of including the amount\n 8-09 3/23/08 of SBA\xe2\x80\x99s ongoing guaranty fees in the purchase 9/3/08 9/30/09\n payment to the Fiscal and Transfer Agent.\n Make cost-effective remediation of mainframe\n vulnerabilities a priority and ensure that\n migration of LAS occurs before the current\n 8-13 5/14/08 8/27/08 3/31/09\n mainframe contract expires in 2012 to reduce\n SBA\'s mainframe costs and timely mitigate\n associated security risks.\n Report the improper rate calculated by the OIG\n 9-10 3/26/09 5/20/09 11/30/09\n for Fiscal Year 2007 to OMB.\n Ensure the correct Fiscal Year 2008 improper\n 9-10 3/26/09 5/20/09 11/30/09\n payment estimate is reported to OMB.\n Establish internal controls that ensure that OBO\n and DPGM are unable to modify contracts\n 9-12 3/31/09 3/31/09 10/15/09\n without the appropriate supporting\n documentation, including a statement of work.\n Update official designation of the Acquisition\n Career Manager and seek administrative rights\n 9-14 7/6/09 6/15/09 8/1/10\n to ACMIS for the position from the Federal\n Acquisition Institute.\n Conduct a program review to evaluate whether\n the growth in ANC 8(a) obligations has\n adversely impacted, or will adversely impact,\n 9-15 7/10/09 8/4/09 9/4/09\n other 8(a) firms and the overall effectiveness of\n the 8(a) program and, if so, make programmatic\n revisions to minimize the adverse impact.\n Determine whether 8(a) firms owned by ANCs\n and tribes should continue to be exempt from the\n 9-15 7/10/09 cap on total sole source awards in CFR 124.519 8/2/09 10/31/10\n and, if not; remove the exemption from this\n regulation.\n Seek recovery of $2.3 million from lenders on\n 9-16 7/10/09 the loans listed in Appendices III and IV of the 8/27/09 10/31/09\n report.\n\n* These are a subset of the universe of recommendations without final action.\n\n\n\n\n 31 \n\n\x0c Appendices\n\n\n\n Appendix VII \n\n Summary of Significant Recommendations\n From Prior Semiannual Reporting Periods\n Without Final Action as of March 31, 2010*\n\n Date of\nReport Date Final Action\n Recommendation Management\nNumber Issued Target Date\n Decision\n Fully implement the corrective action plan\n reported in SBA\xe2\x80\x99s Fiscal Year 2008 Performance\n 9-16 7/10/09 7/28/09 9/30/10\n and Accountability Report to reduce improper\n payments in the 7(a) Guaranty Loan Programs.\n Report the revised improper payment rate\n 9-16 7/10/09 calculated by the OIG for Fiscal Year 2008 to 9/26/09 11/15/09\n OMB.\n Take steps to modify the contract to require the\n Quality Assurance/Independent Verification and\n Validation (QA/IV&V) contractor to report all\n 9-17 7/30/09 findings and recommendations to the Program 8/28/09 9/30/09\n Manager and an independent Quality Assurance\n manager designated by the Chief Information\n Officer (CIO).\n Establish a process for reviewing and accepting\n 9-17 7/30/09 LMAS deliverables that complies with Systems 8/28/09 9/30/09\n Development Methodology (SDM) requirements.\n Immediately establish an enterprise-wide QA\n 9-17 7/30/09 function that is compliant with SBA\xe2\x80\x99s SDM QA 9/3/09 10/30/09\n policy.\n Take steps to ensure that a well-defined\n deliverable acceptance process is established for\n 9-17 7/30/09 9/3/09 12/31/09\n the LMAS project in accordance with SBA\xe2\x80\x99s\n Enterprise Quality Assurance Plan.\n Seek recovery of $1,250,088 on the guaranties\n 9-18 8/25/09 paid on the 6 loans listed in Appendix IV of the 10/21/09 12/31/09\n report.\n Include detailed scopes of work, measurable\n performance metrics, deliverables, and adequate\n 9-18 8/25/09 acceptance criteria in service contracts to assist the 9/11/09 3/31/10\n contractor staff in performing the reviews and the\n Center in supervising them.\n Take timely action to perform adequate post-\n 9-18 8/25/09 purchase and charge-off reviews to ensure the 9/3/09 12/31/09\n recovery of improper payments.\n\n* These are a subset of the universe of recommendations without final action.\n\n\n\n\n 32 \n\n\x0c Appendices\n\n\n\n Appendix VIII\n\n\n Summary of Significant Recommendations \n\n October 1, 2009 through March 31, 2010\n\n\n\nReport Date\n Title Recommendation\nNumber Issued\n Have the Director of the Office of Financial\n Monitoring of Insurance Program Operations inform borrowers on the 36\n 10-01 Coverage for Disaster Loan 10/20/09 loans with lapsed policies or insufficient coverage\n Recipients that they must provide evidence of adequate\n insurance coverage.\n Determine the actions needed to achieve\n Monitoring of Insurance\n compliance with statutory flood insurance\n 10-01 Coverage for Disaster Loan 10/20/09\n monitoring requirements and the cost implications\n Recipients\n of achieving compliance.\n Develop and execute a plan for achieving\n compliance on existing and future loans.\n Monitoring of Insurance\n Alternatively, if achieving compliance is\n 10-01 Coverage for Disaster Loan 10/20/09\n determined to be not cost effective, seek additional\n Recipients\n funding or legislative change to the statutory flood\n insurance requirement.\n Revise SOP 50-52 to clarify what action(s)\n Monitoring of Insurance\n servicing center personnel should take when\n 10-01 Coverage for Disaster Loan 10/20/09\n borrowers refuse to obtain required hazard\n Recipients\n insurance.\n Work with the Office of Financial Assistance to\n Application of Insurance resolve the two over-disbursements totaling\n 10-03 Offsets for Gulf Coast 10/21/09 $44,481, of the $314,363 in over-disbursements\n Disaster Loans identified in this audit, that occurred after the loans\n were transferred to the servicing centers.\n Develop a plan to identify and address duplicate\n benefits present in the remaining universe of Gulf\n Application of Insurance\n Coast Hurricane Disaster Loans. At a minimum,\n 10-03 Offsets for Gulf Coast 10/21/09\n the plan should include steps to identify and\n Disaster Loans\n review loans that have the greatest chance of\n unidentified duplicate payments.\n Implement procedures at the servicing centers that\n Application of Insurance require a timely re-verification of insurance\n 10-03 Offsets for Gulf Coast 10/21/09 recoveries during the servicing of loans, preferably\n Disaster Loans between 6-months to 1 year after the file is\n transferred to servicing.\n Implement a reconciliation procedure in which a\n staff member traces and agrees the Net Present\n Audit of SBA\xe2\x80\x99s Fiscal Year Value in the Return on Assets calculation to the\n 10-04 11/13/09\n 2009 Financial Statements outputs generated by the Credit Subsidy Calculator\n 2 prior to posting the alignment entry in the\n general ledger.\n\n\n\n\n 33 \n\n\x0c Appendices\n\n\n\n Appendix VIII\n\n\n Summary of Significant Recommendations \n\n October 1, 2009 through March 31, 2010\n\n\n\nReport Date\n Title Recommendation\nNumber Issued\n Develop policies and procedures to ensure the\n Audit of SBA\xe2\x80\x99s Fiscal Year Return on Assets alignment entry is made after all\n 10-04 11/13/09\n 2009 Financial Statements credit reform loan guaranty activity has been\n posted to the general ledger.\n Enhance SBA\xe2\x80\x99s procedures related to its in-depth\n analysis of the valuation of the liability for loan\n Audit of SBA\xe2\x80\x99s Fiscal Year guaranties and defaulted loan guaranty receivable\n 10-04 11/13/09\n 2009 Financial Statements balances to ensure the balances are properly\n presented at the NPV in accordance with SFFAS\n No. 2.\n Improve the vulnerability tracking and monitoring\n Audit of SBA\xe2\x80\x99s Fiscal Year\n 10-04 11/13/09 process to include unresolved high and medium\n 2009 Financial Statements\n vulnerabilities in the JAAMS POA&M.