House Select Subcommittee on the Coronavirus Crisis, staff report, "We Had Our Hand in the Cookie Jar": the $700 million loan to Yellow Corporation (Apr. 27, 2022)
Summary
Staff report of the House Select Subcommittee on the Coronavirus Crisis dated April 27, 2022, titled We Had Our Hand in the Cookie Jar: The Trump Administration's $700 Million National Security Loan to Yellow Corporation. The report presents findings from the Select Subcommittee's investigation of a $700 million loan to YRC Worldwide Inc. (now named Yellow Corporation) under a CARES Act program for companies critical to maintaining national security. It states that the loan made up 95% of the total funds disbursed under the national security loan program and that the investigation was launched in June 2021. The report states findings on White House involvement, on political appointees overriding career Department of Defense officials, and on loan terms, and it includes a timeline of the certification from March to July 2020.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Cite this document
“House Select Subcommittee on the Coronavirus Crisis, staff report, ‘We Had Our Hand in the Cookie Jar’: the $700 million loan to Yellow Corporation (Apr. 27, 2022).”
Original at www.govinfo.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/house-select-subcommittee-on-the-coronavirus-crisis-staff-report-we-ha-561711c550/
, SHA-256 ecd352f6476c40ed70915f7f814842fb05d1715972788a2d84058ec74851c44b.Full text
“WE HAD OUR HAND IN
THE COOKIE JAR”
THE TRUMP ADMINISTRATION’S $700
MILLION “NATIONAL SECURITY” LOAN TO
YELLOW CORPORATION
STAFF REPORT
STAFF REPORT
APRIL 27, 2022
TIMELINE OF YELLOW i
CORP CERTIFICATION
I EXECUTIVE SUMMARY 1
II BACKGROUND 3
A. THE CARES ACT NATIONAL SECURITY PROGRAM 3
TABLE OF CONTENTS
B. THE TRUMP ADMINISTRATION’S NATIONAL 4
SECURITY LOAN TO YELLOW
C. THE SELECT SUBCOMMITTEE’S INVESTIGATION 5
III FINDINGS 6
A. WHITE HOUSE OFFICIALS—LIKELY WITH 6
PRESIDENT TRUMP’S INVOLVEMENT—INTERVENED
AS YELLOW’S APPLICATION FOR A NATIONAL
SECURITY LOAN WAS BEING EVALUATED
B. TRUMP ADMINISTRATION POLITICAL APPOINTEES 7
OVERRODE THE RECOMMENDATION OF CAREER
OFFICIALS IN DECIDING TO CERTIFY THAT YELLOW
WAS “CRITICAL” TO NATIONAL SECURITY
C. THE TRUMP ADMINISTRATION APPROVED THE 12
LOAN TO YELLOW ON TERMS THAT VIOLATED
CARES ACT RISK AND USE OF FUNDS
REQUIREMENTS
IV RECOMMENDATIONS 18
The Coronavirus Aid, Relief, and Economic Security Act
MARCH (CARES Act) is enacted to address economic impacts of
TIMELINE OF YELLOW CORP CERTIFICATION, MARCH - JULY 2020
27 the coronavirus crisis and includes a provision
authorizing the Treasury Secretary to make loans to
companies “critical to maintaining national security” to
aid in offsetting “losses incurred as a result of the
coronavirus.”
Lobbyists for Yellow Corporation (Yellow) report that the
APRIL White House Political Director was “almost giddy” at the
8 prospect of working on Yellow’s national security loan
application “considering the Teamsters angle.”
The Department of the Treasury (Treasury) issues
APRIL guidance stating that companies certified by the Defense
10 Secretary as “critical to maintaining national security”
may be considered for National Security CARES Act
loans.
White House Chief of Staff Mark Meadows tells Yellow’s
MAY lobbyists he will call Treasury Secretary Steven Mnuchin
25 regarding Yellow’s loan application. The Treasury official
leading negotiations with Yellow said work on the loan
application became “intensive” around this time.
Department of Defense (DOD) analysis finds that Yellow
provides 34% of DOD’s LTL shipments and that Yellow’s
JUNE services could be replaced “by other carriers without any
major impact.”
