"Subpoena to SBA Administrator Isabella Casillas Guzman Regarding COVID-19 Loan Collection Decisions"

Summary

Letter dated June 5, 2024 from Roger Williams, Chairman of the House Committee on Small Business, to SBA Administrator Isabella Casillas Guzman, with an attached subpoena for documents. The letter states that the Committee is investigating the SBA's decision to end active collection on PPP and COVID EIDL loans of $100,000 or less and its decision not to sell all or part of the COVID EIDL portfolio. It recounts requests from March 15, 2023 onward and says that of the 4,000 pages the SBA produced on March 19, 2024, 3,980 were a fragmented spreadsheet. The subpoena, issued under Rule XI.2(m)(1)(B) of the House Rules, commands production on June 19, 2024. Its schedule lists communications with OMB and Treasury on the April 2022 decision, SBA documents on selling the COVID EIDL portfolio and third-party work for the SBA on COVID EIDL from January 1, 2021.
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Full text

ROGER WILLIAMS, Texas NYDIA M. VELAZQUEZ, New York
CHAIRMAN RANKING MEMBER

Congress of the Wnited States

LS. House of Representatives

Committee on Small Business
2301 Ravburn House Office Building
Washington, HC 20515-0515

June 5, 2024

The Honorable Isabella Casillas Guzman
Administrator

U.S. Small Business Administration

409 3rd Street SW

Washington, DC 20416

Dear Administrator Guzman:

The House Committee on Small Business (Committee) is investigating the Small
Business Administration’s (SBA) decision to end active collection efforts on the Paycheck
Protection Program (PPP) and COVID Economic Injury Disaster Loans (COVID EIDL) valued
at $100,000 or less and the subsequent decision not to sell all or part of the COVID EIDL
portfolio. The purpose of this investigation is to evaluate legislative solutions to issues within
small business lending programs and loan collection processes. Rather than comply with the
Commiittee’s attempt to inform itself about the SBA’s decisions regarding the largest lending
program in the agency’s history, the SBA has provided the Committee with only minimal
information and has ignored numerous requests for information. The SBA’s continual
obstruction has hindered the Committee’s ability to quickly consider legislative reforms
regarding issues directly related to the investigation.

The Committee launched its investigation at the start of this Congress. Over the course of
the Committee’s 14-month investigation, the SBA has slow-rolled document productions and
ignored legitimate oversight document requests, while the Committee has repeatedly offered to
accommodate the SBA. On March 15, 2023, the Committee requested that the SBA provide the
following information within a two-week period: (1) the total number of purchased PPP loans
valued at $100,000 or less that are affected by the SBA’s April 27, 2022 policy; (2) all
communications between and among SBA staff relating to the April 27, 2022 decision to end
collection on purchased PPP loans; (3) all communications between SBA and any external
entities, including but not limited to the White House, relating to the April 27, 2022 decision to
end collection on purchased PPP loans; (4) all documents and evidence relied upon in making
the determination that the cost to collect the purchased PPP loans would likely be more than the
recovery amount; and (5) a copy of the comprehensive analysis, if conducted, recommended by
the September 30, 2022 report.! The SBA provided a narrative response on March 27, 2023, that
was barely more than a page long, mostly regurgitated publicly available information, and
ultimately failed to address the Committee’s concerns. Indeed, the response did not include any

' Letter from Roger Williams, Chairman, H. Comm. on Small Bus., to Isabella Guzman, Adm’r., U.S. Small Bus.
Admin. (Mar. 15, 2023).
The Honorable Isabella Casillas Guzman
June 5, 2024
Page 2 of 4

of the documents requested by the Committee.” A few weeks later, the SBA provided the
Committee with a staff-level briefing, but again, none of the requested documents.

On June 5, 2023, the Committee sent a follow-up letter reiterating its need for the
documents it had previously requested and adding new requests based on the Committee’s
oversight of the SBA’s COVID EIDL activities, with a two-week production deadline, after it
came to light that the decision to end collections applied to both PPP and COVID EIDL.? The
expanded requests included: (1) updated figures of the value of the PPP and COVID EIDL
portfolios valued at $100,000 or less; (2) clarification on the SBA’s policy for defaulted loans
worth more than $100,000; (3) the justification for using the SBA Express loan program as the
basis for analysis in deciding to abandon collection on pandemic lending under $100,000; (4)
copies of the cost-benefit analyses performed to reach the decision not to collect on both PPP and
defaulted COVID EIDL loans under $100,000; (5) clarification on the cost to collect on both
PPP and COVID EIDL, and a copy of the calculation used to reach these figures; (6) whether the
SBA explored alternate means of collection; (7) an explanation of Patrick Kelley’s claim that it
cost the agency $700,000 in fees to have an administrative hearing “before the wage offset kicks
in” after being referred to the Treasury Offset Program upon failure to repay a PPP loan; and (8)
clarification on the subsidy rate. The SBA failed to provide any documents by the two-week
deadline.