\n Ensure that the vulnerability reports are reviewed\n Audit of SBA\xe2\x80\x99s Fiscal Year and analyzed on a regular basis. Periodically\n 10-04 11/13/09\n 2009 Financial Statements monitor the existence of necessary services and\n protocols running on servers and network devices.\n Develop a more thorough approach to track and\n Audit of SBA\xe2\x80\x99s Fiscal Year mitigate patch management and configuration\n 10-04 11/13/09\n 2009 Financial Statements management vulnerabilities identified during\n monthly scans.\n Prevent users from connecting unauthorized\n devices to the GSS network anonymously by\n Audit of SBA\xe2\x80\x99s Fiscal Year\n 10-04 11/13/09 developing and implementing procedures for\n 2009 Financial Statements\n ensuring mandatory domain authentication for IP\n address issuance.\n Audit of SBA\xe2\x80\x99s Fiscal Year Implement controls regarding the validation of\n 10-04 11/13/09\n 2009 Financial Statements physical access to the data center.\n Implement procedures to control the process for\n requesting and granting access to the E-Tran\n Audit of SBA\xe2\x80\x99s Fiscal Year\n 10-04 11/13/09 system, and implement procedures to retain the\n 2009 Financial Statements\n appropriate approval evidence for tracking and\n validation.\n Audit of SBA\xe2\x80\x99s Fiscal Year Implement a process to monitor the audit logs of\n 10-04 11/13/09\n 2009 Financial Statements all financial applications on a regular basis.\n Implement procedures for documenting operating\n system, software and emergency change testing\n Audit of SBA\xe2\x80\x99s Fiscal Year\n 10-04 11/13/09 results, testing approvals, and final approvals.\n 2009 Financial Statements\n Specifically, such procedures and controls need to\n be applied for the LAN\\WAN.\n\n\n\n\n 34 \n\n\x0c Appendices\n\n\n\n Appendix VIII\n\n\n Summary of Significant Recommendations \n\n October 1, 2009 through March 31, 2010\n\n\n\nReport Date\n Title Recommendation\nNumber Issued\n The Senior Policy Analyst in the Office of the\n Administrator should coordinate with program\n offices using end-user programs containing\n Audit of SBA\xe2\x80\x99s Fiscal Year sensitive data, such as Personally Identifiable\n 10-04 11/13/09\n 2009 Financial Statements Information (PII) and financial data, to implement\n end-user computing procedures in accordance with\n the guidance provided by the Office of the Chief\n Information Officer.\n Audit of SBA\xe2\x80\x99s Fiscal Year Develop a tracking mechanism to ensure loans\n 10-06 2009 Financial Statements \xe2\x80\x93 12/15/09 awaiting charge-off for an extensive period are\n Management Letter quickly identified and processed.\n Audit of SBA\xe2\x80\x99s Fiscal Year Oversee and enforce the authorization and\n 10-06 2009 Financial Statements \xe2\x80\x93 12/15/09 document retention of the clearance documents for\n Management Letter all employees and contractors.\n Audit of SBA\xe2\x80\x99s Fiscal Year Require effective training programs for IT security\n 10-06 2009 Financial Statements \xe2\x80\x93 12/15/09 personnel.\n Management Letter\n Audit of SBA\xe2\x80\x99s Fiscal Year Develop a method of monitoring the training\n 10-06 2009 Financial Statements \xe2\x80\x93 12/15/09 program to ensure compliance by all personnel\n Management Letter with IT security roles and responsibilities.\n SBA Regulations Relating to Revise Title 13 CFR, Part 124 to mandate that\n Unconditional Ownership 1/25/10 tribally-owned firms be unconditionally owned as\n 10-07\n Requirements for Indian required by the Small Business Act.\n Tribes\n Study the effect of allowing seller-financed\n transactions to encumber ownership shares, and if\n SBA Regulations Relating to appropriate, revise Title 13 CFR, Part 124 to\n Unconditional Ownership 1/25/10 provide that a stock or other ownership interest\n 10-07\n Requirements for Indian that is pledged or encumbered is not\n Tribes unconditionally owned unless the pledge or\n encumbrance occurs within an arms-length\n transaction with a legitimate financial institution.\n SBA\xe2\x80\x99s Efforts to Improve the Either update the Fiscal Year 2008 Data Quality\n Quality of Acquisition Data in Plan or revise the information notice to include\n 10-08 2/26/10\n the Federal Procurement Data explicit steps that will be taken to ensure data is\n System reviewed for accuracy and completeness.\n SBA\xe2\x80\x99s Efforts to Improve the Conduct an independent review to ensure that the\n Quality of Acquisition Data in Data Quality Plan or information notice\n 10-08 2/26/10\n the Federal Procurement Data requirements have been fully implemented.\n System\n SBA\xe2\x80\x99s Efforts to Improve the Ensure that Office of Business Operations\n Quality of Acquisition Data in contracting personnel are held accountable for the\n 10-08 2/26/10\n the Federal Procurement Data accuracy of Federal Procurement Data System\n System data.\n\n\n\n\n 35 \n\n\x0c Appendices\n\n\n\n Appendix VIII\n\n\n Summary of Significant Recommendations \n\n October 1, 2009 through March 31, 2010\n\n\n\nReport Date\n Title Recommendation\nNumber Issued\n Have the Associate Administrator for Capital\n Access revise SOP 50 10, Lender Development\n Company Loan Programs, to require that lenders\n Audit of Premier Certified use, among other things, (a) the actual cash flow\n 10-10 Lenders in the Section 504 3/23/10 method to determine borrower repayment ability\n Loan Program for businesses using accrual accounting, (b)\n historical salary levels to estimate officer salary,\n and (c) historical sales data to make sales\n projections.\n Have the Associate Administrator for Capital\n Access develop a process to ensure that corrective\n actions are taken in response to Office of Credit\n Risk Management onsite reviews, and/or modify\n Audit of Premier Certified guidance for these reviews, as appropriate, to\n 10-10 Lenders in the Section 504 3/23/10 ensure that reviewers properly assess lender\n Loan Program determination of borrower repayment ability and\n eligibility; including lender validation of financial\n information used by borrowers to demonstrate\n repayment ability and assessment of eligibility\n based on achievement of public policy goals.\n Have the Associate Administrator for Capital\n Access revise current guidance to clarify how\n Audit of Premier Certified\n eligibility should be evaluated in order to ensure\n 10-10 Lenders in the Section 504 3/23/10 the intent of the CDC/504 Loan Program is met\n Loan Program\n when the Federal budget reduction public policy\n goal is used to qualify a borrower for a CDC loan.\n Evaluate the need to establish monetary or other\n Audit of Premier Certified guidelines on the level of excess funds that CDCs\n 10-10 Lenders in the Section 504 3/23/10 should retain as a reserve for future operations\n Loan Program and/or invest in other local economic development\n activities.\n Issue a Procedural Notice for performing data\n SBA Readiness for Reviewing quality reviews over contract recipient reports,\n ROM\n Recipient Reports on the Use 10/30/09 which incorporates specific, detailed instructions\n 10-01\n of Recovery Act Funds for using FederalReporting.gov, and other relevant\n instructions provided in the OFPP Memorandum.\n Have the Associate Administrator for Management\n and Administration define its process for\n SBA Readiness for Reviewing\n ROM reviewing Microloan intermediary reports that\n Recipient Reports on the Use 10/30/09\n 10-01 incorporates specific, detailed instructions for\n of Recovery Act Funds\n using FederalReporting.gov, and other relevant\n instructions provided in the OMB M-09-21.