Under Secretary of Defense for Acquisition and
JUNE Sustainment Ellen Lord approves criteria for evaluating
18 whether companies are “critical to maintaining national
security.”
i
President Trump speaks to a union leader—who was
JUNE coordinating with Yellow in its efforts to obtain a loan—
TIMELINE OF YELLOW CORP CERTIFICATION, MARCH - JULY 2020
19 regarding Yellow’s loan application. This call is
communicated to Treasury Secretary Mnuchin and
Defense Secretary Mark Esper.
A career DOD official informs Treasury official that DOD
JUNE will not certify Yellow as critical to national security. The
24 Treasury official responds that she has briefed this
decision not to certify Yellow “up [the] chain” at Treasury.
Career DOD officials recommend to political appointees
JUNE that Yellow not be certified as critical to national security
25 because “plenty of other trucking companies” can
provide the services Yellow provides to DOD and
because the company is being sued by the Department
of Justice (DOJ) for fraudulently overcharging the federal
government.
Secretary Mnuchin requests a call with Secretary Esper
and the DOD and Treasury General Counsels regarding
“YRC and DOD certification.”
A call takes place between Secretary Mnuchin and
JUNE Secretary Esper. Following the call between Secretary
26 Mnuchin and Secretary Esper, Secretary Esper signs a
letter to Treasury stating that he has certified Yellow is
“critical to maintaining national security” for the
purposes of the CARES Act national security loan
program.
Treasury announces that it has approved a $700 million
JULY loan to Yellow saying it relied on Secretary Esper’s
1 certification that the company was critical to national
security and that Yellow provided 68% of DOD’s LTL
shipments—twice the percentage DOD staff assessed
that Yellow provided.
ii
I. Executive Summary
This staff report presents findings from an investigation conducted by the Select
Subcommittee on the Coronavirus Crisis into the Trump Administration’s $700 million loan to
trucking company YRC Worldwide Inc. (now named Yellow Corporation) under a Coronavirus
Aid, Relief and Economic Security (CARES) Act program designed to ensure continued
operation of companies “critical to maintaining national security.” The loan to Yellow
Corporation (Yellow) made up 95% of the total funds disbursed under the national security loan
program. The Select Subcommittee launched this investigation in June 2021 following reports
that Yellow may not have been eligible for the loan and may have misused the funds it received.
The Select Subcommittee’s investigation has uncovered troubling evidence that Trump
Administration political appointees flagrantly disregarded an assessment by career Department
of Defense (DOD) industrial base experts that the company should not be certified under the
CARES Act as “critical to maintaining national security” and provided generous loan terms that
violated CARES Act risk and interest rate requirements. Evidence obtained by the Select
Subcommittee suggests that these decisions were driven by the White House and President
Trump himself.
Specifically, the Select Subcommittee investigation found:
White House Officials—Likely with President Trump’s Involvement—Intervened as
Yellow’s Application for a National Security Loan Was Being Evaluated.
Yellow lobbyists reported that White House Chief of Staff Mark Meadows planned
to call Treasury Secretary Mnuchin regarding Yellow’s application in late May 2020.
The work of the Department of the Treasury (Treasury) on Yellow’s application became
“intensive” shortly after this planned call. Yellow’s lobbyists identified Meadows as “the
key actor” in the administration and said in internal emails that they talked to Meadows at
least “three different times about YRC.” Records obtained by the Select Subcommittee
show that other White House officials regularly communicated with Yellow and its
representatives concerning Yellow’s loan application and sought to reach out to Treasury
on Yellow’s behalf in May 2020.
Briefing materials provided to Defense Secretary Mark Esper shortly before he
certified Yellow as critical to national security noted that President Trump had
received a call lobbying for a loan on Yellow’s behalf. An earlier report from Yellow’s
lobbyists noted that the White House Political Director was “almost giddy” to work on
Yellow’s application. Immediately after Treasury decided to award Yellow the loan,
Treasury Secretary Steven Mnuchin emailed the announcement to Chief of Staff Meadows
and other close aides to Trump and highlighted praise for President Trump in news reports
about the loan.
