A New Start: Opportunities and Barriers to Entrepreneurship for Returning Citizens and Justice Impacted Individuals (Senate Small Business Committee hearing, July 27, 2022)
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The printed transcript of a hearing titled A New Start: Opportunities and Barriers to Entrepreneurship for Returning Citizens and Justice Impacted Individuals, conducted July 27, 2022 before the Senate Committee on Small Business and Entrepreneurship, 117th Congress (S. Hrg. 117–329). The committee met in Room 428A of the Russell Senate Office Building with Chairman Ben Cardin presiding. The witnesses are Coss Marte of CONBODY, New York; Dan Caudill of Caudill Seed, Louisville; Dr. Damon Phillips of the Wharton School of Business; and Rob Perez of DV8 Kitchen, Lexington. The transcript includes the witnesses' prepared statements and their responses to written questions from Senator Coons and Senator Hirono.
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“A New Start: Opportunities and Barriers to Entrepreneurship for Returning Citizens and Justice Impacted Individuals (Senate Small Business Committee hearing, July 27, 2022).”
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S. HRG. 117–329
A NEW START: OPPORTUNITIES AND BARRIERS
TO ENTREPRENEURSHIP FOR RETURNING CITI-
ZENS AND JUSTICE IMPACTED INDIVIDUALS
HEARING
BEFORE THE
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP
OF THE
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
JULY 27, 2022
Printed for the use of the Committee on Small Business and Entrepreneurship
(
Available via the World Wide Web: http://www.govinfo.gov
U.S. GOVERNMENT PUBLISHING OFFICE
48–249 WASHINGTON : 2023
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COMMITTEE ON SMALL BUSINESS AND ENTREPRENEURSHIP
ONE HUNDRED SEVENTEENTH CONGRESS
BENJAMIN L. CARDIN, Maryland, Chairman
RAND PAUL, Kentucky, Ranking Member
MARIA CANTWELL, Washington MARCO RUBIO, Florida
JEANNE SHAHEEN, New Hampshire JAMES E. RISCH, Idaho
EDWARD J. MARKEY, Massachusetts TIM SCOTT, South Carolina
CORY A. BOOKER, New Jersey JONI ERNST, Iowa
CHRISTOPHER A. COONS, Delaware JAMES M. INHOFE, Oklahoma
MAZIE HIRONO, Hawaii TODD YOUNG, Indiana
TAMMY DUCKWORTH, Illinois JOHN KENNEDY, Louisiana
JACKY ROSEN, Nevada JOSH HAWLEY, Missouri
JOHN HICKENLOOPER, Colorado ROGER MARSHALL, Kansas
SEAN MOORE, Democratic Staff Director
WILLIAM HENDERSON, Republican Staff Director
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C O N T E N T S
WITNESS PREPARED STATEMENTS
Panel 1
Page
Mr. Coss Marte, CEO & Founder, CONBODY, New York, NY ........................... 4
Mr. Dan Caudill, Partner & Chief Operating Officer, Caudill Seed, Louisville,
KY .......................................................................................................................... 10
Dr. Damon Phillips, Robert Steinberg Professor, Professor of Management,
Wharton School of Business, University of Pennsylvania, Philadelphia, PA . 15
Mr. Rob Perez, Co-Owner, DV8 Kitchen, Lexington, KY ..................................... 23
QUESTIONS FOR THE RECORD
Mr. Coss Marte, Responses to questions submitted by Senator Coons and
Senator Hirono ..................................................................................................... 42
Mr. Dan Caudill, Responses to questions submitted by Senator Hirono ............ 44
Dr. Damon Phillips, Responses to questions submitted by Senator Coons
and Senator Hirono .............................................................................................. 45
Mr. Rob Perez, Response to question submitted by Senator Coons .................... 52
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A NEW START: OPPORTUNITIES AND BAR-
RIERS TO ENTREPRENEURSHIP FOR RE-
TURNING CITIZENS AND JUSTICE IM-
PACTED INDIVIDUALS
WEDNESDAY, JULY 27, 2022
UNITED STATES SENATE,
COMMITTEE ON SMALL BUSINESS
AND ENTREPRENEURSHIP,
Washington, DC.
The Committee met, pursuant to notice, at 2:30 p.m., in Room
428A, Russell Senate Office Building, Hon. Ben Cardin, Chairman
of the Committee, presiding.
Present: Senators Cardin, Shaheen, Booker, Rosen, Hickenlooper,
Paul, Ernst, Young, Hawley, and Marshall.
OPENING STATEMENT OF CHAIRMAN CARDIN
Chairman CARDIN. Good afternoon. The Committee on Small
Business and Entrepreneurship will come to order. Our hearing
today will deal with new start opportunities and barriers to entre-
preneurship for returning citizens and justice-impacted individuals.
I want to welcome all of our witnesses today. I think we have a
very distinguished panel, many of whom have experienced first-
hand the challenges of re-entry into society and economic opportu-
nities, all of whom have worked in this area. So we have, I think,
four excellent witnesses that can help us deal with today’s subject,
and we welcome each of you.
Today’s hearing will give the Small Business Committee an op-
portunity to discuss the ways in which the Federal Government
can harness the power of entrepreneurship to help returning citi-
zens and justice-impacted individuals re-enter their community and
build successful lives for themselves and their families. In recent
years, Congress has taken steps to correct the over-policing and un-
fair sentencing that failed to meaningfully reduce crime and in-
stead has separated families and communities.
I am very proud to cast my vote for the landmark First Step Act,
which was a monumental step forward in our effort to right past
wrongs and restore justice to America’s criminal justice system. I
am also proud that one of the Senators that was key to the passage
of the First Step Act, Senator Cory Booker, is a member of this
Committee and is equally committed to creating a pathway to en-
trepreneurship for justice-impacted individuals. I note that my staff
worked very closely with his staff on today’s hearing, and I am
grateful for his leadership on this important issue.
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By now we are all aware of the stigma and discrimination that
returning citizens and justice-impacted individuals face in the job
market. There are more than 70 million Americans who have a his-
tory of involvement with the criminal justice system, and studies
show that these individuals are 50 percent less likely to receive a
callback or a job offer after an interview. So for many justice-im-
pacted individuals, entrepreneurship is becoming an increasingly
common pathway to earn a living.
One of our witnesses here today, Coss Marte, will share with us
his reasons for pursuing entrepreneurship. Mr. Marte, I am inter-
ested in learning about the difficulties you faced in the job market
after you were released and your prospects on the way in which en-
trepreneurship provides you a better path forward to deal with eco-
nomic opportunity.
It is critical that we recognize the significant role of entrepre-
neurship for justice-impacted individuals as well as the inherent
benefit for themselves and their communities. Justice-impacted en-
trepreneurs are less likely to recidivate and are more likely to em-
ploy other justice-impacted individuals, which produces a multi-
plier effect.
Justice-impacted entrepreneurs are succeeding in spite of the
many barriers that they continue to face on the path to business
ownership, including inadequate access to capital as well as limited
opportunities for business mentorship, training, and entrepreneur-
ship development. And because minorities, especially Black Ameri-
cans, have been over-policed and incarcerated for decades, these
barriers are compounded by the continued decrimination that lim-
its minority entrepreneurs.
I am inspired to see that there are already lending institutions
and community organizations working to address these challenges.
In my hometown of Baltimore, for example, Baltimore Community
Lending, a CDFI, specializes in providing capital to returning citi-
zens.
But community organizations and CDFIs cannot do this work
alone. It will take the concerted efforts of the Federal Government,
grassroots organizations, and lenders to substantially provide sup-
port for these entrepreneurs. That is why in the coming weeks I
will be reintroducing the New Start Act. My bill will grow the ca-
pacity of organizations on the ground already administering entre-
preneurial development assistance and training to returning citi-
zens by providing them with grants. These grants will increase an
organization’s capacity and lead to justice-impacted entrepreneurs
being connected with lenders like Baltimore Community Lending,
who participate in the SBA microloan program. I am grateful to the
Biden administration, who also shares this commitment.
In April, the SBA announced that it was eliminating the criminal
records restrictions that prevented entrepreneurs with a past con-
viction from receiving loans through the Community Advantage
Pilot Program. This change is a welcome first step, and it is my
hope that we can work together to open up access to SBA’s other
loan programs as well, including the 7(a) and 504 programs.
We must also examine what we can do to ensure the SBA’s re-
source partners have robust tools and resources to meet the unique
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needs of returning citizens. We are already seeing how some cen-
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3
ters are playing an important role in providing entrepreneurial
training and business development. This is not a partisan issue. In
fact, I have worked in a bipartisan manner in the past to ensure
the SBA relief programs were made available to justice-impacted
business owners.