\n\n\n\n\n 36 \n\n\x0c Appendices\n\n\n\n Appendix VIII\n\n\n Summary of Significant Recommendations \n\n October 1, 2009 through March 31, 2010\n\n\n\nReport Date\n Title Recommendation\nNumber Issued\n Provide training to loan officers on (1) the\n Notice of Finding and\n calculation of goodwill and the importance of\n Recommendation on\n ROM adjusting assets to their book values or appraised\n Recovery Act Loans Involving 12/2/09\n 10-03 values in performing their calculations, and (2)\n Change of Ownership\n applying change of ownership requirements to\n Transactions\n loans involving the refinancing of seller debt.\n Notice of Finding and Establish a process for granting policy waivers\n Recommendation on approved by the Associate Administrator for\n ROM\n Recovery Act Loans Involving 12/2/09 Capital Access or higher official that provides the\n 10-03\n Change of Ownership necessary independence and is supported by risk-\n Transactions based justifications.\n Review of Controls Over Job Implement a data quality review and testing\n Creation and Retention process to determine if job data is properly\n ROM\n Statistics Reported by SBA 12/4/09 recorded, classified, and reported.\n 10-04\n under the American Recovery\n and Reinvestment Act of 2009\n Review of Controls Over Job Improve the transparency and accountability of the\n Creation and Retention reported data by disclosing the number of jobs\n ROM\n Statistics Reported by SBA 12/4/09 associated with disbursed loans in the monthly\n 10-04\n under the American Recovery Recovery Act Program Performance Reports.\n and Reinvestment Act of 2009\n Review of Controls Over Job Establish adequate guidance on how lenders\n Creation and Retention should report jobs created and retained for 7(a)\n ROM\n Statistics Reported by SBA 12/4/09 loans.\n 10-04\n under the American Recovery\n and Reinvestment Act of 2009\n Notice of Finding and Remind lenders of the SBA requirement to obtain\n Recommendation on borrower certification of compliance with\n ROM Recovery Act Loans immigration laws prior to loan disbursement.\n 10-05 Disbursed Without the 12/10/09\n Required Borrower\n Immigration Certifications\n Upon request for guaranty purchase of SBA\n Notice of Finding and\n Recovery Act loans that received increased SBA\n Recommendation on\n guaranties, require lenders to submit borrower\n ROM Recovery Act Loans\n 12/10/09 certifications of compliance with immigration\n 10-05 Disbursed Without the\n laws, and cancel or reduce the SBA guaranty for\n Required Borrower\n any loan made for which the lender cannot furnish\n Immigration Certifications\n the required certification.\n Have the Chief Financial Officer post the\n Lack of Controls to Ensure correcting entry to the general ledger to reverse the\n ROM\n Recovery Act Payroll is 12/15/09 American Recovery and Reinvestment Act of 2009\n 10-08\n Complete and Accurate Salary & Expense correcting Journal Voucher in\n the amount of $5,283.95.\n\n\n\n\n 37 \n\n\x0c Appendices\n\n\n\n Appendix VIII\n\n\n Summary of Significant Recommendations \n\n October 1, 2009 through March 31, 2010\n\n\n\nReport Date\n Title Recommendation\nNumber Issued\n Have the Chief Financial Officer ensure the correct\n Lack of Controls to Ensure\n ROM parameters are used to generate the payroll Journal\n Recovery Act Payroll is 12/15/09\n 10-08 Voucher report so that the report is inclusive of all\n Complete and Accurate\n payroll activity.\n Lack of Approval for a Develop and implement policies and procedures to\n ROM\n Recovery Act Surety Bid 12/15/09 monitor aged outstanding Preferred Surety Bond\n 10-09\n Bond Guarantee bid bond approvals.\n Require intermediaries to provide 3 months worth\n of bank statements with each quarterly financial\n report submitted to SBA and revise the review\n SBA\xe2\x80\x99s Administration of the process to include an analysis of the sources and\n ROM\n Microloan Program under the 12/28/09 uses of MRF and LLRF funds. This process\n 10-10\n Recovery Act. should assist in detecting inappropriate fund\n transfers between the intermediaries\xe2\x80\x99 accounts,\n which are indications of program weaknesses and\n misuses of funds.\n SBA\xe2\x80\x99s Administration of the Develop a staffing plan and hire and train the\n ROM\n Microloan Program under the 12/28/09 additional staff required to provide an adequate\n 10-10\n Recovery Act. level of program oversight.\n Examine, verify, and test microloan data reported\n by the intermediaries in Microloan Program\n SBA\xe2\x80\x99s Administration of the Electronic Reporting System to ensure loan\n ROM\n Microloan Program under the 12/28/09 defaults are accurately reported and that obvious\n 10-10\n Recovery Act. inaccuracies and questionable transactions\n reported by intermediaries are identified and\n resolved.\n Develop additional performance metrics to\n SBA\xe2\x80\x99s Administration of the\n ROM measure the program\xe2\x80\x99s achievement in assisting\n Microloan Program under the 12/28/09\n 10-10 microloan borrowers in establishing and\n Recovery Act.\n maintaining successful small businesses.\n Require intermediaries to report in MPERS the\n technical assistance provided in relation to each\n SBA\xe2\x80\x99s Administration of the\n ROM microloan made and use this data to analyze the\n Microloan Program under the 12/28/09\n 10-10 effect technical assistance may have on the success\n Recovery Act.\n of microloan borrowers and their ability to repay\n microloans.\n Have the Associate Administrator for Capital\n Notice of Finding and Access require the lenders to bring each of the\n ROM Recommendation on loans listed in Appendix I (Ineligible Lender\n 1/22/10\n 10-11 Ineligible Lender-Approved Approved Loans) into compliance, or, if not\n Recovery Act Loans possible, cancel or adjust the SBA guaranties\n accordingly.\n\n\n\n\n 38 \n\n\x0c Appendices\n\n\n\n Appendix VIII\n\n\n Summary of Significant Recommendations \n\n October 1, 2009 through March 31, 2010\n\n\n\nReport Date\n Title Recommendation\nNumber Issued\n Notice of Finding and Implement the appropriate system controls to\n Recommendation on Material automatically identify the outstanding balances of\n ROM Origination and Closing all SBA loans made to a borrower to ensure SBA\n 3/31/2010\n 10-12 Deficiencies Identified in SBA lending limits will not be exceeded upon the\n and Lender-Approved approval of a subsequent loan.\n Recovery Act Loans\n Notice of Finding and Require Wachovia SBA Lending, Inc. to bring\n Recommendation on Material loan number 3406815002 into compliance with\n ROM Origination and Closing SBA requirements, or, if not possible, flag the loan\n 3/31/2010\n 10-12 Deficiencies Identified in SBA as having an equity injection deficiency for\n and Lender-Approved consideration during the purchase review should\n Recovery Act Loans the loan default and purchase be requested.\n\n\n\n\n 39 \n\n\x0c Appendices\n\n\n\n Appendix IX \n\n Events/Activities Where SBA Used its Cosponsorship Authority* \n\n Small Business Act, Section 4(h) \n\n October 1, 2009 through March 31, 2010\n\n\n\nName/Subject of Event Name of Cosponsor(s) Date(s) of Event Location of Event\n Discussion and\nInformational Seminar for The Commonwealth of Virginia - November 17,\n Richmond, VA\n Small Businesses in Office of the Governor 2009\n Virginia\n New York DO Annual\n New York Business Development November 17,\nLender Awards for Fiscal Jamaica, NY\n Corporation 2009\n Year 2009\n Regional Contracting Assistance January 22,\nSelling to the Government\n Center, Charleston WV SCORE February 26, World Wide Web\n Webinars\n Chapter #256 March 26, 2010\n INNOVA Commercialization\n Group, WVHTC Foundation, WVU\n Research Corporation, Higher November 30,\n 2009 Mid-Atlantic\n Education Policy Commission, December 1, Morgantown, WV\n SBIR/STTR Conference\n Division of Science and Research, December 2, 2009\n Dinsmore & Shohl LLC, Steptoe &\n Johnson, PLLC\n Business Workshop and Business Diversity Institute, Kaiser November 12,\n Portland, OR\n Matchmaking Event Permanente 2009\n Southern University and A&M\n 6th Annual "Connecting College Center for Rural and Small\n Business with Contracts" Business Development and March 23, 2010 Baton Rouge, LA\n Procurement Conference Louisiana Procurement Technical\n Assistance Center\n Connecticut Small Business-Key to\n Late May, Early\nSmall Business Week 2010 the Future, Hartford Business TBD\n June\n Journal\n I-FEM Network and View From the Top, A&M October 2009 -\n El Paso County Area\n Training Event Montoya, Inc. October 2010\n Financing Your Small United Way of Delaware, State of\n November 24,\n Business Growth Delaware, Office of Lt. Governor Wilmington, DE\n 2009\n Workshop Matthew Denn\n Series: Women Business\n Workshop: "Marketing\n Business and Professional Women March 10, 2009 Towson, MD\n Strategies in a Struggling\n Economy"\n2010 SBA Maryland Small\n Maryland Small Business Week\n Business Week Awards May 21, 2010 Woodlawn, MD\n Awards Program, Inc.