After negotiations between the Committee and the SBA, on September 28, 2023, the
Committee accepted the SBA’s offer to view one of the relevant documents in camera. Further
negotiations led to a second in camera review of another document on October 11, 2023. These
two documents together totaled just 15 pages. From these in camera reviews, it was clear that
these documents, as well as another report that the Committee became aware of during the in
camera review, struck at the heart of the Committee’s investigation.

Despite repeated attempts to obtain those three documents, the SBA continued to
withhold them. For instance, on October 18, 2023, the Committee sent a follow-up letter to the
SBA reiterating the outstanding requests and, as a further accommodation, extending the
deadline to produce those three documents by October 25, 2023.4 The SBA failed to provide the
documents by that date. Finally, under threat of subpoena, the SBA produced those three
documents to the Committee on November 3, 2023.° The remaining requests in the October letter
expanded the initial requests from March to include all internal and external communications
related to the decision on the sub-$100,000 COVID EIDLs as well as the related documents.
Eventually, nearly five months after the June 5 request, the SBA agreed to provide a narrative
response to the Committee, but still refused to produce the documents.

? Letter from Jihoon Kim, Dir., U.S. Small Bus. Admin., to Roger Williams, Chairman, H. Comm. on Small Bus.
(Mar. 27, 2023).

3 Letter from Roger Williams, Chairman, H. Comm. on Small Bus., to Isabella Guzman, Adm’r., U.S. Small Bus.
Admin. (Jun. 5, 2023).

* Letter from Roger Williams, Chairman, H. Comm. on Small Bus., to Isabella Guzman, Adm’r., U.S. Small Bus.
Admin. (Oct. 18, 2023).

> Letter from George Holman, Assoc. Adm’r, to Roger Williams, Chairman, H. Comm. on Small Bus. (Nov. 3,
2023); on file with Committee.
The Honorable Isabella Casillas Guzman
June 5, 2024
Page 3 of 4

On December 22, 2023, the SBA finally produced its first responsive email chain: a
single thread, totaling 11 pages. That same 11-page thread was repeated over subsequent pages
making the total production 140 pages long.® This minimal production after nine months of
negotiations did little to satisfy the Committee’s multiple legitimate oversight requests. That
same day, the SBA notified the Committee that it ran a search for the requested Office of
Management and Budget (OMB) communications but had inadvertently included a typo in the
search and needed to re-run it. The SBA has yet to produce a single document from that search.

Next, the SBA contacted Committee staff on December 28, 2023, seeking a meeting that
same day, which the Committee accommodated. In this virtual meeting, the SBA announced it
had “new information” that led it to reverse its prior policy of not referring PPP and COVID
EIDLs valued at $100,000 or less to Treasury. During the meeting, Committee staff asked for the
new information that led to this policy change.

The Committee sent a follow-up letter to the SBA on January 4, 2024, narrowing its
outstanding requests and requesting a Transcribed Interview (TI) with the SBA employee who
authored the initial decision memoranda that ended collections on PPP and COVID EIDLs
valued at $100,000 or less, Jihoon Kim.’ The SBA responded in narrative form on January 12,
2024, and produced 276 pages of information—252 pages of which were simply a re-
transmission of letters and narrative information the SBA had already provided to the
Committee.* Although the Committee maintained the need to interview Mr. Kim, as an
accommodation to the SBA, the Committee accepted the SBA’s offer for a briefing with the
current SBA Office of Capital Access Associate Administrator, Katie Frost, which took place on
January 31, 2024. Unfortunately, Ms. Frost was unable to answer several key questions about the
decision, claiming multiple times that because she was not in her role at the time of the
underlying events, she did not know the answers to the Committee’s questions. If this briefing
had any value, it was to underscore the Committee’s need to talk to Mr. Kim.

On January 7, 2024, Committee staff met with SBA staff to discuss the outstanding
document requests. At that meeting, the Committee again agreed to narrow its requests.
Unfortunately, even after yet another attempt to accommodate the SBA, the SBA’s next
production was not sent to the Committee until March 19, 2024, nearly two months after the
January 12, 2024, deadline and the day before the Administrator was scheduled to testify before
the Committee.’ Of the 4,000 pages produced, 3,980 were a fragmented spreadsheet. The entire
production was from a search of a single email inbox of a former employee that the SBA was
already reviewing for a different investigation.