After the Trump administration initially blocked justice-impacted
entrepreneurs from receiving PPP loans in April of 2020, Repub-
lican Senator Rob Portman and I sent a letter to the administra-
tion urging them to reverse course. Weeks later, in June 2020, Sen-
ators Portman, Booker, Lankford, and I introduced legislation to
prevent decrimination against justice-impacted entrepreneurs in
the PPP program.
I believe that we can work together. This is an area where we
can change the lives of many and meaningfully empower entire
communities. I recognize this is not an easy task, but it is a critical
one.
I am hopeful that this hearing will identify additional areas
where we can come together in a bipartisan consensus on how to
address these problems and produce meaningful change for the
more than 70 million Americans with a criminal history.
I want to thank again our witnesses for being here today and
their work and leadership in this area. I am looking forward to
hearing your insight and recommendations on what Congress must
do to empower individuals to have these opportunities.
With that let me yield to the Ranking Member, Senator Paul.
OPENING STATEMENT OF SENATOR PAUL
Senator PAUL. Today we have two exceptional Kentuckians who
recognized a problem in their local communities and, rather than
wait for government to come along, Dan Caudill and Rob Perez
took action themselves.
Dan Caudill is the owner of Caudill Seed, a regional seed and
supply distribution celebrating its 75th year of family ownership
this August. I visited Dan’s business. I have seen the passion he
has for helping returning citizens as they become productive and
law-abiding members of society. His partnerships with Volunteers
of America and Healing Place to employ individuals coming out of
the criminal justice system and rehabilitation programs is laud-
able.
Dan is joined by Rob Perez. Rob Perez and his wife Diane are
co-owners of DV8 Kitchen in Lexington. Rob firmly believes in pro-
viding a second chance to those in the early stages of post-incarcer-
ation life. As a second-chance employer, DV8 Kitchen does trans-
formative work for returning citizens. I was pleased to visit their
kitchen and see what an excellent example DV8 provides.
Returning citizens in Kentucky and all around the country are
eager and willing to be productive members of society, but they are
faced with unique economic challenges following their incarcer-
ation. Whether it is on the basis of stereotype or stigma, Dan and
Rob know how difficult it is for returning citizens to become eco-
nomically independent.
Dan and Rob have stepped up to put their money where their
mouth is. Returning citizens need stable jobs. They need the direct
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and specialized support only their local communities can provide.
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Without employment opportunities like those provided by Caudill
Seed and DV8 Kitchen, many individuals would continue in a cycle
of incarceration, drug addiction, and poverty. We can do better, we
have to do better, and I am proud to see Kentuckians leading the
way on all fronts.
Chairman CARDIN. Let me thank Senator Paul, and let me wel-
come Dr. Phillips and Mr. Perez. Senator Paul has, I think, given
you all the proper introduction.
I mentioned Mr. Coss Marte in my opening statement. He is cur-
rently CEO and Founder of CONBODY, a prison-style bootcamp
that has trained over 70,000 clients and has employed over 50 jus-
tice-impacted individuals to teach fitness class.
In 2009, Mr. Marte was sentenced to jail as a leader of a multi-
million-dollar drug operation in New York City. In 2017, four years
after his release, Mr. Marte launched CONBODY, inspired by his
fitness journey while in prison.
And we are also pleased to have Dr. Damon Phillips, a resident
of Maryland. That gives you the priority in this Committee any-
way, when I am Chairman. He is the Robert Steinberg Professor
of the University of Pennsylvania Wharton School and Annenberg
School for Communications. He is also a Senior Research Scholar
with the Tamer Center at Columbia Business School, where he was
a full professor from 2011 to 2021. Dr. Phillips is an expert in labor
markets and entrepreneurships with a focus on entrepreneurship
by people from marginalized communities.
We will start with Mr. Marte.
STATEMENT OF COSS MARTE, CEO AND FOUNDER, CONBODY
Mr. MARTE. Chairman Cardin, Ranking Member Paul, and mem-
bers of the Committee, I really appreciate you inviting me to share
my journey as a small business owner with a criminal record. I am
born and raised in the Lower East Side of New York City where,
as a child, there were limited opportunities to succeed legally. The
individuals that I saw succeed were usually the drug dealers that
stood on the corner, and wore big chains and rode in luxury vehi-
cles. As a kid, schoolteachers would ask me, ‘‘What do you want to
be when you grow up?’’ and I would tell them I wanted to be rich.
I wanted to be rich so badly because my mom immigrated from
the Dominican Republic with limited resources and six months
pregnant with me. I grew up in a heavily drug-infested neighbor-
hood at the time and I hated the fact that my mom denied me
things because she had no money.
This led me to the streets at a very early age where I began sell-
ing drugs and eventually created a multimillion-dollar drug empire,
and by the age of 19 I was making over $2 million a year. But this
all ended when I was arrested by the DEA and ended up being sen-
tenced to seven years in prison.
As I entered the prison system I developed a workout routine
that saved my life. I lost over 70 pounds in just six months doctors
told me I could die in prison from a heart attack because of my cho-
lesterol levels. I then helped over 20 inmates lose over 1,000
pounds combined, and this led me to develop a business plan while
I was sitting in solitary confinement, and the idea launched as
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CONBODY, a prison-style bootcamp that hires formerly incarcer-
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ated individuals to teach fitness classes. Today we have trained
over 70,000 people worldwide.
As I came home from my prison sentence I was released with
$40, a bus ticket, and this net bag with my business plan. How-
ever, I was faced with many barriers such as insurance, real estate,
capital, and policy regulations against hiring employees who have
been formerly incarcerated. Even finding a job was difficult as I
was denied over 100 times because of my past.
Thanks to programs like Defy Ventures, who believe that for-
merly incarcerated individuals have the entrepreneurial skills to
start their own businesses, I was able to navigate the resources of
running a small business.
However, even with the help of Defy, I was rejected business in-
surance multiple times. I was even quoted an absurd rate of
$30,000 a month to launch my small business because of my crimi-
nal record.
Then capital came into play as banks had those questions in
their applications: ‘‘Have ever been convicted of a criminal record?’’
I literally sold my collection of over 300 pairs of Jordan sneakers
to use as my start-up capital to start my business. In addition, real
estate locations rejected me because of the same factors. It took me
three years of showing up every single day, twice a day, through
rain, sleet, and snow to train my clients in a public park.
It was truly not an easy task, but I was fortunate enough to
catch the ear of a landlord who owned a Buddhist Temple, who let
me rent their basement to operate my small business, where we
were able to create a safe space for myself and my employees who
all have been incarcerated in the system. We truly thought it was
going to be a safe haven for my employees who have gone through
so many biases in the workforce due to their past criminal record,
but we were faced with fraternizing, a rule that is stated in parole
and probation, where formerly incarcerated individuals are not al-
lowed to be in the same place at any given time. Our goal was to
create a space where our employees had each other’s back and
made sure that we would never go back into the system, which has
worked so far.
However, fraternizing has blocked us from employing some for-
merly incarcerated individuals due to their parole and probation of-
ficers denying them from working with us. For example, we had
one individual who was about to be violated on parole and sen-
tenced to two years in prison for working with us, but thankfully
enough we were able to create a petition with our community and
clients and employees to prevent him from going back inside. We
also brought this issue up to the regional supervisors in the parole
system to stop one of our employees from being reincarcerated be-
cause he was working with us. Our efforts worked and were able
to get him out of the situation, but today there are so many indi-
viduals that come out of the system that face this issue but do not
have a community that can support them through these barriers.
I have been a strong advocate for criminal justice reform for the
last nine-plus years, and I am a true believer that if given the tools
that we need we can show that we cannot only bring recidivism
rates down but demonstrate that we can really tap untapped talent
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in the entrepreneurial space.
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According to the Harvard Political Review currently our national
recidivism rate is 76 percent, but if we employ our returning citi-
zens the recidivism and give them a second chance it drops down
automatically to 31 percent. And the stat that I am proudest of at
CONBODY is that we have a zero recidivism rate. No one has gone
back into the prison system.
I believe what New York State is doing in the cannabis space is
a great example of innovation in the business world. By giving first
licenses to people that have been justice impacted by the war on
drugs in the cannabis space. I believe this is a great example that
we could follow, that not only could help our communities but our
economy as well. For example, I have recently launched a company
called CONBUD, a potential dispensary in New York State, where
we will be hiring formerly incarcerated individuals to work with us
and will give back portions of the proceeds to community members
that have been affected by the war on drugs.
I would like to end by leaving you with these questions. What if
you were judged for the worst thing you have ever done for the rest
of your life? Or what if you were known for taking those negative
situations and turning them into a legacy that can impact our fu-
ture? What would you want to choose?
Thank you so much for your time and I look forward to your
questions and answers.
[The prepared statement of Mr. Marte follows:]
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Chairman CARDIN. Well thank you very much for your testimony,
and thank you for being here. We hear numbers, but when we see
an individual that has gone through this it is very powerful. So
thank you very much for your attendance here today.
Mr. MARTE. I appreciate it.