\n Breakfast\n\n* The Agency provided this information based on approved cosponsorship agreements. Some events have not yet\n been held. This information has not been verified by the OIG.\n\n\n\n\n 40 \n\n\x0c Appendices\n\n\n\n Appendix IX \n\n Events/Activities Where SBA Used its Cosponsorship Authority* \n\n Small Business Act, Section 4(h) \n\n October 1, 2009 through March 31, 2010\n\n\n\nName/Subject of Event Name of Cosponsor(s) Date(s) of Event Location of Event\n December 17,\n 2009, January 13,\n February 17,\n March 18, April\nSBA/KIP Entrepreneurial\n The Kip Business Report 15, May 13, June New York, NY\nPotential Workshop Series\n 17, July 15,\n August 12,\n September 16,\n 2010\n Morgan State University\n Entrepreneurial Development\n Export Trade Assistance\n Center, Greater Baltimore SCORE\nPartnership - Breaking into TBD/2010 TBD/MD\n Chapter #3, Department of\n the Trade Game\n Commerce/US Commercial\n Services\n Conference for Latino\n The Central America Chamber of\nEntrepreneurs - Conference January 30, 2009 Santa Ana, CA\n Commerce of Southern California\n Empresarios Latinos\nSeries of informational and December 2009 -\n Google, Inc. World Wide Web\n educational videos December 2011\n Annual Celebration of Small Business Awards Foundation,\n June 3, 2010 Richmond, VA\nSmall Business in Virginia Inc.\n Federal Contracting\n Impact Foundation Procurement January 2010 -\n Workshops & Training North Dakota\n Assistance Center December 2010\n Seminars North Dakota\n Memphis & Shelby County Office\n of Economic Development, Office\n April 2010 -\n e200 of the Mayor of the City of Memphis, TN\n November 2010\n Memphis and Office of the Mayor\n of Shelby County\n Financial Resources for Coachella Valley Women\xe2\x80\x99s\n Small Business/Small Business Center, Coachella Valley\n February 3, 2010 Rancho Mirage, CA\nBusiness Resource Forum Economic Partnership\n & Expo\n New York Business Development\n Corporation, M&T Bank, Onondaga\n OPERATION: Start Up Community College, Onondaga\n March 18, 2010 Syracuse, NY\n and Grow Small Business Development\n Center, Anaren, Inc.\n\n\n* The Agency provided this information based on approved cosponsorship agreements. Some events have not yet been\n held. This information has not been verified by the OIG.\n\n\n\n\n 41 \n\n\x0c Appendices\n\n\n\n Appendix IX \n\n Events/Activities Where SBA Used its Cosponsorship Authority* \n\n Small Business Act, Section 4(h) \n\n October 1, 2009 through March 31, 2010\n\n\n\nName/Subject of Event Name of Cosponsor(s) Date(s) of Event Location of Event\nSmall Business Excellence New York Business Development May 7; May 10, Syracuse; Albany,\n Award Recognition Corporation 2010 NY\n City of Burlington - Community &\n Economic Development Office,\n Winter Business Fair Champlain Valley Office of February 11, 2010 Burlington, VT\n Economic Opportunity - Micro\n Business Development Program\n Cleveland Business to\n The Council of Smaller Enterprises,\n Business Matchmaker May 11-12, 2010 Cleveland, OH\n Group Services, Inc.\n 2010\n Small Business Week of Eastern\nSmall Business Week 2010 May 10-15, 2010 St. Louis, MA\n Missouri, Inc.\n North Carolina- North Carolina\n Small Business & Technology\n Veterans Small Business Development Center, North\n April 28, 2010 Cary, NC\n Conference Carolina Military Business Center,\n Cary Chamber of Commerce\n\n Six video segments\n targeting SBA Hall of\n Fame members, a printed\nand online workbook/guide January 2010 -\n Automatic Data Processing, Inc. World Wide Web\n supplement provided by January 15, 2013\nthe Hall of Fame members\n with content on SBA\n programs and services\n South Carolina Chamber of\n Commerce, University of South\n Carolina thru Small Business\n Development Center of South\n Carolina, South Carolina\n Department of Commerce, ECI/Find\n New Markets, Midlands SC SCORE\n Salute to Small Business May 12, 2010 Columbia, SC\n Chapter, South Carolina\n Manufacturing Extension\n Partnership, U.S. Department of\n Agriculture - Rural Development\n Administration, U.S. Department of\n Commerce - U.S. Export Assistance\n Center, SC Launch!\n\n* The Agency provided this information based on approved cosponsorship agreements. Some events have not yet\n been held. This information has not been verified by the OIG.\n\n\n\n\n 42 \n\n\x0c Appendices\n\n\n\n Appendix IX \n\n Events/Activities Where SBA Used its Cosponsorship Authority* \n\n Small Business Act, Section 4(h) \n\n October 1, 2009 through March 31, 2010\n\n\n\nName/Subject of Event Name of Cosponsor(s) Date(s) of Event Location of Event\n Cosponsorship Brand,\n Website, Preparedness\n February 1, 2010 -\n Webinars and Business Agility Recovery Solutions World Wide Web\n January 30, 2012\n Preparedness Planning\n Guide\n North Texas Small Business\n Development Center Network,\n Dallas Black Chamber of\n Commerce, Greater Dallas Asian\n American Chamber of Commerce,\n Minority Business Development April 2010 -\n e200 Dallas, TX\n Agency, US Department of November 2010\n Commerce, Greater Dallas Hispanic\n Chamber of Commerce, Dallas\n SCORE Chapter 22, City of Dallas-\n Office of Economic Development,\n State of Texas\n AMEC Earth & Environmental,\n Inc., The City of Philadelphia City\n Hall, Delaware Valley Industrial\n Resource Center, The Greater\n Philadelphia Chamber of\n Commerce, Hispanic Association of\n Contractors and Enterprises, PNC April 2010 -\n e200 Philadelphia, PA\n Bank, SCORE, Philadelphia November 2010\n Chapter #, Urban League of\n Philadelphia, Inc., Women\xe2\x80\x99s\n Business Enterprise Council of PA-\n DE-NJ/WBC, Asian American\n Chamber of Commerce of Greater\n Philadelphia, Continental Bank\n\n* The Agency provided this information based on approved cosponsorship agreements. Some events have not yet\n been held. This information has not been verified by the OIG.