1
Trump Administration Political Appointees Overrode the Recommendation of DOD Career
Officials to Certify That Yellow Was Critical to National Security and Thus Eligible for the
Loan.
Trump appointees awarded Yellow $700 million even though career officials
recommended that Yellow not be certified as “critical to maintaining national
security,” according to documents uncovered by the Select Subcommittee. DOD’s
analysis found that other companies could replace the trucking services Yellow provided
to DOD, which were less than half of what the company claimed. The same documents
show that career officials were also concerned about an ongoing Department of Justice
(DOJ) lawsuit against Yellow for fraudulently overcharging DOD, which Yellow
misleadingly described to Treasury merely a “contractual dispute.” Citing these facts,
career DOD officials recommended against certifying the company as “critical to
maintaining national security” and thus making it eligible for a CARES Act national
security loan.
Documents obtained by the Select Subcommittee show that Secretary Mnuchin
requested a phone call with Defense Secretary Esper shortly after DOD career staff
informed Treasury that DOD would likely not certify Yellow as “critical.” On June
24, 2020, DOD staff informed a Treasury official by email that DOD would not be
certifying Yellow to be eligible for a national security loan. The Treasury official replied
that she had briefed this information “up my chain.” The next day, Secretary Mnuchin’s
office requested an urgent call “re: YRC and DOD certification” between the two
Secretaries and their General Counsels who, records show, had previously discussed the
“political aspect” of Yellow’s certification process. The call was held the next morning.
After the call with Treasury Secretary Mnuchin regarding the Yellow certification
process, Defense Secretary Esper certified that Yellow was “critical” to national
security, making it eligible for the $700 million national security loan. New evidence
of this phone call obtained by the Select Subcommittee calls into question the veracity of
Secretary Mnuchin’s testimony to the Congressional Oversight Commission on December
10, 2020, during which he said that Treasury merely “relied” on the DOD certification and
even suggested that DOD’s purportedly independent certification of Yellow prompted
Treasury to prioritize Yellow’s loan application over the applications of other companies.
The Trump Administration Approved the Loan to Yellow on Terms That Violated CARES
Act Risk and Use of Funds Requirements.
The Trump Administration agreed to allow Yellow to use more than half of its $700
million loan for long-term capital investments, despite the CARES Act requirement
that loans be made to offset “losses incurred as a result of the coronavirus.” The $400
million portion of the loan that the Trump Administration allowed Yellow to use for long-
term investment in replacing its truck and trailer fleet far exceeded what Yellow had been
spending annually on capital investments before the pandemic and was much larger than
Treasury’s initial loan offer to the company. Public records and documents obtained by
2
the Select Subcommittee make clear that this substantial funding for long term investment
was not related to losses incurred as a result of the pandemic.
Documents obtained by the Select Subcommittee show that Yellow’s CFO wrote to a
creditor to say, “while we had our hand in the cookie jar we thought we would try to
get a little ‘catch up’ capex [capital expenditures] while we were at it,” making clear
that Yellow’s executives intended that the capital expenditure request go beyond covering
losses caused by the pandemic.
The Trump Administration’s loan to Yellow provided an interest rate substantially
lower than the rate Yellow paid to private creditors, even though the government took
on more risk than those creditors. These terms violated the CARES Act requirement
that loans be made at a “rate that reflects the risk” and which is not less than the rate the
company would have received “prior to the outbreak of the coronavirus.” The loan terms
agreed to by the Trump Administration were impermissibly generous even under Yellow’s
own legal counsel’s interpretation of the applicable CARES Act requirements. The terms
are a boon to Yellow as the company will pay tens of millions of dollars less in interest
payments back to taxpayers than it would have if it was required to pay the same rate it had
received on the market prior to the pandemic. In 2021, Yellow has increased the total
compensation flowing to its top executives to over $12 million.