Chairman CARDIN. Mr. Caudill.
STATEMENT OF DAN CAUDILL, OWNER, CAUDILL SEED
Mr. CAUDILL. Thank you for having me here. My name is Dan
Caudill and I am Chief Operating Officer of Caudill Seed Company.
I and four other partners own the business, and I am one of the
directors.
Caudill Seed Company was established in 1947 by my father. It
is a family business. It is a diversified agricultural production com-
pany that produces a lot of agricultural products for planting pur-
poses, for reclamation purposes, as well as purposes for human con-
sumption, et cetera.
Caudill Seed Company, beginning with my father, has had a long
history of not discriminating against people who might have had
arrest records or convictions, but had a desire to straighten up
their lives and obtain gainful employment. So this really began
with my father.
Caudill Seed Company has been involved in a lot of numerous
nonprofit agencies there in the state of Kentucky, in Louisville,
such as the Healing Place, Volunteers of America, and Talbot
House, and a number of other projects. And through that we
learned the need to have gainful employment after people com-
pleted programs to treat their addiction or other problems that
they had. So we offered employment to these people.
We also work with Dismas Charities. They are local, right next
to our business actually. And we found little difference between the
people that we hired out of these programs and, quote, ‘‘the normal
population’’ that did not have an arrest record or a conviction. Our
success rate with these people was about the same.
What we did notice is that these employees were much more
loyal and dedicated employees after they had been there awhile,
and they were anxious to move up through the ranks, into manage-
ment positions.
Today I am proud to say we have 148 total people working in our
company, in different divisions, and nearly 50 right now are all sec-
ond-chance employees. Some of these employees have been with us
for many, many years and others only a few months. We normally
start them off at a livable wage of about $15 an hour with benefits
that include health insurance, dental, vision, profit-sharing, 401(k),
year-end bonuses, based on the profitability of the company.
Caudill Seed Company has been involved with regular volunteer
work at these nonprofits throughout our community, so we are well
known for hiring these individuals within our company, especially
from the Volunteers of America and the Healing Place.
One thing I find interesting, which is worth bringing up here, is
in the 1970s and 1980s, in the company—I began in about 1982—
we would not have access to the information on background checks,
and it was a pain in the tail to get background checks. We had to
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hire an attorney. The attorney had to go to the county clerk’s office
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to find background records on these individuals, and if they lived
in numerous places you had to hire an attorney or someone that
could go in and get these records. And we only did that with the
county people and people that handled cash.
Anyway, today the world has changed. With the explosion of the
information technology now, anybody that wants to know a com-
plete background on somebody can spend $9.99 on the internet and
get this information. And, of course, there are many subscription
agencies that you can subscribe to for regular background checks,
that will pull up all public records on any individual—every stop
sign you ever ran, every misdemeanor that you were ever charged
with, even arrests but not convictions are on these reports, as well
as any property you have bought, any cars you own. All the public
information is there, such as LexisNexis and so on.
Today, from my work at in the nonprofit side of this thing and
knowing these people, this information is being used to increase
the amount of discrimination that people are running into out
there, not just in employment but, as you said, to rent apartments
or to rent property or to even see a doctor today. The doctors are
running background checks on patients to make sure they are not
recovering addicts, because they are liable for oxycontin and so on.
So anyway, my thought on this thing is that, really, what we
need to do is deal more with reversing the stigma concerning prior
criminal records and so on, rather than sinking a bunch of money
into new programs, the government running things, to try to make
changes, when the problem is stigma. It is led by the Federal Gov-
ernment, followed by state, county, city governments, and the
major corporations across the country.
With that I see I am out of time, so thank you.
[The prepared statement of Mr. Caudill follows:]
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15
Chairman CARDIN. Well, I thank you very much for your testi-
mony but also for your commitment, longstanding commitment to
recognize the value of workers and giving chance to those that
needed a second chance. So thank you very much for everything
you have done.
Dr. Phillips.
STATEMENT OF DAMON PHILLIPS, PH.D., ROBERT STEINBERG
PROFESSOR OF MANAGEMENT, WHARTON SCHOOL OF BUSI-
NESS, UNIVERSITY OF PENNSYLVANIA
Mr. PHILLIPS. Chairman Cardin, Ranking Member Paul, and dis-
tinguished members of the Committee, and my fellow panelists,
good afternoon and thank you for this opportunity to speak on this
topic.
I am a tenured professor at Wharton Business School and I pre-
viously held tenured positions at Columbia University and the Uni-
versity of Chicago. In 2016, I founded a program at Columbia
called ReEntry Acceleration Program—REAP is what we call it.
Through REAP, MBA students go inside prisons and teach busi-
ness skills, including entrepreneurship. I am currently working on
bringing a similar program to Wharton.
This work on REAP is rooted in research that I conduct with my
collaborator, Dr. Kylie Hwang. This research, in addition to other
recent scholarship by Hwang will be the focus of the rest of my tes-
timony.
Dr. Hwang and I are motivated by the fact that this recidivism
number that Coss Marte mentioned and the numbers that we were
working at the time are two-thirds of returning citizens are re-in-
carcerated within three years of re-entry. And research has shown
over the past 20 years that one of the key reasons is high unem-
ployment, and that is related to the challenge of stigma, that you
mentioned.
Hwang and I study entrepreneurship, where returning citizens
circumvent employment barriers by becoming entrepreneurs. We
have three key findings.
The first is that we found that someone coming out of prison is
more likely to start a business than someone who has never been
to prison. A key reason why is that employment discrimination
makes it painfully difficult for returning citizens to find work.
Second, we found that returning citizens earned more as entre-
preneurs compared to what they earned as employees. And third,
we found that having a job certainly reduces recidivism, but in our
analysis returning citizen entrepreneurs have even lower recidi-
vism rates. As a final note on our research, most of our findings
were more pronounced for Black returning citizens.
Our research shines a light on positive outcomes, but returning
citizens face significant barriers that make it difficult to reach their
full potential as entrepreneurs. In particular, we can think about
three types of barriers: financial, human capital, and social capital.
For financial capital we typically think when you are starting a
business that there a lot of diverse ways of getting funding. It can
be your personal funds, family and friends, credit cards, bank
loans, government funds. Yet these resources have been tradition-
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16
So one area where government can help overcoming these bar-
riers is by continuing to reduce or remove restrictions on govern-
ment loans, as Chairman Cardin noted, adjustments to the PPP
loans, the Community Advantage Program. A second suggestion
that have for improving access to financial capital is to consider tax
incentives for investing in justice-impacted entrepreneurs.
Second, there are these human capital barriers, and this has to
do a lot with training and getting skills to run a business, but real-
ly, skills, as well, to be a great employee. Some of us pick up these
skills in school. Some of us pick up these skills in a career. But jus-
tice-impacted individuals are rarely hired for the kind of jobs that
teach them these skills that you would need to start a business.
To help overcome this barrier, government can create and ex-
pand avenues for entrepreneurial training and other support serv-
ices, including supporting in-prison opportunities for business
training. One example might be the Aspire Entrepreneurship Ini-
tiative. It is in the St. Louis area. It is a partnership between the
SBA and the Kellogg Foundation to provide loans but also entre-
preneurship education. I would also recommend supporting suc-
cessful prison entrepreneurship programs such as the Prison En-
trepreneurship Program out of Texas, the Resilience Education of
Virginia, Columbia University’s REAP Program, and Georgetown
University’s Pivot Program.
The last barrier I will speak on is social capital. By that I mean
business connections. Most returning citizens lack these kinds of
connections even before they were incarcerated, and being incarcer-
ated amplifies that problem.
So strengthening and expanding many of the types of programs
to help with connections could be done by the same types of initia-
tives that are already underway with the programs I mentioned
out of Texas, Virginia, Columbia, Georgetown, and others. Part of
the reason is a lot of these programs combine providing funds with
also helping with mentorship and connections or providing edu-
cation with helping with establishing other business connections.
One of the things that I would advocate is supporting the kind
of programs that exist either through partnerships like the SBA
has done, but bolstering these programs that have some success
but need to scale that particular success around entrepreneurship
training.
Thank you again for inviting me and especially for talking on
this important topic. The returns in terms of the time and invest-
ment you spend on this, it helps individuals but is also helps com-
munities and society. So thank you very much.
[The prepared statement of Mr. Phillips follows:]
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Chairman CARDIN. Dr. Phillips, thank you for your testimony.
We appreciate the specific recommendations that you make. That
makes our job a little bit easier.
Mr. Perez.
STATEMENT OF ROB PEREZ, CO-OWNER, DV8 KITCHEN
Mr. PEREZ. Chairman Cardin, Ranking Member Paul, and mem-
bers of the Committee, I am Rob Perez, and along with my wife
Diane, own DV8 Kitchen. DV8 is a restaurant and a bakery com-
pany in Lexington, Kentucky, who employs people that are in early
stages of recovery from substance use disorder and the formerly in-
carcerated.