\n\n\n\n\n 43 \n\n\x0c Appendices\n\n\n\n Appendix IX \n\n Events/Activities Where SBA Used its Cosponsorship Authority* \n\n Small Business Act, Section 4(h) \n\n October 1, 2009 through March 31, 2010\n\n\n\nName/Subject of Event Name of Cosponsor(s) Date(s) of Event Location of Event\n Bankers Trust, Business Innovation\n Zone, City of Des Moines,\n Corporation for Economic\n Development, Des Moines SCORE,\n Greater Des Moines Partnership,\n Iowa Department of Economic\n Development, Iowa State Bank, April 2010 -\n e200 Des Moines, IA\n ISED Ventures, Neighborhood November 2010\n Development Corporation, State\n Public Policy Group, United Way of\n Central Iowa, US Bank, Wells\n Fargo, Des Moines Area\n Community College, Venturenet\n Iowa, Iowa SBDC\n Jacksonville Regional Chamber of\n Commerce, Jacksonville Women\xe2\x80\x99s\n Business Center, Jacksonville\n SCORE #86, Small Business\n April 2010 -\n e200 Development Center at the Jacksonville, FL\n November 2010\n University of North Florida, Beaver\n Street Enterprise Center,\n Jacksonville Economic\n Development Commission\n The Atlanta Development\n Authority, The Atlanta Workforce April 2010 -\n e200 Atlanta, GA\n Development, Agency, Atlanta November 2010\n SCORE Chapter 4\n Detroit Economic Growth\n Corporation, Detroit Regional\n Chamber, Mayor\xe2\x80\x99s Office of\n Targeted Business Development,\n Michigan Economic Development April 2010 -\n e200 Detroit, MI\n Corporation, Michigan Minority November 2010\n Business Development Council,\n Michigan Small Business and\n Technology Development Center,\n TechTown\n\n* The Agency provided this information based on approved cosponsorship agreements. Some events have not yet\n been held. This information has not been verified by the OIG.\n\n\n\n\n 44 \n\n\x0c Appendices\n\n\n\n Appendix IX \n\n Events/Activities Where SBA Used its Cosponsorship Authority* \n\n Small Business Act, Section 4(h) \n\n October 1, 2009 through March 31, 2010\n\n\n\nName/Subject of Event Name of Cosponsor(s) Date(s) of Event Location of Event\n Hispanic American Chamber of\n Commerce, City of Boston -\n Department of Neighborhood\n Development, University of\n Massachusetts - Massachusetts\n Small Business Development\n Centers, Boston SCORE Chapter April 2010 -\n e200 Boston, MA\n 20, Center for Women and November 2010\n Enterprise, Massachusetts State\n Office of Women and Minority\n Business Assistance, Boston Private\n Bank & Trust, Century Bank,\n Mercantile Bank & Trust, First\n Trade Union Bank, Webster Bank\n Maryland SBDC \xe2\x80\x93 Central Region,\n Greater Baltimore SCORE # 3,\n Baltimore City Small Business\n Resource Center, Women\n Entrepreneurs of Baltimore, Inc.,\n Maryland Department of Business\n and Economic Development,\n Greater Baltimore Committee,\n April 2010 -\n e200 Baltimore City Chamber, University Baltimore, MD\n November 2010\n of Baltimore-Entrepreneurial\n Opportunity Center, Morgan State\n University \xe2\x80\x93 Entrepreneurial\n Development & Assistance, Greater\n Baltimore Black Chamber of\n Commerce, Baltimore City Hispanic\n Chamber of Commerce, Greater\n Baltimore Urban League\n24th Annual Reservation\n Economic Summit & National Center for American February 22-24,\n Las Vegas, NV\nAmerican Indian Business Indian Enterprises Development 2010\n Trade Fair\n February 18,\n March 18, April\n Dutchess County Regional Chamber\nSmall Business Workshops 15, May 20, June Poughkeepsie, NY\n of Commerce\n 17, September 16,\n October 21, 2010\n\n* The Agency provided this information based on approved cosponsorship agreements. Some events have not yet\n been held. This information has not been verified by the OIG.\n\n\n\n\n 45 \n\n\x0c Appendices\n\n\n\n Appendix IX \n\n Events/Activities Where SBA Used its Cosponsorship Authority* \n\n Small Business Act, Section 4(h) \n\n October 1, 2009 through March 31, 2010\n\n\n\nName/Subject of Event Name of Cosponsor(s) Date(s) of Event Location of Event\n New Mexico Small\n Santa Fe Community College\n Business Week Awards June 3, 2010 Albuquerque, NM\n through New Mexico SBDC\n Event 2010\n Small Business\n Development & Louisville Urban League June 23, 2010 Louisville, KY\n Contracting Expo\n ACCION New Mexico,\n Albuquerque Hispano Chamber of\n Commerce, Albuquerque SCORE\n Chapter 67, Central New Mexico\n Community College - Albuquerque\n Small Business Development\n Center, American Indian Chamber\n of Commerce of New Mexico, Inc.,\n City of Albuquerque, Economic\n Development Department , City of\n Gallup, Greater Albuquerque\n Chamber of Commerce , NAWBO-\n Northern New Mexico , New\n Mexico 8(a) & Minority Business\n April 2010 - Albuquerque and\n Native American e200 Association, New Mexico\n November 2010 Gallup, NM\n Department of Veterans Services,\n New Mexico Manufacturing\n Extension Partnership, New Mexico\n Rural Entrepreneur Institute,\n University of New Mexico - Gallup\n Small Business Development\n Center , South Valley Economic\n Development Center, Northern New\n Mexico College - South Valley\n Small Business Development\n Center, The Loan Fund, WESST,\n Zia Pueblo, Zuni Entrepreneurial\n Enterprises Inc., Gallup \xe2\x80\x93 McKinley\n County Chamber of Commerce\n National Center for American\n Indian Enterprise Development,\n American Indian Chamber of April 2010 - Phoenix and Tucson,\n Native American e200\n Commerce of Arizona, American November 2010 AZ\n Indian Chamber Education Fund \xe2\x80\x93\n PTAC\n\n* The Agency provided this information based on approved cosponsorship agreements. Some events have not yet\n been held. This information has not been verified by the OIG.\n\n\n\n\n 46 \n\n\x0c Appendices\n\n\n\n Appendix IX \n\n Events/Activities Where SBA Used its Cosponsorship Authority* \n\n Small Business Act, Section 4(h) \n\n October 1, 2009 through March 31, 2010\n\n\n\nName/Subject of Event Name of Cosponsor(s) Date(s) of Event Location of Event\n April 2010 - Oklahoma City and\n Native American e200 Rural Enterprises of Oklahoma, Inc.\n November 2010 Tulsa, OK\n The Black Business Chase, Alpha Phi Alpha Fraternity,\n March 31, 2010 Detroit, MI\n Conference 2010 Inc.\n 2010 National\n Microenterprise Association for Enterprise\n May 10-13, 2010 Crystal City, VA\nConference and Training Opportunity (AEO)\n Institute\n February 25,\n EDGE: Educate to Drive March 11, March\n Seal Beach Chamber of Commerce,\nand Grow the Economy of 25, April 8, April Seal Beach, CA\n Boeing Company\n Seal Beach 22, May 6, May 20,\n June 3, 2010\n Ohio Department of Development,\n Ohio Business Connection,\n Southern Ohio Procurement\n 2010 Ohio Business Outreach Center, Aeronautical\n March 23-24, 2010 Dayton, OH\n Matchmaker Systems Center Small Business\n Office, Defense Logistics Agency,\n Edison Materials Technology\n Center\n SCORE Columbus Chapter #27,\nHow to Make It Work for\n Economic & Community February 20, 2010 Columbus, OH\n You and Your Business\n Development Institute\n La Dinamica de los\n Contratos Federales Colegio de Ingenieros y\n April 16, 2010 San Juan, PR\n (Federal Contracting Agrimensores de Puerto Rico\n Matchmaking Event)\n March 12, 26,\nExport Trade Assistance Irvine Chamber of Commerce, U.S.\n April 9, 23, May Irvine, CA\n Program Commercial Service\n 14, 28, 2010\n Connecticut Expo for Hartford Business Journal, Metro\n June 10, 2010 Hartford, CT\n Business Hartford Alliance\n STEP Stimulate the\n City of Parris California April 14, 2010 Perris, CA\n Economy of Perris\nFuture of Small Business\n Brookings Institution March 15, 2010 Washington, DC\n Workshop\n\n* The Agency provided this information based on approved cosponsorship agreements. Some events have not yet\n been held. This information has not been verified by the OIG.