® On file with Committee.

7 Letter from Roger Williams, Chairman, H. Comm. on Small Bus., to Isabella Guzman, Adm’r., U.S. Small Bus.
Admin. (Jan. 4, 2024).

8 Letter from George Holman, Assoc. Adm’r, to Roger Williams, Chairman, H. Comm. on Small Bus. (Jan. 12,
2024); on file with Committee.

° On file with Committee.
The Honorable Isabella Casillas Guzman
June 5, 2024
Page 4 of 4

Under threat of subpoena, the SBA then produced a letter and 90 pages of documents on
May 22, 2024..This production contained none of the requested communications, neither of the
two requested internal analyses, and only two of the requested reports related to the third-party
recommendations that the SBA sell the portfolio, including an eight-page report that had already
been provided to the Committee in November 2023. Further, nearly one-third of the documents
the SBA produced appear to be in response to a different request by a Member in a Committee
hearing on March 23, 2023.!°

The Committee still has not seen the communications surrounding the SBA’s decision to
end collections on PPP and COVID EIDLs valued at $100,000 or less that were first requested
on March 15, 2023. These communications are critical to assessing how and why this decision
was made in the first place, the justification behind the reversal in December 2023, whether the
SBA acted in accordance with the Debt Collection Improvement Act, and whether legislative
reforms are needed to protect taxpayer dollars in future small business lending programs and
loan collection processes. The SBA continues to obstruct these efforts. Though the Committee
appreciates that after four months of negotiations the SBA finally made Mr. Kim available for
the requested TI on June 7, 2024, that does not satisfy the Committee’s informational need for
the requested communications surrounding the decision.

The Committee has broad authority to investigate “problems of all types of small
business” under House Rule X. The Committee continues to have serious concerns regarding the
SBA’s efforts to comply with legitimate oversight requests and will not tolerate any further
delay. Accordingly, attached to this letter is a subpoena, issued pursuant to Rule XI.2(m)(1)(B)
of the Rules of the House of Representatiyes and Rule 9(A) of the Committee’s rules.

Poser pilliams
airman

House Committee on Small Business

‘0 Oversight of the Small Business Administration, Hearing before the H. Comm. on Small Bus., 118" Cong. (Mar.
23, 2023).
SUBPOENA

BY AUTHORITY OF THE HOUSE OF REPRESENTATIVES OF THE
CONGRESS OF THE UNITED STATES OF AMERICA
The Honorable Isabella Casillas Guzman, Administrator of the U.S. Small Business Administration

To

You are hereby commanded to be and appear before the
House Committee on Small Business

of the House of Representatives of the United States at the place, date, and time specified below.

to produce the things identified on the attached schedule touching matters of inquiry committed to said
committee or subcommittee; and you are not to depart without leave of said committee or subcommittee. |

Place of production: 2361 Rayburn House Office Building, Washington, D.C. 20515

Date: June 19, 2024 Time: 12:00p.m.

[_] to testify at a deposition touching matters of inquiry committed to said committee or subcommittee;
and you are not to depart without leave of said committee or subcommittee.

Place of testimony:

Date: Time:

[] to testify ata hearing touching matters of inquiry committed to said committee or subcommittee; and
you are not to depart without leave of said committee or subcommittee.

Place of testimony:

Date: Time:

' To any authorized staff member or the U.S. Marshals Service

to serve and make return.

Witness my hand and the seal of the House pre§entatives of the United States, at

the city of Washington, D.C. this ~ 2094.
é

Attest: : a ie Lr Mombe7/

Clerk

Schedule to Subpoena

In accordance with the attached Schedule instructions, you, Isabella Casillas Guzman,

Administrator of the U.S. Small Business Administration (SBA), are required to produce the
following items in your possession, custody, or control in unredacted form:

l.

10.

All documents and communications between and among SBA staff relating to the April
2022 decision, including but not limited to emails, messages, and calendar invitations.

All documents and communications between the SBA and the Executive Office of the
President, including but not limited to the Office of Management and Budget (OMB),
relating to the April 2022 decision.

All documents and communications between the SBA and the U.S. Department of the
Treasury (Treasury) relating to the April 2022 decision.

All documents and communications between and among the SBA and the Executive
Office of the President, including but not limited to OMB, regarding the decision not to
sell all or portions of the COVID Economic Injury Disaster Loans (COVID EIDL)

portfolio.