Before I tell you all the reasons why DV8 is awesome, I think
I have to probably tell you how I originally thought it was a ter-
rible idea.
Let me be clear: I am a businessman with a long career in the
restaurant industry, and as in any small business, you know, my
focus is turning a profit. When my wife approached me with the
idea of using a restaurant to help people, I was not interested.
Previously, over the course of eight years, we had employed 60
people with a past. Each candidate would admit to their mistakes,
claim to be clean, and unfortunately we would lose them within
two weeks. I had done the math. Nearly $800 of training expense
per person times 60 people, that is nearly $50,000. I told my wife
no to this idea.
Diane did not give up. She had done her own math. See, we had
lost 10 people, 10 employees to fatal overdoses in the same 8 years,
so she was heartbroken, and she did not really care about the cost.
While I still was not on board, she decided to schedule a ride-
along with a policeman in an unmarked car on a Friday afternoon.
I witnessed something during that ride that changed me forever.
Why would a person sell themselves for $5? Ultimately, this was
the question Diane had been desperate to answer, and now it was
keeping me up at night.
Diane suggested that on the path of poor choices there are sober
moments and motivations that people want to become employed.
We came to believe people need the support of a recovery commu-
nity as well as the purpose of a job.
We did not have any of the answers, so we did what any sane
person would do—we opened up this restaurant but we did not
know what we were going to do or how we were going to do it. We
figured we would figure it out along the way.
In August 2017, DV8 Kitchen was born. I still had one condition,
that it had to be profitable.
We developed a menu, hired employees, prepared for opening
day, and excitedly opened the doors, but it was an epic fail. We had
no idea how to validate that our employees were in a recovery pro-
gram, how to motivate them, and our customers were basically
afraid of us.
Over the next couple of months, we took a long, hard look at
what we were doing and we wanted to learn from our mistakes. We
found two big things.
One, you do not need to be a social worker to employ people with
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24
a past do need more than a job to be successful. They need housing,
therapy, and some case workers. We forged relationships with resi-
dential living facilities. These centers validated that our employees
are staying in their program and they supported them so they
could arrive at work at DV8 each day on time.
Secondly, you do not need to lower your standards to employ peo-
ple with a past. In fact, we think you should raise it. So many of
our people shared one thing, and that was shame. It was both a
cause of their substance abuse and the result of it. We realized that
work was an absolute perfect place to build them up. We decided
to set a higher standard, not only are our people capable of meeting
it, but they also needed to see that they could.
Today we work with a group of people most people deem ‘‘unem-
ployable,’’ and together have created two successful restaurants
and a wholesale bakery. Turnover is low, profits are good and
YELP named DV8 Kitchen one of the top 40 restaurants in all of
America for 2 out of the last 3 years.
But now I kind of want more, not really for me but for our peo-
ple. We have a nurse, an engineer, and a college professor that are
working in a restaurant in Lexington. I am thrilled to have them,
but they have skills which really could be put to better use in other
businesses.
Sadly, just like me, too many businesspeople think someone with
a past is legally too risky, expensive, and a waste of time. Our re-
sults suggest otherwise, and so do I. You see, I am not just a small
business owner but I am a recovering addict, with 31 years sober.
Here is what I want you to know. I am not the exception, and
neither is DV8. People in recovery can be excellent in the work-
place. What if every American small business rethought HR and
employed one person with a past? Based on my experience, small
businesses can make a huge impact on recidivism. Contrary to
what some people think, free enterprise can save the world.
Thank you for allowing me to testify, and we look forward to
your questions.
[The prepared statement of Mr. Perez follows:]
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27
Chairman CARDIN. Well, Mr. Perez, first of all congratulations on
running a successful business. You, like many of us, succeed be-
cause of the person we married. Thank you for following your wife’s
advice. We appreciate that very much. [Laughter.]
Chairman CARDIN. We have had maybe a dozen hearings this
year, probably a little more than that. To me, this has been the
most impressive panel we have had all year, so thank you, all four
of you, for your contributions to this subject.
Let me start off with Mr. Marte. If I understand your testimony,
it is challenging for a returning citizen to get all the pieces to-
gether to start a business, because you have got to get financing,
you have got to get a lease on a property, people have to do busi-
ness with you, et cetera. But it is even more difficult to find an em-
ployer that will hire you. So as difficult as it is for path to entre-
preneurship, it is even more difficult for employment, and chances
of success seem to be greater with entrepreneurship than employ-
ment. Am I reading you correctly in that regard?
Mr. MARTE. Well, I do not know if the chance of success at all
varies for, you know, variables and different reasons of that person
returning back into society, but for my instance I had previously
felt like I ran an entrepreneurial business. The only difference was
that I did not pay taxes back in the day, and now I do.
And so I really believe that all I needed was that pathway and
guidance of like programs like Defy Ventures, different nonprofit
organizations that I took advantage of, to utilize those resources
and build those connections and relate my stories and break down
those barriers and really start utilizing everybody that wanted to
really help me, because there are people that want to help. They
just do not know how to. And I feel like when we have these non-
profits that bring individuals that want to figure out how to—like
yourself, how do you want to help, you know. And so we put these
two different communities in one different room and listen to each
other, you know, like what we are doing today.
For me, yes, I believe entrepreneur was the right path, not for
everybody, and you know the stats of people running their own
businesses. I mean, it is really hard. It is like playing baseball. You
know, most people fail at hitting a ball. But for me it was pretty
much out of desperation that I made it happen.
Chairman CARDIN. And you still had the challenge of frater-
nizing. Is that still an issue in regard to parole compliance? Is that
still an issue in New York?
Mr. MARTE. Yeah, for certain instances. I mean, I built a great
relationship with parole and probation, but there are people that
are coming out. For example, I had an individual that wanted to
work with us from work release. So in a work release program indi-
viduals go in and out of prison every day. So they go out to try to
find a job, we interviewed someone, they went back to tell their
counselor or whoever they speak to back in the system, and they
said, ‘‘No, you cannot work with other people that have criminal
records.’’ And there is that, stated in those criteria, so that hope-
fully we could get that out of there, you know, that policy.
Chairman CARDIN. Dr. Phillips, thank you for your suggestions.
We have done a lot of late to try to make educational opportunities
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available while an individual is in prison, and we have broken
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28
down some of the barriers, including post-secondary education. I do
not believe we have done much in regard to entrepreneurial edu-
cation, so think that is a suggestion that we need to look at.
I am just interested in your observations as to where the SBA
could play a stronger role in helping returning citizens. We have
eligibility for programs today but it is not throughout the entire
SBA portfolio. We have resource partners, but they do their own
priorities and there is really no resource partner directly associated
with returning citizens.
So where could the SBA play a stronger role in trying to remove
some of these barriers?
Mr. PHILLIPS. So thanks for the question, Chairman. I agree. I
would say also one of the challenges is because it is sort of patch-
work, when you are on the other side it gets confusing to know
whether SBA, this particular program applies to you or not. And
a lot of the people who try very hard to figure that out just get lost
in the process.
So I will start there, that one of the challenges is doing our best
to communicate when there is a program, that that program is
available and what the criteria are. Even with the PPP, when it
came out there was a lot of confusion around whether someone ac-
tually did qualify, and you needed sometimes intermediaries who
were knowledgeable about the loan in order to help with that.
So all of that, for me, means SBA, partnering and finding good
organizations to partner with. It is true that there is not a lot of
entrepreneurship training or business training within prisons, but
because of the work that you and others have done, the infrastruc-
ture is there to do that.
I am in a business school. This is what we teach. There are other
business schools around the country that are amazing at this. And
so I believe partnering with people who are expert in these par-
ticular areas can yield some positive benefits.
Chairman CARDIN. Thank you. I do want to point out that Sen-
ator Portman and I worked together to expand the eligibility under
the Work Opportunity Tax Credit to returning citizens’ employ-
ment so they are eligible. So we have made some modifications, but
it is by program by program rather than comprehensive. And un-
less you had the support from a resource entity, whether it is the
SBA or one of our partners, it is tough to figure out where you are
eligible and where you are not eligible, and the subtleties in regard
to getting that help.
Senator Paul.
Senator PAUL. Well, I agree with the Chairman. I think this is
a great hearing and a good time to hear things that are working
and things that are changing and evolving. I think we still have
a long way to go, but I think that there are good things happening
as far as giving people second chances.
Dan Caudill, you mentioned in your testimony that the stigma
and the ongoing discrimination against these individuals is led by
the Federal Government and their hiring practices. Then you men-
tioned also state, city, and county government. Are there people
that you are coming across that have tried to get employment in
either Federal Government or city government who are still having
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29
Mr. CAUDILL. Yes, from the people I have talked to, yes. And un-
less things have changed pretty significantly I believe that is still
the case today. They did have a campaign not to check the box in
Jefferson County and in Louisville for a while, but my under-
standing is that it is still extremely difficult to get state or Federal
jobs with a prior conviction.