\n\n\n\n\n 47 \n\n\x0c Appendices\n\n\n\n Appendix IX \n\n Events/Activities Where SBA Used its Cosponsorship Authority* \n\n Small Business Act, Section 4(h) \n\n October 1, 2009 through March 31, 2010\n\n\n\nName/Subject of Event Name of Cosponsor(s) Date(s) of Event Location of Event\n CA Native American Chamber,\n National Center for American\n Indian Enterprise Development,\n April 2010 -\n Native American e200 University of Redlands - The Santa Ana, CA\n November 2010\n Redlands Institute, American Indian\n Chamber of Commerce of\n California\n City of Milwaukee - Milwaukee\n Economic Development\n Corporation, Milwaukee SCORE\n Chapter 28, Wisconsin Women\xe2\x80\x99s\n Business Initiative Corp ,\n Manpower, Inc, Greater Milwaukee\n Committee, Small Business April 2010 -\n Native American e200 Milwaukee, WI\n Development Center Milwaukee, November 2010\n Potawatomi Business Development\n Corporation, Oneida Tribe of\n Indians , American Indian Chamber\n of Commerce, Metropolitan\n Milwaukee Sewerage District, WI\n Department of Commerce\nTrain Your People-Grow\n West Hartford Chamber of September 2010 -\n Your Business Seminar West Hartford, CT\n Commerce June 2011\n Series\nSeries GC/BD Workshops Rhode Island Procurement March 1, 2010 -\n Area wide RI\n and Matchmaker Events Technical Assistance Center December 31, 2011\n Women\'s Business September 9, 2010\n First National Bank Buffalo, WY\n Roundtables - May 12, 2011\n 22nd Annual High-Tech\n Conference for Small Jet Propulsion Laboratory/NASA March 1-3, 2010 Los Angeles, CA\n Business\n Waterbury Regional Chamber of\nBusiness Women\'s Forum TBA 2010 Waterbury, CT\n Commerce\n Women\'s Business September 1, 2010\n First State Bank of Newcastle Newcastle, WY\n Roundtables - May 5, 2011\n Jefferson Chamber of Commerce,\n Louisiana Minority Business\n Council, University of Louisiana at\n Monroe, SCORE, State of Louisiana April 2010 -\n Native American e200 New Orleans, LA\n - Department of Economic December 2010\n Development, Urban League of\n Greater New Orleans and Urban\n League\'s Women\'s Business Center\n\n* The Agency provided this information based on approved cosponsorship agreements. Some events have not yet\n been held. This information has not been verified by the OIG.\n\n\n 48 \n\n\x0c Appendices\n\n\n\n Appendix IX \n\n Events/Activities Where SBA Used its Cosponsorship Authority* \n\n Small Business Act, Section 4(h) \n\n October 1, 2009 through March 31, 2010\n\n\n\nName/Subject of Event Name of Cosponsor(s) Date(s) of Event Location of Event\n Oregon Native American Chamber\n of Commerce, ONABEN, A Native\n American Business Network, City\n of Portland, Bureau of Development April 2010 -\n Native American e200 Portland, OR\n Services, Portland Community November 2010\n College - Small Business\n Development Center, Port of\n Portland\n Rocky Mountain Indian Chamber of\n Commerce, Native American Bank,\n Rocky Mountain Minority Supplier\n Development Council, City of\n Aurora - Aurora Business April 2010 -\n Native American e200 Denver, CO\n Development Center, Colorado December 2010\n SBDC, Denver Metro Chamber of\n Commerce, SCORE Denver\n Chapter and Denver Business\n Journal\n Rhode Island Minority\n Hispanic American Chamber of October 12-15,\n Enterprise Development Warwick, RI\n Commerce 2010\n Week\n Illinois Department of Commerce\n and Economic Opportunity Illinois\n April 2010 -\n e200 Entrepreneurship Network Small Chicago, IL\n November 2010\n Business Development Centers,\n Office of the Illinois State Treasurer\nSeven Facets of Business\n Fayette County Public Library April 29, 2010 Fayetteville, GA\n Ownership\n Ohio Department of Development,\n thru, Entrepreneurship and Small\n Business Division, Minority\n Business Enterprise Division, Small\n Business Development Center,\nFrom Planning to Funding:\n Minority Contractor Business\n Learn All the Options to March 11, 2010 Dayton, OH\n Assistance Program, Procurement\n Fund Your Business\n Technical Assistance Center,\n Columbus SCORE Chapter 27,\n Ohio SBDC - The Entrepreneurs\n Center, Dayton SCORE Chapter #\n 107\n\n* The Agency provided this information based on approved cosponsorship agreements. Some events have not yet\n been held. This information has not been verified by the OIG.\n\n\n\n\n 49 \n\n\x0c Appendices\n\n\n\n Appendix IX \n\n Events/Activities Where SBA Used its Cosponsorship Authority* \n\n Small Business Act, Section 4(h) \n\n October 1, 2009 through March 31, 2010\n\n\n\nName/Subject of Event Name of Cosponsor(s) Date(s) of Event Location of Event\n Empire State Economic\n Development, Long Island\n Development Corporation, Long\nSmall Business Financing Island Small Business Assistance\n April 9, 2010 Farmingdale, NY\n 2010 Corporation, New York State\n University at Farmingdale through\n Small Business Development\n Center\n B2G Matchmaking Business Development Assistance\n June 16, 2010 Washington, DC\n Opportunities 2010 Group\n April 23, June 25,\n The State Journal, Huddleston\n August 27, October\n Business for Breakfast Bolen, LLP, SCORE Charleston Charleston, WV\n 22, December\n Chapter 0256\n TBD, 2010\n ASTRA, Women\xe2\x80\x99s Business\n Alliance, Business Diversity\n American Recovery Act Institute, Hispanic Metropolitan\nEvent: Meet the Lenders & Chamber of Commerce, Business April 21, 2010 Portland, OR\n Meet the Buyers Oregon \xe2\x80\x93 State of Oregon Economic\n Development Department, Kaiser\n Permanente, Bank of America\n Rose State College through Small\n Business Development Center, The\n Journal Record Publishing\nOklahoma Small Business\n Company, Oklahoma Center for April 6, 2010 Midwest City, OK\n Awards Program\n Advancement of Science and\n Technology, Oklahoma Department\n of Commerce, Bullet Productions\n Small Business Week\n Worcester Business Development\n Awards Breakfast - June 8, 2010 Worcester, MA\n Corporation\n Recognition Event\n Antioch University - Seattle, United April 2010 -\n Native American e200 Seattle, WA\n Indians of All Tribes Foundation December 2010\nDynamic Contracting for\n U.S. Army Corps of Engineers April 21, 2010 Fairmont, WV\n Small Business\n 4th Annual Heritage &\n March 30 - April 1,\n Cultural Tourism Sitka Tribe of Alaska Sitka, AK\n 2010\n Conference\n Small Business Week\n Breakfast & Awards Puerto Rico Bankers Association May 20, 2010 San Juan, PR\n Ceremony\n\n* The Agency provided this information based on approved cosponsorship agreements. Some events have not yet\n been held. This information has not been verified by the OIG.\n\n\n\n\n 50 \n\n\x0c Appendices\n\n\n\n Appendix IX \n\n Events/Activities Where SBA Used its Cosponsorship Authority* \n\n Small Business Act, Section 4(h) \n\n October 1, 2009 through March 31, 2010\n\n\n\nName/Subject of Event Name of Cosponsor(s) Date(s) of Event Location of Event\n NC Department of Revenue,\n Internal Revenue Service, NC\n June 23, 24, 25,\nTax Workshop Webinars Department of Community Colleges World Wide Web\n 2010\n Small Business Centers, Charlotte\n SCORE\n New York State Department of\n Labor, Division of Employment and\n Workforce Solutions, Office of New\n Entrepreneurship & Job\n York State Assemblywoman Grace April 7, 2010 Flushing, NY\n Fair 2010\n Meng, Office of New York City\n Council Member Peter, Koo, F & T\n Group\n The Enterprise Center, City of\n Philadelphia Economic\n Philadelphia City Hall,\n Recover Procurement April 6, 2010 Philadelphia, PA\n Pennsylvania Convention Center\n Summit\n Authority\n North Carolina Small Business &\n Technology Development Center,\nVeterans Small Business North Carolina Military Business\n August 5, 2010 Jacksonville, NC\n Conference Center, City of Jacksonville, North\n Carolina, Coastal Carolina\n Community College\n University of Hartford through The\n25th Anniversary Business May 11, 2010 -\n Entrepreneurial Center, Women\xe2\x80\x99s Hartford, CT\n Plan Competition June 15, 2010\n Business Center\n\n* The Agency provided this information based on approved cosponsorship agreements. Some events have not yet\n been held. This information has not been verified by the OIG.\n\n\n\n\n 51 \n\n\x0c Appendices\n\n\n\n Appendix X\n\n\n Legal Actions Summary\n October 1, 2009 through March 31, 2010\n\n Investigated\nState Program Alleged Violation(s) Prosecuted Legal Action\n Jointly With\n CO BL The part-owner of a construction company Part-owner pled guilty FBI\n received two SBA-guaranteed loans totaling and was sentenced to 37\n $1.35 million. In order to obtain the SBA months in prison, 60\n loans, he hid his criminal history, which months supervised\n would have precluded him from receiving release, and $975,424 in\n the loans. restitution.