In summary, Trump Administration political appointees fast-tracked approval of a
substantial national security loan to Yellow despite the assessments of career officials that the
company was not “critical” to national security and provided Yellow with terms that violated
CARES Act risk and interest rate requirements, a conclusion that Yellow itself had reached
before receiving the loan. The loan to Yellow—which totaled 95% of the funds disbursed under
the national security loan program—was approved months faster than smaller, less risky national
security loans made to other applicants. There are clear indications that President Trump and
White House officials allowed political considerations—including the belief that delivering relief
funds to Yellow could be electorally advantageous—to override adherence to CARES Act
requirements and agency policies in the process of evaluating Yellow’s loan application.
II. Background
A. The CARES Act National Security Loan Program
Congress created the national security loan program as part of the CARES Act to ensure
that companies critical to America’s national security had access to funds necessary to offset
losses caused by pandemic disruptions. Specifically, the CARES Act directed Treasury to make
national security loans and loan guarantees available to “provide liquidity” to “businesses critical
to maintaining national security” that were experiencing “losses incurred as a result of
coronavirus.”1 In April 2020, Treasury released guidance stating that a business would qualify
for a loan if it met conditions defined in existing national security regulatory frameworks either
by “performing under a ‘DX’-priority rated contract”—meaning a contract of the highest
national defense urgency— or “operating under a valid top secret facility security clearance.”2
Treasury stated that companies that did not meet those conditions could be determined by the
3
Treasury Secretary to be eligible for national security loans if they secured a “recommendation
and certification by the Secretary of Defense or the Director of National Intelligence that the
applicant business is critical to maintaining national security.”3
More than two months after Treasury’s initial guidance, on June 18, 2020, DOD’s Under
Secretary of Defense for Sustainment and Acquisition approved a memorandum adopting basic
guidance for determining whether companies would be certified as “critical” to maintaining
national security. The memorandum incorporated five criteria, which included basic threshold
considerations like whether the company supplied DOD at all, whether there were “alternate
sources” for the company’s goods, and whether the company supplied a “commodity.”4 DOD
staff recommendations show that the commodity-like nature of a company’s goods and services
and DOD’s ability to replace a company’s services from alternate sources generally weighed
against certification.5
The CARES Act directed Treasury to make national security loans for limited purposes
related to the pandemic’s impact under terms that protected taxpayer funds from undue risk. It
specified that the loans were “to provide liquidity to eligible businesses . . . related to losses
incurred as a result of coronavirus.”6 Treasury guidance stated that national security loans were
available to “offset covered losses” incurred “as a result of the coronavirus pandemic.”7 The
CARES Act also required that loans only be made if they were “prudently incurred.”8 If the loan
was not “sufficiently secured,” Treasury was required to make the loan at an interest rate that
“reflect[ed] the risk of the loan” and which was not less than the rate charged for comparable loans
“based on market conditions” that existed prior to the pandemic.9
B. The Trump Administration’s National Security Loan to Yellow
On July 1, 2020, the Trump Administration announced that Yellow would receive a $700
million CARES Act loan intended for businesses “critical to maintaining national security.”10 No
other company received a national security loan until late October 2020, when 10 other
companies—all of whom applied for relief around the same time as Yellow—received loans
totaling $35.9 million. The loan to Yellow constituted 95% of the $735.9 million total loaned
under the program.11 In support of its decision to approve this substantial loan to Yellow, Treasury
asserted that its “determination was based on a certification by the Secretary of Defense that YRC
is critical to maintaining national security” and that Yellow “provides 68% of less-than-truckload
services to the Department of Defense.”12
4
Treasury’s loan to Yellow was made at an interest rate of 3.5% plus LIBOR, with $300
million to be used for “near-term contractual obligations and non-vehicle capital expenditures”
and $400 million to be used for long term capital investments in its truck and trailer fleet.13
Treasury took a third-priority security interest in Yellow’s existing collateral assets, putting
taxpayers behind Yellow’s bank creditors in an Asset-Backed Lending (ABL) facility and a group
of private creditors led by Apollo Global Management (Apollo).14
C. The Select Subcommittee’s Investigation
Following reports about Yellow’s questionable eligibility for the significant CARES Act
national security loan it received and the troubling terms on which the Trump Administration
agreed to make the loan, the Select Subcommittee initiated an investigation on June 3, 2021.15 As
a part of this investigation, the Select Subcommittee has sought and received documents from
Yellow, DOD, Treasury, and Crowley Logistics, a prime DOD transportation contractor. After
initial evidence obtained by the Select Subcommittee revealed that Trump White House officials
were involved in efforts to procure the loan, the Select Subcommittee sought and received Trump
White House documents from the National Archives and Records Administration (NARA).16 In
total, the Select Subcommittee received and reviewed approximately 12,000 pages of documents
responsive to these requests. The Select Subcommittee also interviewed the Trump Administration
Treasury official who led negotiations with Yellow and the career DOD official who chaired the
group that evaluated whether Yellow should be certified as “critical” to national security.17
5
III. Findings
A. White House Officials—Likely with President Trump’s Involvement—Intervened as
Yellow’s Application for a National Security Loan Was Being Evaluated.