Senator PAUL. Anybody else have a comment on that or any
awareness of either prohibitions or problems with Federal employ-
ment, with records? Okay.
Mr. Perez, I, like the Chairman, am glad that Diane had such
a great influence in your life and got you to open the restaurant.
I have been there and I have seen the employees, and it is uplift-
ing, really, to see the smiles on the faces and the people who are
excited to be there at work. It is not every restaurant you go in
that every worker in there is excited to be there, but they do seem
to be excited to be there.
I am one who is a big believer that our self-esteem comes from
work. No matter who you are, that is how you get your self-esteem.
You cannot be anybody unless you really do something. It does not
matter exactly what it is. It can be a range of things. But doing
something is who we are. So I was pretty impressed with meeting
the employees that you are giving these second chances to.
You mentioned that you have a nurse and an engineer and a col-
lege professor, and I am, like you, glad that they are able to work,
but their full self-esteem has to really come from doing more. Are
you aware of any kind of connection to like a consortium of infor-
mation of people who would hire, like engineers or nurses? Is there
some sort of way to connect them, that you are aware of, other
than just word of mouth, of finding somebody in the area that
might hire an engineer, or do you have any insight as to any way
to try to conquer that problem?
Mr. PEREZ. Yeah. So if we speak about just the engineer, I
worked pretty hard with this young man after he was employed
with us for a year and a half, and we needed an internship. I called
ten people and I got one interview, and that one interview felt that
it was not safe enough for insurance purposes, he claimed, or be-
cause, at the end of the day, he was going to have to do a back-
ground check and he did not think that it would make it through
all of his HR policies and procedures.
Senator PAUL. You know, there are a lot of groups that deal with
criminal justice reform and second chances. I know you are aware
of them. You and I are both aware of them. Dan is too. I am won-
dering if maybe setting up some sort of nationwide, like a
LinkedIn, something where you would be able to share information
with people might be a way to connect people.
I do know that, for example, and do not know if this would help
your industry, that Koch Industries has been a leader in this, in
nationwide, not only in giving tens of millions of dollars to the
criminal justice movement but also, you know, putting their policy
where their money is as well and hiring people. Now that might
not be in Lexington, but they have got stuff all over the world. I
mean, it is a big company and that might be a possibility for him
or her.
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Mr. PEREZ. Yes.
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Senator PAUL. But I do not know if that is something on the hir-
ing aspect, Mr. Chairman, that we might look into or have our
staffs look into, if there are any Federal impediments to hiring, you
know, as far as second chances. That is something that maybe you
and I could look at together, and perhaps if there are any Federal
impediments that are still there that could be removed as far as
hiring.
Chairman CARDIN. I think it is an excellent suggestion and I
think we will have our staffs follow up on that.
Senator PAUL. Thank you.
Chairman CARDIN. Senator Shaheen.
Senator SHAHEEN. Thank you, Mr. Chairman, and thank you to
each of you for being here today.
Dr. Phillips, I want to start with you because you talked about
your research showing that entrepreneurship is something that is
more prevalent among the previously incarcerated than the general
population. Are there any particular types of businesses or areas
of interest that you see among previously incarcerated?
Mr. PHILLIPS. Yes, there are some patterns. They usually are in-
dustries or settings where you do not need much capital to get
launched, and they are also industries that have historically been
more open to employment. So food service would be one, for exam-
ple, you might find, or you might find in construction, as well, as
long as it is not the areas of construction that are going to require
a lot of upfront. So it could be things that build off the trades if
it is in a state that does not have licensing restrictions around
trades. So those are the things where you see people start.
There are two ways that I think about it. One is people are going
to those opportunities. It does not mean that is the business they
want to start, though. It just means that they want to be an entre-
preneur.
Senator SHAHEEN. That is where they wind up.
Mr. PHILLIPS. That is where they wind up because that is where
you can become an entrepreneur and be productive in a way that
matches your own abilities.
Senator SHAHEEN. So thinking about the capital aspect, which is
something that SBA could certainly be helpful with, might make a
difference, I assume, Mr. Marte, that would have been very helpful
to you had there been an SBA availability for previously incarcer-
ated to be able to get capital as you were starting your business.
Mr. MARTE. Absolutely, and I have gone to Federal banks and
sat down with them, and I filled out those applications and was de-
nied. You know, this is close to ten years ago when criminal justice
was not, you know, excuse my language, a sexy topic. You know,
nobody really cared. But now I appreciate everybody putting their
word in here and putting in the effort to make this thing happen.
Senator SHAHEEN. Thank you. Mr. Perez, New Hampshire has a
pretty sizeable hospitality industry, hospitality and tourism, and
one of the concerns I hear everywhere I go is that they cannot find
workers. And we also have been very much affected by the opioid
epidemic and have a lot of folks who are former misusers of sub-
stances. So as you think about your experience, what would you
say to business owners in New Hampshire and across the country
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31
both with people who have a history of substance misuse but also
previously incarcerated? What have you found that works and what
kind of advice would you give to people?
Mr. PEREZ. I would tell them that our experience showed this.
We have three restaurants in Lexington that we cannot staff that
does not have the second-chance motto that we have at the other
two restaurants we have. We are fully staffed, have been fully
staffed since the day that we opened in 2017, with folks that are
in a second-chance position. I have to tell you, the motivation level,
the commitment, and the dedication to high standards and effort
at our second-chance restaurants far exceed the folks at the regular
for-profit restaurants that we have.
Senator SHAHEEN. So how do you respond to people who say,
‘‘Well, you are not going to be able to count on these workers. They
are not going to be dependable. They are not going to always show
up,’’ which is a common problem, as we know, with the workforce
in some employment sectors, in general. For example, we have
friends who have a restaurant, a seasonal restaurant, and they pe-
riodically have problems with people not showing up when they are
supposed to be there to do their jobs. How do you answer that con-
cern that people might have?
Mr. PEREZ. I am just like every other businessperson. I want to
predict I am going to have success and profit. So the way that we
have attacked that is we hire folks with an employment contract.
We say, hey, look, your interviewing process is continuing to go on.
We source people only that are in recovery centers. We tell them
that if they allow us, through a medical release of information, to
share with us that they are in the program, that they are in safe
housing, and that they are being tested each week, and they good
on all three cases, we will keep on employing them. We have them
sign a contract saying that they will adhere to the recovery pro-
gram, and if they do they have gainful employment with good effort
standards and relationships. And if they do not, then it is our op-
tion to let them go.
And we have found the difference is crazy difference. I mean, we
were losing people after two weeks. Our average tenure for 60 peo-
ple was two weeks. Once we installed this, now we employ only
folks with a past, and now we have 11 months, our average tenure,
in a place where we are trying to get them to the business that
they originally came from. But it is crazy the difference in just
using the leverage of a job, that most people cannot get in their po-
sition, giving them a good wage, and using that to keep them in
recovery. Just the leverage of the job does it.
Senator SHAHEEN. And you think the contract has something to
do with it too, the fact that you engage somebody personally in that
contract for their future?
Mr. PEREZ. I do believe that. I think the underlying thing is that
we are forcing them to evaluate the root cause of why they might
be undependable, why they might not have high effort and high re-
lationships in a workplace, and that is with a recovery program,
where we validate that folks are clean, because we have access to
their test results. We do not want the details. Either it is good or
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it is not. We want yes or no.
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And we start off with a contract that is a second-chance employ-
ment contract based on the fact that they do not have really much
job history, they do not have a recommendation. And so we, in
turn, do this, and it is amazing the results. I cannot even tell you
how crazy it is. It is something I did not know. But again, it all
has to do with trying to predict success in business.
Senator SHAHEEN. I am out of time, Mr. Chairman, but can I ask
Mr. Marte if he would respond to that as well? Because as some-
body who has been there and who is working with previously incar-
cerated people, what is it that you think keeps them coming back,
responding in the way that they do?
Mr. MARTE. I believe loyalty is the number one factor. Like loy-
alty was number one on the streets, and when you hear about a
contract being signed it is like this is my word, I am not going to
break it, and I am going to full force, and I am going to be com-
mitted to this.
My retention rate at CONBODY is four years. I cannot get them
out of there. They come in and they want to stay there forever. And
when I first hired somebody coming out of the system I did not
know how to deal with their other barriers in terms of housing,
clothing, funding, you know, those individuals that had no place to
live. So I literally had four air mattresses in the studio. I had to
deflate the air mattresses at 6 a.m. so we could start classes at
6:30 a.m.
So it was things that I did not project that I was going to deal
with, but they understood, like hey, if you have got my back, I have
got your back. Loyalty was number one and it is still seen today.
Senator SHAHEEN. Thank you all very much.
Chairman CARDIN. Senator Hickenlooper.
