SBA sued for discrimination in $20 Billion Small Business Investment Company Progam. Black firm's allegations supported by Inpector General report and dismal statistics showing SBA only approved 14 of 450 firms that wer minorty-two black. These 450 firms deploy $20 Billion in the last 10 years.
FOR IMMEDIATE RELEASE
SEPTEMBER 2003
CONTACT:C. Earl Peek (404) 404-603-5300
(404) 285-6661-Cell
eptravbuff@aol.com
Black Venture Capital Firm Files Discrimination Complaint against SBA for Discrimination in SBIC Venture Capital Program
-SBA Celebrates 50th Anniversary- Fails to Highlight Dismal Records
of SBIC Investment in Minority Firms
ATLANTA. GA (PRWEB) September 18, 2003 – For the last 50 years, the SBA has played a vital role in ensuring that the door to the American Dream is truly open to all entrepreneurs, because the dream should never be limited by access to capital. In America, an entrepreneurs only limit should be his or her own ideas and desire to succeed." This statement is on SBAs website from Hector Barretto to celebrate SBAs 50 years of being a resource to Americas Small Business- It seems to only apply to white males in the Small Business Investment Company (‘SBIC") program.
Diamond Ventures, an Atlanta-based venture capital firm with a majority black management, announced that it has filed an unprecedented discrimination lawsuit against the Small Business Administration in the District Court of Washington, D.C. alleging bias in its selection process and prejudice in its application policies and procedures towards minority applicants in the SBIC program. C. Earl Peek, Managing Partner of Diamond addressing SBAs denial said Our management team demonstrated a solid track record in financings and private investments for over 20 consecutive years- its awful to see SBAs take this stance, while it hasnt licensed more than only two black firms-non majority owned and less than 5% of the existing 450 SBICs are Black, Hispanic, Women, Native Indian, or Asians in total.
-more-
Diamond Ventures Files Lawsuit Against SBA in District Court/page 2
Harry Haskins, deputy associate administrator admitted The number is not as high as we would like it to be". SBA need only look internally to find the answers.
SBA funded a research report in 1994 entitled Is SBA A Racist Institution", by Dr. Timothy Bates. Bates noted that SBA administered the Minority Enterprise Small Business Investment Company Program (MESBIC") poorly, requested funding from Congress at smaller than needed levels to meet its commitment to the program, frequently changed administrators, implemented legislation to reform the program over five years as compared to the all white SBIC program in 2 years and other acts of racism".
From 1970 and the next 10 years, SBA licensed 141 MESBICS. Of the 141 MESBICs licensed by 1980, 65 had been declared insolvent by 1994 and forced into liquidation by the SBA, 44 had walked away from their charters, and 32 continued to operate. The 109 MESBICs licensed that went under were 77% of the total program. Peek said, This is not the American Dream-its a black nightmare".
Bates should know something, he has studied SBA since 1970, and recently co-authored a report Minorities in Venture Capital-A New Wave in American Business. The report funded by the Kauffman Foundation studied 24 venture funds nationally and demonstrated that minority focused venture funds are successful with a Median Internal Rate of Return of 19.5%. Oddly, the report showed that little if any money for these venture funds came from the federal government and there were no SBICs in the survey.
- more -
Diamond Ventures Files Lawsuit Against SBA in District Court/page 3
Diamond Ventures, which has a management team with more than 70 years of combined experience in all aspects of business finance, lending, operations, venture capital, and business valuations, initially applied to the SBA for a venture capital license in January 2002. The management team has completed over 1,000 financings including 50 investments with a return of over 400% while other SBICs have averaged a 9.28% return for the last 15 years, per SBA reports.
In February 2003 Jeff Pierson, Associate Administrator for the SBAs Investment Division denied the application stating that the team lacked qualifications and ability to operate a Small Business Investment Company (SBIC) and SBA has significant concerns" with Diamonds investment philosophy of investing in Blacks, Asians, Women, Hispanics, and Native Indians. Peek noted, Those statements or a pretext for discrimination." Public reports show:
-more-
Diamond Ventures Files Discrimination Against SBA in District Court/page 3
No matter what the outcome is regarding Diamond Ventures, SBA will need to address the serious disparity and availability of financing to minorities and women and in inner-city, underserved, and rural areas" Peek added.
Diamond Ventures is an Atlanta-based firm that specializes in investing and financing inner city businesses, real estate and commercial properties. Its partners collectively have more than 70 years experience in lending, investments, business advisory services, and venture capital.
# # #
Photo Caption: C. Earl Peek and Lonnie A. Saboor with Former Senior Vice-President Roger Bower of RBC Tucker Federal after its first commitment to the
|