The Select Subcommittee has obtained evidence suggesting that political pressure from
the Trump White House may have contributed to Treasury and DOD’s decisions to support and
approve the loan to Yellow despite career DOD officials’ recommendation that Yellow not be
certified as eligible to receive a loan, and the failure of the loan terms to Yellow to comply with
CARES Act risk requirements. Documents obtained by the Select Subcommittee show that
senior White House officials, including White House Chief of Staff Mark Meadows, repeatedly
communicated with Treasury on Yellow’s behalf as Treasury evaluated Yellow’s application for
a national security loan. Emails obtained by the Select Subcommittee also indicate that President
Trump personally discussed Yellow’s loan application with a union leader coordinating with the
company in its efforts to obtain relief, and that the fact of President Trump’s call concerning
Yellow’s loan application was relayed to Secretary Mnuchin and Secretary Esper. Secretary
Mnuchin’s subsequent emails to President Trump’s closest aides, highlighting praise for the
issuance of the loan, appear to confirm the President’s involvement.
1. White House Chief of Staff Meadows Contacted Treasury on Yellow’s Behalf.
Documents obtained by the Select Subcommittee show that White House officials
repeatedly communicated with Treasury on Yellow’s behalf as Treasury evaluated Yellow’s
application for a national security loan. As early as April 3, 2020, White House officials sent
Yellow’s application materials to President Trump’s Deputy Assistant Secretary of the Treasury
Brian Morgenstern and requested that he call Yellow’s CEO.18 A few days later, Yellow’s
lobbyists wrote that the White House Political Director was “almost giddy” on a phone call with
them about the prospect of working on Yellow’s application for a loan “considering the
Teamsters angle,” referring to the fact that Yellow employed Teamsters members as its drivers.19
Emails obtained by the Select Subcommittee show that, in early May 2020, White House
Deputy Assistant to the President Tim Pataki “committed to huddle” with White House Political
Director Brian Jack, who planned to then “call Treasury on [Yellow’s] behalf.”20 Special
Assistant to the President Joseph Russo later emailed Yellow asking the company to specifically
identify the company’s contacts at Treasury.21 Other documents show that Yellow had continued
contact with other White House offices and officials throughout May 2020—including the Chief
of Staff to National Economic Council (NEC) Director Larry Kudlow—as it sought a loan from
Treasury, and noted that the “White House remains engaged and has been calling for updates
frequently.”22
Yellow’s lobbyists reported their repeated phone contacts with White House Chief of
Staff Meadows regarding Yellow’s application for a loan. Emails obtained by the Select
Subcommittee from Yellow’s lobbyists show that Meadows offered on May 25, 2020 to call
Treasury Secretary Mnuchin regarding Yellow’s loan application.23 The former Treasury official
who led the team analyzing Yellow’s loan application told the Select Subcommittee during an
interview that Treasury’s work in evaluating Yellow’s loan application became “intensive”
6
around the “end of May, beginning of June,” which coincides with the time that Chief of Staff
Meadows committed to call Secretary Mnuchin regarding the matter.24 Yellow’s lobbyists
reported that they had already “talked to Meadows three different times about YRC” by mid-
June and identified him as “the key actor” for influencing approval of Yellow’s loan application
within the Trump administration.25 Indeed, on the day the loan to Yellow was announced,
Secretary Mnuchin personally sent Chief of Staff Meadows emails highlighting the decision to
approve the loan and press coverage of the approval.26
2. President Trump Personally Discussed Yellow’s Loan Application in a Conversation
Relayed to Secretary Esper and Secretary Mnuchin.