Senator HICKENLOOPER. Thank you, Mr. Chair, and I want to
thank all of you for being here.
Several years ago, when I was governor of Colorado, I went
through the DEFY program and did a lot of the process where you
build relationships with people that were mostly doing hard time.
And it was breathtaking. The power that was there was potential.
Dr. Phillips, I have got two questions. One is, in your studies
have you seen a difference in age, where if someone is a little bit
older are they going to do better with a job when they first get out?
And then the second question is, with the record low-level non-
violent drug offenses, if you just have a record for some low-level
offense you have a hard time getting capital, a hard time getting
a loan, start a business. And we certainly worked for and ap-
plauded this, SBA’s decision to remove barriers to eligibility based
on irrelevant criminal history records, both for the 7(a) program,
the microloan program, the 504 program. What other adjustments
should the SBA be doing to ensure the qualified, formerly incarcer-
ated individuals can access these programs?
Mr. PHILLIPS. So thank you, Senator, for the question. I guess a
couple of things. First, in terms of the age, most of the research
that I am familiar with certainly says that, no surprise, older peo-
ple are more mature, and you have a lot of people who have been
incarcerated for mistakes and things they did when they were
young—18, 19, 20—and maturity has an effect. So someone who is
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returning to society at age 30, you do see a stronger effect. Also,
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33
studies show that people with children have lower recidivism as
well, that connection and I think the maturity that comes with
that.
Senator HICKENLOOPER. Before you go to the next question, let
me ask Mr. Marte, because you hired a lot of people. Are young,
recently released, incarcerated individuals higher risk, do you
think?
Mr. MARTE. Yeah, I think somebody that is younger than 23
years old is not fully developed and has not experienced. I have in-
dividuals that committed murder, and, you know, we look at non-
violent offenders as like, oh, they deserve a second chance. But I
have seen the people that have done 25 years, 27 years, for we
think the worst crime ever, you know, are the best employees, you
know, the most loyal individuals. I have got one female that 22
years, went in at 16, came out at 38. She has been with us for six
years, and you would never think that she did something super
wrong. But she is the happiest person and will greet you with a
smile every single time you walk in.
Senator HICKENLOOPER. Right. Mr. Phillips, let me go back to the
next question. What else can the SBA be doing?
Mr. PHILLIPS. So I think those programs you mentioned are actu-
ally on the right track. I am very supportive of those initiatives.
I think two things. One, more initiatives that involve partnership
with organizations that are on the ground and actively doing the
work so that things are not just loans but they are also education.
There are also connections. You know, those three barriers of fi-
nance, human capital and training, and connections.
So in addition to the loan programs, partnering with organiza-
tions that help out with those other buckets, so it is a more robust
change that happens, that is what I would advocate. So in addition
to those programs, finding ways of linking them to others.
I would say, too, in the business school we spend a lot of time
trying to talk to employers to convince them, and we are very good
at generating numbers, as it turns out. And numbers do part of it,
but I just wanted, as a comment, the personal stories. If SBA can
also organize things like this, where it is just people talking about,
as employers, going through this, that, in our experience, has been
at least if not more powerful than us putting statistics. I have and
I can provide numbers of lower turnover——
Senator HICKENLOOPER. Sure, but it is not the same.
Mr. PHILLIPS. It is not the same.
Senator HICKENLOOPER. And you are right. That is another way
that the SBA could partner with some of these organizations doing
it.
I am out of time, but Mr. Perez, my brother had a bakery for
many years and they had occasion to hire—some of the employees
had been formerly incarcerated. And that sense of loyalty that you
all have kind of addressed is very powerful in and of itself.
Anyway, I appreciate, again, all of you for being here, and I am
out of time. I yield back.
Chairman CARDIN. Senator Rosen.
Senator ROSEN. Thank you, Chairman Cardin and Ranking
Member Paul. This is a really important hearing, and I just thank
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you for everything that you are doing and your caring about your
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community, your neighbor. Uplifting people is very important. So
I want to build on what people have been talking about here and
some of the things, we talk about loyalty, I want to talk about
mentorship, because how do you bring people back, some of the
things that you are talking through.
You know, over the past few years, in my home state of Nevada
we have seen a big jump in startups. But even with that surge, po-
tential entrepreneurs, they just do not have easy access to the in-
formation. It is complicated. It is hard to find—permitting, SBA
loans, a lot of the things we are talking about. So I think
mentorship is one way to maybe help new entrepreneurs, startup
business, to fill this knowledge gap.
The Small Business Administration did establish the All Small
Mentor-Protégé to develop protégé firms to help all kinds of folks
through mentor-provided business development assistance. You
have been there. People have been there before. You know what
the opportunities and challenges are.
Dr. Phillips, maybe you just want to elaborate a little bit on how
the mentorship programs, led by seasoned entrepreneurs like those
we have here and others around the country, can really help build
that trust and loyalty with other formerly incarcerated individuals,
build up that community.
Mr. PHILLIPS. Thank you, Senator. I think that is an excellent
idea. Right now it just happens informally and sort of, you know,
if I run into someone who wants to start a fitness business I would
say, ‘‘Oh, do you know Coss Marte? You should get in touch with
him.’’ It is not systematic at all, but the programs you are talking
about could be successful.
There are already programs that are—let’s say the local Cham-
ber of Commerce will have a program where retired entrepreneurs
can give feedback. So what I am wondering is, maybe there is an
infrastructure into these like that, to also just build on—it is al-
ready people who are showing up and very excited to provide men-
toring, maybe attaching that to the sort of initiative that you pro-
posed. But I think it is an excellent idea.
Senator ROSEN. So we need to be sure that we find a way to
robustly build this out, because the opportunity is there. We just
have to kind of help build the infrastructure to do that.
Mr. PHILLIPS. Yes.
Senator ROSEN. And speaking about infrastructure and how you
are mentoring others, I wonder if any of you have any thoughts
about registered apprenticeship programs. In my state of Nevada
we have, I think, around 90 registered apprenticeship programs.
People earn while they learn. They graduate debt-free. They are in
labor and industry, and we are trying to even bring them into cy-
bersecurity, all kinds of things.
And so how do you think maybe the SBA could partner, enhance
our apprenticeship programs that really work well around this
country, to bring those individuals, help them, lift them up to get
perhaps a trade, if you will? Does anybody have any comments in
thinking about how we might use the registered apprenticeship
programs that we have?
Mr. MARTE. Yes. So I actually started an apprenticeship program
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carcerated individuals get into the media space. And what we have
seen is that, you know, there are a lot of programs out there for
formerly incarcerated individuals but none of them are giving them
a check, and that is the first thing you need. Like when I was
speaking in my testimony, all I was released with was $40. You
know, what am I going to do with $40? The first thing I did, I went
to McDonald’s at my bus stop, and then the next $20 I took a
Metro card and then I am left with $10 in my pocket. What is
next?
So what I did was go into different organizations to help me get
small internships, do small little jobs that I could get a couple of
bucks in my pocket. But what I created was an apprenticeship pro-
gram not only just to work in the back of the kitchen or do manual
labor jobs. What we did was get into the media space, which is
growing significantly. And we got individuals that graduated the
program to work at MTV now, to work in these bigger industries
like Vice and companies of that nature.
Senator ROSEN. So maybe the small business, the mentorship,
the protégé program can work with some of our registered appren-
ticeship programs in many industries. Maybe that is a natural
partnership going forward.
Mr. Marte, I want to talk a little bit about the information. You
had to find all these different places to go to get information, and
you were really entrepreneurial to figure all that out and create
what you did. What do you think Congress can do to alleviate infor-
mation, the access, the challenges—centralize it, find a way for
people to find those resources right away, not wait until they have
$1 in their pocket?
Mr. MARTE. I think getting to the media that speaks to the indi-
viduals that have been incarcerated, going inside the prison sys-
tem, giving this information. Literally, the transitional programs,
when I had to write a resume before I was released, all they give
you was lined paper and a number 2 pencil, and they expect you
to go with a resume that is written to go into a job interview that
way, with no computers. There is no internet inside. So let’s start
on the inside.
And your feedback on mentorship, without mentors that have
been serial entrepreneurs at ran businesses, I would not be in the
position I am in right now. Like there is one individual called Mi-
chael Rothman who, you know, pretty much every week, Friday
morning, 7 a.m., we met. And he gave me homework. I did my
homework and I went back to him. And so setting up individuals
that really care that are retired or, you know, are really successful,
that want to give back, it is a great example to give back.
Senator ROSEN. Thank you. My time is up too, but thank you all
again.
Chairman CARDIN. Senator Booker was one of those that helped
us plan for this hearing, who has made reentry a priority not only
here in the Small Business Committee but in many areas in the
United States Senate. Senator Booker, thank you very much.