All documents and communications between and among the SBA and Treasury regarding
the decision not to sell all or portions of the COVID EIDL portfolio.

All documents relating to internal analyses conducted by the SBA on selling the COVID
EIDL portfolio, including (a) any documents that support the conclusion that doing so
was not in the best interests of the government and (b) the initial and updated analyses
referenced in the SBA’s December 22, 2023, correspondence to the Committee on Small
Business.

All documents and communications between and among SBA staff relied upon and/or
related to the September 2022 analysis.

All documents and-communications between and among SBA staff relied upon and/or
related to the February 23, 2023, memorandum, including all reports relied upon in
drafting the memorandum.

All third-party analyses, including those from subcontractors, conducted for the SBA
related to COVID EIDL from January 1, 2021, until present.

All documents and communications relied upon and/or related to the December 2023
decision, including all reports relied upon in drafting the December 23, 2023, decision.

RESPONDING TO THE COMMITTEE’S SUBPOENA

In responding to this Subpoena, please apply the instructions and definitions set
forth below:

INSTRUCTIONS

1. In complying with this Subpoena, you are required to produce all responsive documents
in unredacted form that are in your possession, custody, or control or otherwise available
to you, regardless of whether the documents are possessed directly by you. You are also
required to produce documents that you have a legal right to obtain, that you have a right
to copy or to which you have access, as well as documents that you have placed in the
temporary possession, custody, or control of any third party. You must also produce any
responsive documents or communications from any Slack or Teams channel that you
own, is in your primary control, or have access to. Subpoenaed records, documents, data,
or information should not be destroyed, modified, removed, transferred, or otherwise
made inaccessible to the Committee.

2. In the event that any entity, organization, or individual named in the Subpoena has been,
or is currently, known by any other name, the Subpoena should be read also to include
such other names under that alternative identification.

3. The Committee’s preference is to receive documents in electronic form in lieu of paper
productions.

4. Documents produced in electronic format should also be organized, identified, and
indexed electronically.

5. Documents produced to the Committee should include an index describing the contents of
the production. To the extent more than on CD, hard drive, memory stick, thumb drive, box
or folder is produced, each CD, hard drive, memory stick, thumb drive, box or folder should
contain an index describing its contents.

6. When you produce documents, you should identify the paragraph(s) and/or clause(s) in
the Committee’s schedule to which the documents respond.

7. Documents produced pursuant to this Subpoena should be produced in the order in which
they appear in your files and should not be rearranged. Any documents that are stapled,
clipped, or otherwise fastened together should not be separated.

8. Documents produced in response to this Subpoena should be produced together with
copies of file labels, dividers, or identifying markers with which they were associated
when this Subpoena was issued. Indicate the office or division and person from whose
files each document was produced.

9. It shall not be a basis for refusal to produce documents that any other person or entity
also possesses non-identical or identical copies of the same documents.
10.

Ll

12.

13.

14.

15.

16.

17.

18.

If any of the subpoenaed information is only reasonably available in machine-readable
form (such as on a computer server, hard drive, or computer backup tape), you should
consult with Committee staff to determine the appropriate format in which to produce
the information.

If compliance with the Subpoena cannot be made in full by June 19, 2024, at 12:00
noon, compliance shall be made to the extent possible by that date. An explanation of
why full compliance is not possible shall be provided no later than June 12, 2024, at
12:00 noon.

In the event that a document is withheld on any basis, provide a log containing the
following information: (a) the basis for withholding the document; (b) the type of
document; (c) the general subject matter; (d) the date, author, and addressee; and (e) the
relationship of the author and addressee to each other.

If any document responsive to this Subpoena was, but no longer is, in your possession,
custody, or control, or has been placed into the possession, custody, or control of any
third party and cannot be provided in response to this Subpoena, you should identify the
document (stating its date, author, subject and recipients) and explain the circumstances
under which the document ceased to be in your possession, custody, or control, or was
placed in the possession, custody, or control of a third party.

In complying with the Subpoena, be apprised that the U.S. House of Representatives and
the Committee do not recognize: any purported non-disclosure privileges associated with
the common law including, but not limited to, the deliberative process privilege, the
attorney-client privilege, and attorney work product protections; any purported
privileges or protection from disclosure under the Freedom of Information Act; or any
purported contractual privileges, such as non-disclosures agreements.

If any document responsive to this Subpoena cannot be located, describe with particularity
the efforts made to locate the document and the specific reason for its disappearance,
destruction or unavailability.