Documents obtained by the Select Subcommittee show that President Trump spoke
directly with a union leader about Yellow’s loan application. That leader had been coordinating
with Yellow and its lobbyists in the company’s efforts to obtain a national security loan. The
President’s call was communicated to Secretary Mnuchin and Secretary Esper shortly before
they took action to approve the national security loan to Yellow. On June 19, 2020, Yellow’s
lobbyists communicated to Secretary Esper’s Deputy Chief of Staff that Teamsters President
James Hoffa “spoke to Trump about YRC this week,” and that that call also “prompted a call
from Mnuchin to Hoffa.”27 President Trump’s reported call concerning Yellow’s loan
application, and the resulting call from Secretary Mnuchin to Mr. Hoffa, were highlighted for
Secretary Esper in background materials he received the same day he certified Yellow as
“critical” to national security.28
Secretary Mnuchin’s communications appear to confirm President Trump’s interest in the
matter.29 On the morning that Treasury announced the loan to Yellow, Secretary Mnuchin sent
the company’s press release to President Trump’s executive assistant, Molly A. Michael. A few
hours later, he sent Ms. Michael and Chief of Staff Meadows a CNN article reporting on the loan
and highlighted that Mr. Hoffa had thanked President Trump, writing “SEE COMMENT FROM
JAMES HOFFA.”30 These records suggest that President Trump may have intervened to press
for Yellow’s receipt of the $700 million national security loan based on the calculation that it
could result in praise from a union leader months before the presidential election.
B. Trump Administration Political Appointees Overrode the Recommendation of
Career Officials in Deciding to Certify That Yellow Was “Critical” to National
Security.
Senior career DOD officials concluded, after collecting and analyzing information about
the services that Yellow provided to DOD, that Yellow should not be certified as “critical to
maintaining national security” for the purposes of obtaining a CARES Act loan. Yet within a
day of receiving the recommendation of career officials, senior political appointees—including
Treasury Secretary Mnuchin, Defense Secretary Esper, and Defense Under Secretary Ellen
Lord—conferred about Yellow and quickly decided to certify that the company was “critical” to
national security and eligible for a national security loan. This certification overrode the
recommendations of career officials who found that Yellow should not be certified because the
trucking services the company provided to DOD could be carried out by “plenty of other
trucking companies” and because the company was being sued for fraudulently overcharging
7
DOD for the very services that Yellow argued made it critical to national security.31 Secretary
Esper’s certification that Yellow was “critical” to national security contained no data or analysis,
and Treasury’s announcement that Yellow would receive a national security loan asserted, in a
repetition of the company’s own talking points, that Yellow provided 68 percent of DOD’s less-
than-truckload [LTL]32 shipments—twice the share found by DOD career officials. Without the
intervention of political appointees, Yellow would not have been deemed eligible to receive a
national security loan.
1. DOD Analysis Found That the Trucking Services Yellow Provided to DOD Could Be
Replaced by Other Providers.