Senator BOOKER. I want to thank both the Chairman, first of all,
for your cooperation and your leadership in this space. It has been
extraordinary and you have been a great partner. And I want to
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thank the Ranking Member as well. Since I got to the United
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36
States Senate, this is an area he has brought a lot of common
sense and a lot of partnership as well.
Gentlemen, I am so excited to see you, and especially the three
folks out there that are getting folks hired. When I started in New
Jersey, the first-ever municipal Office of Reentry, we started find-
ing a lot of patterns but also having a lot of frustrations with all
the barriers that men and women coming home were facing, get-
ting sort of rapid attachment to work, finding someplace to just live
for a night. I was so desperate that I lived in a two-family home
as mayor, and I would let just guys crash there as we tried, with
our agency, to put people back to work.
And so there is a lot that has been documented here, I am sure,
and gone over, and I do not need to go over it all, the benefits to
society in helping people get rapid attachment to work, helping
people deal with a lot of the challenges that often create that slip-
pery slope.
There are 40,000 collateral consequences, according to the Amer-
ican Bar Association, if you have a criminal record, 40,000 things
you cannot do that most Americans often take for granted. And so
my hope is this Committee, which has a great bipartisan sensibility
about themselves, can start doing even more to removing these ar-
tificial barriers. And I would love to maybe get some examples of
these from you and maybe some advice for this Committee about
what could we be doing to deal with it.
During the pandemic I was stunned—and again, we had bipar-
tisan help fixing it—that the PPP loans were very artificially ex-
cluding people that had been incarcerated within five years. It did
not reflect other areas within our government but it was just arbi-
trary and unfortunately uneven in its impact.
And so, Professor, I do not know if there is anything, Dr. Phil-
lips, that you might be able to point to right now. I do not care
what space it is, whether it is in access to capital or credit worthi-
ness, of things that this Committee might attack to really help a
class of people that have higher rates than average Americans for
starting businesses, often because of the urgency for it, because
they just cannot get hired. But I do not know if there was anything
that you would advise us, hey, if this Committee attacked this in
a bipartisan way you could remove another barrier that would save
government money in the long run, lower crime in the long run be-
cause people would not recidivate, but also help expand our econ-
omy.
Mr. PHILLIPS. Thank you, Senator, and also thank you for your
work in New York. I spend a lot of time in New York so I am famil-
iar with the great work that you did there. So thanks for that ques-
tion.
What I want to say is similar to before, and it sort of links to
the overall concept. In my mind, entrepreneurship and employment
are linked, and sometimes we organize them in different ways, but
they are very much linked. Entrepreneurs hire employees. Employ-
ees then become entrepreneurs. The two are linked.
One of the things that I think can be very helpful is helping pro-
vide information and education in prison as early as possible. One
of the challenges, there are too many things to combat. I mean,
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there are too many things to keep in mind, and what we find is
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then if you try to add on that entrepreneurship training or here are
some opportunities, people are just so overwhelmed they cannot
take advantage of all the things that, you know, everyone put a
whole lot of hard work to put forward.
In prison, a lot of times people are idle, unfortunately, but there
are ways of spending that time productively. We have the advance-
ment that have been done lately and also including the Pell grant.
So I think that is a place to tackled. And I think it can be captured
as both entrepreneurship and employment skills. I do not see these
two as distinct. I think they can be captured and taught to people
early on.
The students we teach inside prison are amazing. They are dedi-
cated. Our MBA students are sometimes embarrassed by how de-
voted these students are, and question their own devotion to their
own education. They are groups of people who could really take ad-
vantage.
So focusing on that area, getting those opportunities, information
about loans, other things, as early as possible, that is what I would
think.
Senator BOOKER. Anybody else want to add, in the last 30 sec-
onds or so?
Mr. PEREZ. Yeah. I would just maybe suggest that instead of
worrying about a specific program, how can we open it up to every-
body? For example, if the SBA loan, on the PPP loan automatically
excludes someone with a past in the last five years, they would
throw out that application. Do not even fill it out. But I am sug-
gesting that PPP applications should just be like an interview. If
someone has a past, they should have an opportunity to explain
what they are doing to change their life.
And I am telling you that that is going to help the greater good.
Instead of a single program we have 20 percent of our population
that is in a second-chance position. We have got to open up the fun-
nel. We keep on putting it down to one thing, and we need to be
able to talk to someone about their past, and just like every other
opportunity, we are going to ask them the question in an interview,
or at an SBA loan, what are you doing to change? Explain to me
what your plan is.
And I think that is really the crux of this. If we want to help the
greater good, that is the mentality we have to have, not a single
program, but open it up for everybody.
Senator BOOKER. Thank you. Mr. Chairman, the last thing I
would say is Mr. Marte might have an athletic program here that
all the Senators could enroll in perhaps. [Laughter.]
Senator BOOKER. I appreciate that, sir. And I would love to sub-
mit maybe a question for the record to all of you, if you could
maybe add to that list of some of the common-sense things I heard
from Mr. Perez and Mr. Phillips, so thank you.
Chairman CARDIN. I think we can benefit from the testimony of
all four of these witnesses. Thank you.
Senator Marshall.
Senator MARSHALL. Thank you, Mr. Chairman. If somebody else
has asked you this question, forgive me. Obviously we are all run-
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ning back and forth. But I would be curious, for any of you, if you
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38
have used any SBA resources to help in hiring recently incarcer-
ated individuals.
Okay. Are you aware of any SBA options out there? Okay. I am
not either.
What about just in accessing capital? Any businesses using the
SBA to access capital, to get loans? None of you have tried them?
Mr. MARTE [continuing]. The PPP loan, at first I thought I did
not qualify until they changed and reversed that criterion about
the time spent.
Mr. CAUDILL. We did receive PPP funding.
Senator MARSHALL. Okay, which is not meant for new startups
or new companies or anything, right? Okay.
We certainly have a strong group of folks, non-government enti-
ties, committed to the recidivism rate and employing them, some-
how, some way, in Kansas City, and I am trying to help them. How
can a Congressman help an employer be connected to employees to
help this along? You see any congressional offices doing a good job
with this? I would love to copy them. Sometimes it just helping
connect people.
Mr. CAUDILL. I think the connection, at least in my case, with
the nonprofit community that was working with recovering addicts,
alcoholics, former prison inmates, halfway-backed programs, and so
on. And due to our contact with those people they knew that we
would hire people with backgrounds, and they referred them on to
us, and then they would do follow-up.
Senator MARSHALL. Okay. In any of your programs is there any
type of a spiritual component to the issues as well?
Mr. PEREZ. Yeah. You know, we have a faith-based attitude to
our business. It is not a requirement for anybody to do, but we sub-
scribe to the 12-step program with everybody that we work with,
or a similar program, and you get to choose who you God is. It is
not for us to kind of do it, but we think it is important for us, as
recovering folks, to contemplate that we are not the center of the
universe. We are only part of it. And so it is an important piece
for us, and we try to do it in a way that is appropriate for an em-
ployer to do it.
Senator MARSHALL. Great.
Mr. CAUDILL. Yeah, we also have worked the Healing Place,
which is a faith-based, 12-step program, and here again, with half-
way-backed programs. We did run into an issue, which was kind
of interesting. It seems like a new solution to addiction problem is
suboxone. I was up in Winchester and we went to a Kentucky re-
covery facility, but everyone was on suboxone. And so we checked
with our insurance company, and due to the dangerous equipment
we work with—forklifts, tractors, trailers and stuff—we could not
employ them.
So primarily the people that we have here have come out of pro-
grams that were faith-based.
Senator MARSHALL. Okay. Anybody else?
Mr. PHILLIPS. Sorry. This is to the previous question about what
can Congress do. You got me thinking.
Senator MARSHALL. Good.
Mr. PHILLIPS. One of the things I would recommend is cham-
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pioning those employers that are doing second-chance hiring. There
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are still employers that are afraid, that may even be hiring but are
afraid to let others know, and still becoming more legitimate thing
to do. And getting attention, positive attention for doing it, just like
today, can help other employers move a little bit closer to hiring.
Senator MARSHALL. Great. Okay. Thank you so much. I appre-
ciate you all being here. Thank you, Chairman.
Chairman CARDIN. Senator Paul.
Senator PAUL. The discussion of addiction reminded me of com-
ing to your place, Dan, and in a small group several of them say-
ing, ‘‘Oh yes, I am in Narcotics Anonymous’’ and somebody saying,
‘‘I am somebody’s sponsor.’’ And you mentioned also that they actu-
ally meet and that part of that is part of employment, or after
hours they do meet there?
Mr. CAUDILL [continuing]. A lot of times, and we allow them, you
know, if they have a bad day or something they can leave early,
go make a meeting and come back, or whatever. So it works out
really well. I have got a second-shift supervisor that sponsors the
entire crew, 100, and he has done a great job. He has been there
for eight years.