If a date or other descriptive detail set forth in this Subpoena referring to a document,
communication, meeting, or other event is inaccurate, but the actual date or other
descriptive detail is known to you or is otherwise apparent from the context of the
Subpoena, you should produce all documents which would be responsive as if the date or
other descriptive detail were correct.

The Subpoena is continuing in nature and applies to any newly discovered document,
regardless of the date of its creation. Any document not produced because it has not
been located or discovered by the return date should be produced immediately upon
location or discovery subsequent thereto.

All documents should be Bates-stamped sequentially and produced sequentially.
19.

20.

Two sets of the documents should be delivered to the Committee, one set to the majority
staffin Room 2361 of the Rayburn House Office Building and one set to the minority staff
in Room 2069 of the Rayburn House Office Building. You should consult with Committee
majority staff regarding the method of delivery prior to sending any materials.

Upon completion of the document production, you must submit a written certification,
signed by you or your counsel, stating that: (1) a diligent search has been completed of all
documents in your possession, custody, or control which reasonably could contain
responsive documents; (2) all documents located during the search that are responsive
have been produced to the Committee.

i.

DEFINITIONS

The term “document” means any written, recorded, or graphic matter of any nature
whatsoever, regardless of how recorded, and whether original or copy, including but not
limited to, the following: memoranda, reports, expense reports, books, manuals,
instructions, financial reports, working papers, records, notes, letters, notices,
confirmations, telegrams, receipts, appraisals, pamphlets, magazines, newspapers,
prospectuses, interoffice and intra-office communications, electronic mail (“e-mail”),
instant messages, calendars, contracts, cables, notations of any type of conversation,
telephone call, meeting or other communication, bulletins, printed matter, computer
printouts, invoices, transcripts, diaries, analyses, returns, summaries, minutes, bills,
accounts, estimates, projections, comparisons, messages, correspondence, press releases,
circulars, financial statements, reviews, opinions, offers, studies and investigations,
questionnaires and surveys, power point presentations, spreadsheets, and work sheets (and
all drafts, preliminary versions, alterations, modifications, revisions, changes, and
amendments to any of the foregoing as well as any attachments thereto) and other written,
printed, typed, or other graphic or recorded matter of any kind or nature, however
produced or reproduced, and whether preserved in writing, film, tape, disk, videotape or
otherwise. A document bearing any notation not part of the original text is to be considered
a separate document. A draft or non-identical copy is a separate document within the
meaning of this term.

The term “communication” means each manner or means of disclosure or exchange of
information, regardless of means utilized, whether oral, electronic, by document or
otherwise and whether in a meeting, by telephone, facsimile, email (desktop or mobile
device), text message, instant message, MMS or SMS message, regular mail, telexes,
releases, or otherwise.

The phrase “possession, custody or control” means (a) documents that are in your
possession, custody, or control, whether held by you or your past or present agents,
employees, or representatives acting on your behalf; (b) documents that you have a legal
right to obtain, that you have a right to copy, or to which you have access; and (c)
documents that have been placed in the possession, custody, or control of any third party.

The terms “and” and “or” should be construed broadly and either conjunctively or
disjunctively as necessary to bring within the scope of this Subpoena any information which
might otherwise be construed to be outside its scope. The singular includes the plural
number, and vice versa. The masculine includes the feminine and neuter genders.

The terms “person” or “persons” mean natural persons, firms, partnerships, associations,
limited liability corporations and companies, limited liability partnerships, corporations,
subsidiaries, divisions, departments, joint ventures, proprietorships, syndicates, other legal,
business or government entities, or any other organization or group of persons, and all
subsidiaries, affiliates, divisions, departments, branches, and other units thereof.
6. The terms “referring” or “relating,” with respect to any given subject, mean anything that
constitutes, contains, embodies, reflects, identifies, states, refers to, deals with, or is in any
manner whatsoever pertinent to that subject.

7. The term “employee” means agent, borrowed employee, casual employee, consultant, de -
facto employee, joint adventurer, loaned employee, part-time employee, permanent
employee, provisional employee, contract employee, contractor, or any other type of
service provider.

8. The term “April 2022 decision” refers to the SBA decision ending collections and
abandoning collateral on delinquent loans of $100,000 or less.

9. The term “September 2022 analysis” refers to the supplemental memorandum which
supplied additional analysis for the decision to end collections on delinquent PPP loans of

$100,000 or less.

10. The term “February 23, 2023, memorandum” refers to the supplemental memorandum that
analyzed the PPP portfolio for potential sale.

11. The term “December 2023 decision” refers to the SBA’s decision to begin referring loans to
Treasury for Offset and Cross Servicing.
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Original: smallbusiness.house.gov