\n\n FL DL An individual used her sister\xe2\x80\x99s Social Individual pled guilty SSA/OIG,\n Security account number without her and was sentenced to 15 NFPD, USPIS\n authorization to secure a $41,700 SBA months in prison, 5 years\n disaster business loan, a $25,000 supervised release, and\n SBAExpress loan, and a $30,000 business $97,008 in restitution.\n line of credit. The SBA disaster business\n loan was obtained to alleviate economic\n injury caused by Hurricane Wilma to a\n women\xe2\x80\x99s apparel store that the individual\n owned.\n\n FL DL The manager of a construction company Charged via criminal FBI\n applied for a $239,300 SBA economic injury information.\n disaster loan (EIDL) for his company after\n Tropical Storm Fay hit in August 2008. It is\n alleged that he misrepresented the status of\n several pending foreclosures in order to get\n approved for the EIDL and then provided\n SBA with altered title reports to hide those\n foreclosures, as well as other undisclosed\n adverse items.\n\nGA BL An individual is alleged to have falsely Individual indicted. None\n represented his company\xe2\x80\x99s gross sales and\n falsely indicated that he had no previous\n criminal history when applying for a $1.8\n million SBA-guaranteed loan.\n\n IA BL An individual enlisted \xe2\x80\x9cfront\xe2\x80\x9d borrowers and Individual sentenced to FBI\n provided a non-bank lender with false and 2 years in prison, 3 years\n fraudulent documentation in order to get an supervised release, and\n SBA-guaranteed loan and two other loans $2,008,964 in restitution.\n approved. The three loans, totaling over $4\n million, were to be used for the purchase of\n three gas stations in Iowa.\n\n\n\n\n 52 \n\n\x0c Appendices\n\n\n\n Appendix X\n\n\n Legal Actions Summary \n\n October 1, 2009 through March 31, 2010\n\n\n\n Investigated\nState Program Alleged Violation(s) Prosecuted Legal Action\n Jointly With\n IL BL The former owner of a finance company Former owner sentenced FBI\n provided fraudulent equity injection to 135 months in prison,\n documentation to a non-bank lender in order 5 years supervised\n to influence the approval of a $1.35 million release, and $7,412,884\n SBA-guaranteed loan for one of his in restitution. After his\n companies. He also brokered 46 other loans, prison term, he will be\n totaling $44,314,371, mostly for the purchase deported to India.\n of gas stations and convenience stores, and\n provided false information to the same lender\n for the majority of these loans.\n\n LA DL An individual and his wife submitted Wife sentenced to 36 DHS/OIG,\n fraudulent receipts in support of an SBA months probation and a HUD/OIG\n disaster home loan and an SBA disaster $1,500 fine. Husband\n business loan totaling approximately previously sentenced.\n $220,000. The couple claimed damages from Restitution of $119,728\n Hurricane Katrina to their residence and to paid to SBA prior to\n the wife\xe2\x80\x99s day care business, which was sentencing.\n located at the same address.\n\n LA DL An individual allegedly submitted misleading Individual pled guilty to USDA/OIG\n documentation which caused SBA to believe a criminal information\n that he had contracted for repairs to his and was sentenced to\n residence; in reality, he had only received an 36 months probation,\n estimate for these repairs. Based on the restitution to the SBA in\n misleading information, SBA approved a the amount of $57,777,\n loan of $106,300 for damages caused by and a fine of $2,000.\n Hurricane Katrina.\n\n LA DL An individual received $50,000 in SBA Individual charged via HUD/OIG\n disaster loan funds by allegedly using an criminal information.\n address on his application that was not his\n primary residence at the time Katrina struck.\n It is also alleged that he submitted fraudulent\n receipts to induce SBA to approve the loan.\n\n LA DL An individual applied for an SBA physical Individual sentenced to HUD/OIG\n disaster loan for property that she did not 69 months in federal\n own at the time Hurricane Katrina hit New prison, 3 years\n Orleans. She received $75,000 in SBA supervised release, and\n disaster loan funds. restitution of $156,761.\n LA DL An individual submitted false construction Individual sentenced to 3 None\n contracts, fraudulent purchase receipts, and years probation and\n altered quotes in order to obtain an SBA restitution of $16,730.\n disaster home loan of $77,200.\n\n\n\n 53 \n\n\x0c Appendices\n\n\n\n Appendix X\n\n\n Legal Actions Summary \n\n October 1, 2009 through March 31, 2010\n\n\n\n Investigated\nState Program Alleged Violation(s) Prosecuted Legal Action\n Jointly With\n LA DL A borrower submitted altered and fictitious Individual pled guilty to FBI\n documents to SBA in order to receive a a criminal information.\n $68,400 disaster home loan and a $70,000\n disaster business loan. After the loans were\n approved, he submitted altered and fictitious\n contracts and invoices for home repairs\n purporting the work was complete in order to\n mislead SBA and influence disbursement of\n funds. The borrower also falsely represented\n that his used auto dealership was reopening\n in order to entice SBA to disburse disaster\n business loan funds.\n\n LA DL An individual made false statements and Individual pled guilty to HUD/OIG\n submitted false documents to SBA in order to a criminal information.\n receive a physical disaster loan of $38,800 Husband pled guilty to\n for Hurricane Katrina damages. Instead of misprision of a felony\n using the SBA loan to repair the family for concealing\n home, the individual and her husband used knowledge of his wife\xe2\x80\x99s\n the SBA disaster relief funds, as well as felony.\n $150,000 in Louisiana Road Home funds, to\n open a pizza restaurant.\n\nMD GC A former West Virginia state employee Individual sentenced to EPA/CID,\n provided confidential bid information to a 12 months and one day NCIS,\n contractor allowing the company to come in incarceration, 6 months IRS/CID, FBI\n as the lowest bidder on state contracts. The home confinement, 3\n individual awarded the contracts to the years supervised release,\n company and in return received money and and a $3,000 fine.\n other things of value from the company.\n\nMD BL The owner of a restaurant equipment outlet Owner of equipment None\n entered into an agreement with the vice outlet pled guilty to a\n president of a restaurant to perform criminal information.\n construction/renovation work and provide Prosecution of restaurant\n equipment at a cost of $145,000. The two vice president continues.\n allegedly conspired to falsely inflate the total\n cost of the project in order to obtain a\n $417,000 SBA-guaranteed loan. The\n contractor returned $97,000 of the loan\n proceeds back to the borrower.\n\n\n\n\n 54 \n\n\x0c Appendices\n\n\n\n Appendix X\n\n\n Legal Actions Summary \n\n October 1, 2009 through March 31, 2010\n\n\n\n Investigated\nState Program Alleged Violation(s) Prosecuted Legal Action\n Jointly With\nMD BL An accountant embezzled over $125,000 Accountant sentenced to EPA/CID,\n from her employer, a former 8(a) certified 30 days in jail, 5 months NCIS,\n firm, and omitted the amount as taxable home confinement, 1 IRS/CID, FBI.\n income on her income tax return. year probation, and\n restitution of $33,624.\n\n MI BL An individual and his co-conspirators used Individual sentenced to USSS\n counterfeit bank documents and checks to 24 months incarceration\n verify the required borrower equity injections and ordered to pay\n on at least nine SBA-guaranteed loans. In $5,672,929 in restitution\n addition, he used a fraudulently obtained jointly with other co-\n check in the amount of $1,680,000 to conspirators.