A career DOD official told the Select Subcommittee that senior career officials with
industrial base expertise—forming DOD’s Joint Industrial Base Working Group (JIBWG)—
analyzed companies seeking CARES Act national security loans to determine whether to
recommend that they be certified as “critical to maintaining national security” to determine
eligibility for those loans.33 The JIBWG collected information and data from relevant DOD
components to inform its recommendations.34 The JIBWG staff weighed the factors in the June
18, 2020 memorandum concerning whether a company should be certified as “critical” to
national security, including whether there were “alternate sources” for the company’s services
and whether the company provided a good or service akin to a “commodity.”35 The JIBWG
made recommendations to the Industrial Base Council, and ultimately to the Under Secretary of
Defense for Acquisition and Sustainment, who was further responsible for making a
recommendation to the Secretary of Defense.36
Documents obtained by the Select Subcommittee show that, through this process, DOD
career officials collected information concerning Yellow and the impact of a possible loss of
Yellow’s services on DOD from the Department’s Transportation Command (TRANSCOM),
TRANSCOM’s Surface Deployment and Distribution Command (SDDC), and a major
TRANSCOM surface transportation contractor (Crowley Logistics) that subcontracted services
to Yellow.37
TRANSCOM staff had already “shot down” Yellow’s request that TRANSCOM support
Yellow’s certification as critical to national security.38 TRANSCOM and SDDC provided
information and data concluding that Yellow’s trucking services could be replaced by other
companies with minimal impacts to DOD due to the substantial capacity of other trucking
companies. SDDC assessed that any disruption caused by the cessation of services provided by
Yellow could be managed by using other transportation service providers (TSPs) and noted that
“the current LTL [less-than-truckload] industry utilization rate of the 300 other TSPs is low.”39
TRANSCOM’s primary surface transportation contractor Crowley Logistics—which
subcontracts with LTL providers including Yellow—also assessed that Yellow’s services could
be replaced “by other carriers without any major impact.”40
In accordance with these assessments that Yellow’s services could be replaced by other
companies, DOD’s analysis also found that Yellow provided a much smaller share of LTL
trucking services to DOD than the 68% repeatedly claimed by the company, a figure that was
ultimately included in Treasury’s announcement of the loan to Yellow.41 But in compiling data
8
on Yellow’s share of DOD’s LTL shipments from TRANSCOM and its components, DOD
found that Yellow had only provided 34% of DOD’s LTL shipments in 2019 and 2020,
amounting to half of what Yellow had claimed in its application.42 Furthermore, DOD experts
assessed that even that 34% could easily be absorbed by other companies.43 The company has
continued to maintain that the 68% figure it provided is accurate.44
2. Yellow Was Entangled in a False Claims Act Suit Alleging That the Company
Fraudulently Overcharged DOD.
Emails obtained by the Select Subcommittee also show that, in the process of evaluating
Yellow, career DOD officials discovered that DOJ was pursuing litigation against Yellow for
fraudulently overcharging DOD for trucking services.45 DOJ had alleged in a lawsuit based on
the findings of DOD’s Defense Criminal Investigative Service that Yellow had fraudulently
overcharged DOD for thousands of shipments worth millions of dollars over a period of more
than seven years by submitting shipment weights that Yellow knew to be inflated. The suit also
alleged that Yellow knowingly made false statements to DOD to conceal this misconduct.46
Treasury officials evaluating Yellow’s application had become aware that the company
was being sued by the Department of Justice before career DOD officials, and the counselor to
the Secretary leading the team analyzing the loan application asked Yellow’s counsel about the
status of that litigation. Yellow’s counsel responded that the lawsuit was a mere “contractual
dispute” with a pending motion to dismiss.47
That statement was, at best, misleading. The lawsuit was a False Claims Act action
alleging that Yellow engaged in “a fraudulent scheme … to deliberately overcharge” DOD by
submitting inflated shipment weights and also “knowingly made false statements” to facilitate
this scheme.48 The Department of Justice had characterized Yellow as having “systematically
overcharged the government for freight carrier services and made false statements to the
government that hid their misconduct . . . for more than seven years.”49 Yellow ultimately
agreed to pay the government nearly $7 million to settle this case following a court’s ruling
against the company’s motion to dismiss.50 Yellow also agreed to settle a securities fraud
lawsuit brought by investors related to the company’s alleged overcharging practices and DOJ’s
9
investigation.51 That investor lawsuit alleged that Yellow employees consistently raised
concerns about the “integrity” of Yellow’s shipment weighing practices.52
3. Career DOD Officials Recommended that Yellow Not Be Certified as “Critical” to
National Security and Eligible for a National Security Loan.
The Select Subcommittee’s investigation identified evidence showing that DOD
industrial base experts recommended against certifying Yellow as critical to national security.