Senator PAUL. And I think that is sort of one thing, me learning
from listening to you and listening to Rob and others, is that, you
know, everybody deserves a second chance but not everybody is
going to take the second chance. You have to be doing something.
I mean, you know, not every alcoholic is going to be a great em-
ployee, and not every heroin addict is going to be a great employee.
They have to be wanting to try to recover. And so being in some
kind of program, was what Rob was saying, requiring them to be
in a program.
And I liked the idea of the contract. It reminded me, I was vis-
iting one of the KIPP charter schools down in Nashville, and a
young girl was just like, you know, brilliant, and going on to all
these great places. She has probably already graduated from col-
lege by now. But part of what they told me was that they had a
contract, and the parents sat down, and they, for the children at
least, they were responsible that the child was going to bring his
homework in, and for a child you can see that. But somehow ac-
cepting that responsibility through the contract, which leads to loy-
alty, but it has to be this two-way street, and you have got to, you
know, I do not know.
But I am amazed how many people want to try to get the second
chance. When we first did expungement in Louisville, an attorney
gave like $300,000 to help with the fees for it, and 1,000 people
showed up. And to me that did not show that everybody wants
their record expunged. Not everybody wants a second change, but
1,000 people did. And you have selected out, for the people who are
no longer a drug dealer, why get your record expunged if you are
a drug dealer? They want legitimate jobs, and 1,000 people showed
up.
So I think there is great hope and great momentum going for-
ward with this. And the one thing that we will try to work on is
looking at the Federal employment to see if there are any impedi-
ments to Federal employment. But then also I think that—I will
bet you there is some group that may have started this, but I want
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to look in to see if there is some way of having a posting for em-
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ployers, maybe not even just a job but employer that is friendly to-
wards hiring people with a second chance. And it may be that it
would be a national posting. You have to go somewhere else if you
are an engineer or a nurse.
But I bet you something like that might be of value, because here
it is by word of mouth. People know you can go to Caudill Seed,
and people know about your restaurant. Anyway, there might be
some way of facilitating that. It might not have anything to do with
government but there might be a way of facilitating the knowledge
of who these employers are.
But thank you all for your testimony, and Thank you, Mr. Chair-
man, for doing this.
Chairman CARDIN. Thank you, Senator Paul.
Senator Booker, anything further?
Senator BOOKER. No, sir, but I would look forward to following
up and seeing if we can think of some things we can work on to-
gether to make it easier to access loans. I think the idea about
doing something maybe with this Committee—I do not know how
in-person it would be—but also with the Bureau of Prisons to talk
about something that we could try to do together, or a pilot pro-
gram.
Because I noticed, from my own personal experience, the dif-
ferences between those prisons in New Jersey that have those pro-
grams that open people up to basic financial literacy, resume writ-
ing on computers, the different you give in people coming out is
pretty extraordinary. And more people than we think max out and
then are just sort of released with no preparation or no arrange-
ments being made if possible. And it is just a pathway to having
people get in trouble again, and they go back right into the envi-
ronments that often foster the criminal activity in the first place,
as opposed to having a real plan and a real help and a real start.
So I am very curious about what we can possibly do together.
Chairman CARDIN. Thank you, Senator Booker. I do think this
is an area where we can make progress in this Committee. There
is strong bipartisan interest in moving forward.
What this hearing has demonstrated, there is a path forward.
There is hope. There is a path forward where we can provide op-
portunities for people to succeed in life, and, by the way, it is going
to be good for our business.
Mr. Perez, I tell you, I am so impressed by your experience, and
the same thing with Mr. Marte, so impressed at how you have been
able to give opportunities to individuals, but at the same time you
have grown your own business to be a successful entity, which is
what America is all about. So you give us hope that there is a path
forward.
What we need to do is remove the obstacles. That is what Sen-
ator Paul was saying. If we remove the obstacles, if it is in your
business interests to hire the best employees, you will find a way
to do it. But when we put obstacles in the way it makes it chal-
lenging for the private sector to do what they need to do. I agree
with Senator Paul on this point. We do not always agree on that
point, but this one, I think, is right.
But I also think we can offer incentives, and, Dr. Phillips, you
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talked about some of the incentives, the extra costs involved, the
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risk factors. Those issues I think we can offer incentives to help in
that regard. So I think we can put together a package.
And Senator Paul, you are absolutely right. The Federal Govern-
ment, in its employment practices, should be an example. They
should not be a problem. So that is an area I think we clearly can
work on.
Again, I want to thank all four of our witnesses for your incred-
ible commitment. You are an inspiration to all of us, so thank you
all very much for being here.
The Committee record will stay open for two weeks in the event
members decide to ask questions for the record. We would ask that
you would promptly reply to those questions. And once again,
thank you for your testimony, and with the Committee will stand
adjourned.
[Whereupon, at 3:54 p.m., the Committee was adjourned.]
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dmwilson on DSKJM0X7X2PROD with HEARING
Insert offset folio 88 here 48249A.015
VerDate Sep 11 2014 03:57 Oct 19, 2023 Jkt 048249 PO 00000 Frm 00046 Fmt 6633 Sfmt 6602 E:\HR\OC\A249.XXX A249
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dmwilson on DSKJM0X7X2PROD with HEARING
Insert offset folio 89 here 48249A.016
VerDate Sep 11 2014 03:57 Oct 19, 2023 Jkt 048249 PO 00000 Frm 00047 Fmt 6633 Sfmt 6602 E:\HR\OC\A249.XXX A249
44
dmwilson on DSKJM0X7X2PROD with HEARING
Insert offset folio 90 here 48249A.017
VerDate Sep 11 2014 03:57 Oct 19, 2023 Jkt 048249 PO 00000 Frm 00048 Fmt 6633 Sfmt 6602 E:\HR\OC\A249.XXX A249
45
dmwilson on DSKJM0X7X2PROD with HEARING
Insert offset folio 93 here 48249A.020
VerDate Sep 11 2014 03:57 Oct 19, 2023 Jkt 048249 PO 00000 Frm 00049 Fmt 6633 Sfmt 6602 E:\HR\OC\A249.XXX A249
46
dmwilson on DSKJM0X7X2PROD with HEARING
Insert offset folio 94 here 48249A.021
VerDate Sep 11 2014 03:57 Oct 19, 2023 Jkt 048249 PO 00000 Frm 00050 Fmt 6633 Sfmt 6602 E:\HR\OC\A249.XXX A249
47
dmwilson on DSKJM0X7X2PROD with HEARING
Insert offset folio 95 here 48249A.022
VerDate Sep 11 2014 03:57 Oct 19, 2023 Jkt 048249 PO 00000 Frm 00051 Fmt 6633 Sfmt 6602 E:\HR\OC\A249.XXX A249
48
dmwilson on DSKJM0X7X2PROD with HEARING
Insert offset folio 96 here 48249A.023
VerDate Sep 11 2014 03:57 Oct 19, 2023 Jkt 048249 PO 00000 Frm 00052 Fmt 6633 Sfmt 6602 E:\HR\OC\A249.XXX A249
49
dmwilson on DSKJM0X7X2PROD with HEARING
Insert offset folio 97 here 48249A.024
VerDate Sep 11 2014 03:57 Oct 19, 2023 Jkt 048249 PO 00000 Frm 00053 Fmt 6633 Sfmt 6602 E:\HR\OC\A249.XXX A249
50
dmwilson on DSKJM0X7X2PROD with HEARING
Insert offset folio 98 here 48249A.025
VerDate Sep 11 2014 03:57 Oct 19, 2023 Jkt 048249 PO 00000 Frm 00054 Fmt 6633 Sfmt 6602 E:\HR\OC\A249.XXX A249
51
dmwilson on DSKJM0X7X2PROD with HEARING
Insert offset folio 99 here 48249A.026
VerDate Sep 11 2014 03:57 Oct 19, 2023 Jkt 048249 PO 00000 Frm 00055 Fmt 6633 Sfmt 6602 E:\HR\OC\A249.XXX A249
52
dmwilson on DSKJM0X7X2PROD with HEARING
Insert offset folio 91 here 48249A.018
VerDate Sep 11 2014 03:57 Oct 19, 2023 Jkt 048249 PO 00000 Frm 00056 Fmt 6633 Sfmt 6602 E:\HR\OC\A249.XXX A249
53
dmwilson on DSKJM0X7X2PROD with HEARING
Insert offset folio 92 here 48249A.019
VerDate Sep 11 2014 03:57 Oct 19, 2023 Jkt 048249 PO 00000 Frm 00057 Fmt 6633 Sfmt 6602 E:\HR\OC\A249.XXX A249
File and source
- File
- CHRG-117shrg48249.pdf
- Size
- 5,784,106 bytes
- SHA-256
- 9701faa5dbe04c0b6671407ea31826e11c438d1c17b92a64e354b064a8ed2e4f
- Our copy
- CHRG-117shrg48249.pdf
- Original
- www.govinfo.gov