\n purchase a house with the intent to promptly\n resell or \xe2\x80\x9cflip\xe2\x80\x9d the property to a straw buyer\n who would use 100% financing to pay a\n substantially inflated price for the house.\n\n MI BL An individual acted as a broker and recruited Individual pled guilty. USSS\n \xe2\x80\x9cstraw buyers\xe2\x80\x9d to fraudulently obtain 12\n SBA-guaranteed loans by falsifying equity\n injections and loan disbursements on HUD\n settlement statements.\n\nMO BL Two bank officers, an SBA branch manager, Seventeen individuals FBI\n two business consultants, and numerous have been charged. To\n borrowers are alleged to be involved in a date, two have pled\n complex bank fraud scheme involving guilty.\n fraudulent loans totaling over $10 million.\n The scheme used nominee borrowers to\n falsely obtain SBA-guaranteed loans and\n involved making false entries in bank records\n and structuring loans to avoid scrutiny by\n bank personnel.\n\nNY BL An individual defrauded a number of federal Individual fled to Israel ED/OIG,\n and state grant, loan, and subsidy programs, prior to the unsealing of IRS/CID, FBI,\n including an SBA program designed to the original indictment in HUD/OIG,\n provide venture capital to small, minority- 1997. He was arrested in SSA/OIG\n owned businesses. the United Kingdom in\n 2008 and extradited to\n the U.S. where he pled\n guilty in March 2010.\n\n\n\n\n 55 \n\n\x0c Appendices\n\n\n\n Appendix X\n\n\n Legal Actions Summary \n\n October 1, 2009 through March 31, 2010\n\n\n\n Investigated\n State Program Alleged Violation(s) Prosecuted Legal Action\n Jointly With\n NY BL A member of an organized group of foreign Individual pled guilty. USPIS\n nationals obtained six SBAExpress loans\n totaling $290,000 using false identities,\n documents, and businesses.\n\n TX BL A Louisiana petroleum corporation falsified Company pled guilty and IRS/CID\n the true source of funds to support its was ordered to pay a fine\n required $120,000 equity injection in order to of $200,000\n secure a $480,000 SBA-guaranteed loan.\n\n TX BL Thirteen individuals allegedly conspired to Loan broker indicted and FBI, IRS/CID\n submit fraudulent loan applications in order pled guilty. Twelve\n to secure loan proceeds from various lenders, others indicted.\n most of them SBA-certified. The complex\n loan fraud scheme also involves money\n laundering of the ill-gotten gains. The\n fraudulent loan requests exceed $8 million.\n\n WA BL The owner of a now-defunct disaster Owner pled guilty to a IRS/CID\n restoration business submitted inflated criminal information and\n invoices for work performed, which resulted was sentenced to 48\n in the company receiving over $3 million months in prison, 60\n more in insurance payments than it was months supervised\n entitled. The owner sold the business to a release, $4,935,974 in\n buyer who obtained a $1,999,800 SBA- restitution, and 120\n guaranteed loan to fund a portion of the sale. hours of community\n The inflated financial statements were service.\n submitted to the lender to support the value\n of the business and the purchase price. The\n owner then used the fraudulently obtained\n loan proceeds to purchase a $1.785 million\n home in Florida.\n\n\nProgram Codes: BL=Business Loans; DL=Disaster Loans; GC=Government Contracting and Section 8(a) Business\nDevelopment.\n\nJoint-investigation Federal Agency Acronyms: DHS/OIG=Department of Homeland Security/Office of Inspector General;\nED/OIG=Department of Education/OIG; EPA/CID=Environmental Protection Agency/Criminal Investigations Division;\nFBI=Federal Bureau of Investigation; HUD/OIG=Housing and Urban Development/OIG; IRS/CID=Internal Revenue\nService/CID; NCIS= Naval Criminal Investigative Service; NFPD=Naples Florida Police Department; SSA/OIG=Social\nSecurity Administration/OIG; USDA/OIG=U.S. Department of Agriculture/OIG; USPIS=United States Postal Inspection\nService; USSS=United States Secret Service\n\n\n\n\n 56 \n\n\x0c Appendices\n\n\n\n Appendix XI \n\n Small Business Administration \n\n Office of Inspector General \n\n\nThe OIG has four divisions that perform the key functions described.\n\n \xe2\x80\xa2\t\t The Auditing Division performs financial, information technology and other mandated audits,\n program performance reviews, and internal control assessments, and oversees audits by\n contractors to promote the economical, efficient, and effective operation of SBA programs.\n\n \xe2\x80\xa2\t\t The Investigations Division manages a program to detect and deter illegal and/or improper\n activities involving SBA programs, operations, and personnel. The criminal investigations staff\n carries out a full range of traditional law enforcement functions. The security operations staff\n ensures that all Agency employees have the appropriate background investigations and security\n clearances for their duties. They also conduct the name check program, which provides SBA\n officials with character-eligibility information on loan applicants and other potential program\n participants.\n\n \xe2\x80\xa2\t\t The Counsel Division provides legal and ethics advice to all OIG components, represents the\n OIG in litigation arising out of or affecting OIG operations, assists with the prosecution of civil\n enforcement matters, processes subpoenas, responds to Freedom of Information and Privacy Act\n requests, and reviews and comments on proposed Agency policies, regulations, legislation, and\n procedures.\n\n \xe2\x80\xa2\t\t The Management and Policy Division provides business support (e.g., budget/financial\n management, human resources, information technology, and procurement) for the various OIG\n functions, coordinates the preparation of the Semiannual Report to Congress and the Report on\n SBA\xe2\x80\x99s Management Challenges, and develops OIG strategic and performance plans.\n\nThe OIG is headquartered in Washington, DC, and has field staff located in Atlanta, GA; Chicago, IL;\nDallas/Fort Worth, TX; Detroit, MI; Denver, CO; Herndon, VA; Houston, TX; Kansas City, MO;\nLos Angeles, CA; Miami, FL; New Orleans, LA; New York, NY; Philadelphia, PA; Tacoma, WA; and\nWashington, DC.\n\nAn organization chart for the OIG is shown on page 59.\n\n\n\n\n 57 \n\n\x0cThis page intentionally left blank.\n\n\n\n\n 58 \n\n\x0c Appendix XI \n\n Small Business Administration \n\n Office of Inspector General \n\n\n\n Inspector\n General Counsel Division\n\n Deputy Inspector\n General\n\n\n\n\n Auditing Division Investigations Division Management and Policy\n Security Operations\n Division\n59\n\n\n\n\n Business Development\n Credit Programs\n Programs Group\n Group Eastern Region Central Region Southern Region Western Region\n\n Washington, DC\n Atlanta, GA\n Atlanta, GA Chicago, IL Houston, TX Denver, CO\n\n Los Angeles, CA\n Chicago, IL Herndon, VA New Orleans, LA\n Dallas, TX Los Angeles, CA\n\n Herndon, VA Financial Management\n & IT Group Miami, FL\n Detroit, MI Tacoma, WA\n\n Washington, DC\n Washington, DC Kansas City, MO\n New York, NY\n\n\n Recovery Oversight\n Group Disaster Assistance Group Philadelphia, PA\n\n\n Dallas/Fort Worth, TX\n Herndon, VA Washington, DC\n\n\n Washington, DC New Orleans, LA\n\x0c\x0c Make A Difference! \n\n\n To promote integrity, economy, and efficiency, we encourage you to report instances of\n fraud, waste, or mismanagement to the SBA OIG HOTLINE.*\n\n\n\n\n Online: \n\n http://www.sba.gov/ig/\n\n\n\n\n Call: \n\n This page intentionally left blank.\n 1-800-767-0385 (Toll Free)\n\n\n\n\n Write or Visit: \n\n U.S. Small Business Administration \n\n Office of Inspector General\n\n\n Investigations Division \n\n 409 Third Street, SW. (5th Floor) \n\n Washington, DC 20416 \n\n\n\n\n\n*Upon request, your name will be held in confidence.\n\x0c'