Following the analysis of information and data concerning Yellow’s criticality to national
security, the career official serving as chair of the JIBWG sent a recommendation to Acting
Deputy Assistant Secretary of Defense for Industrial Policy Scott Baum recommending that
Yellow should not be certified as critical to maintaining national security. That
recommendation, which has not previously been made public, explained that Yellow should not
be certified because it provided a service akin to a “commodity” and there were “plenty of other
trucking companies that do this,” and because DOJ was suing the company for “fraudulently
overcharging DoD by millions of dollars.”53
The chair of the JIBWG told the Select Subcommittee that Acting Deputy Assistant
Secretary Baum concurred in the recommendation that Yellow should not be certified.54 On
June 25, 2020, Mr. Baum sent an email to Under Secretary for Acquisition and Sustainment
Ellen Lord, a Trump appointee, recommending against certifying Yellow due to the
“commodity” nature of the services provided by Yellow, the fact that “plenty of other trucking
companies” could provide Yellow’s services, and the lawsuit against the company for
fraudulently overcharging DOD.55 Mr. Baum noted, however, that Treasury’s General Counsel
had reached out to DOD’s General Counsel to remind DOD of “the political aspect of the
request” for certification.56
10
4. Following a Call with Treasury Secretary Mnuchin and Other Political Appointees,
Secretary Esper Certified Yellow Was “Critical” to National Security—Contrary to
the Recommendations of Experienced Career Officials.
Documents obtained by the Select Subcommittee from DOD and Treasury show that
shortly after career officials communicated that Yellow would not be recommended for
certification, Trump Administration political appointees at the highest levels of the departments
moved to discuss the matter and quickly overrode career officials’ assessments. On June 24,
2020, the chair of the JIBWG, a DOD career official, emailed a Treasury official to inform her
that DOD would not certify that Yellow was critical to national security. The Treasury official
responded later that day that she had briefed the message “up my chain.”57 According to
documents obtained for the first time by the Select Subcommittee, Treasury Secretary Mnuchin
requested a call with Secretary Esper the next day regarding “YRC and DOD Certification.”58
The request also sought to include DOD’s General Counsel and Treasury’s General Counsel.59
The call between Secretary Mnuchin and Secretary Esper took place on the morning of
June 26, 2020.60 Secretary Esper’s senior staff emailed among themselves in the hours before
the call requesting information on the issue of Yellow’s certification, with which Secretary Esper
was unfamiliar.61 Documents obtained by the Select Subcommittee show that DOD’s
Acquisition and Sustainment first provided brief bullet points for the Secretary’s use that
included components of the analysis and recommendation of career DOD officials, which led to
the recommendation that Yellow should not be certified.62 Those briefing points noted that
Yellow was “not the only carrier that has the ability to” provide freight carrier services to DOD
and flagged that “the Justice Department sued YRCW for fraudulent charges to DoD.”63
Emails obtained by the Select Subcommittee show that, 15 minutes later, Secretary
Esper’s Chief of Staff wrote to the staffer accompanying Secretary Esper that “Ellen [Under
Secretary for Acquisition and Sustainment Ellen Lord64] is now in my office and requested” that
a new set of bullet points be provided to the Secretary “in lieu of the previous talking points.”65
The new talking points deleted the note that other carriers could provide the services provided by
Yellow and added a recommendation that Yellow should be certified that contradicted the
recommendations of career officials:
A&S believes that it is in DOD’s best interest to support YRC Worldwide
with a loan at this time in order to both support force readiness and national
economic security.66
Shortly following his call with Secretary Mnuchin, Secretary Esper signed a brief letter to
Treasury indicating that he certified that Yellow was “critical to maintaining national security,”
without providing any rationale or supporting data.67 On July 1, 2020, Treasury announced its
loan to Yellow.68
Secretary Mnuchin testified at a hearing of the Congressional Oversight Commission on
December 10, 2020. In response to a question concerning whether he had independently
assessed that Yellow was critical to national security, Secretary Mnuchin said that Treasury
“relied” on the DOD certification.69 Secretary Mnuchin also responded to a question asking why
11
Treasury prioritized Yellow’s application over other companies by testifying that “we also had a
certification from the Department of Defense that the loan qualified, so of course we were going
to prioritize this.” He also later testified, “[I]t’s not my position to comment on the DOD
certification.”70 In none of these responses did Secretary Mnuchin mention his call with
Secretary Esper regarding Yellow’s certification or any other role he may have played in the
certification process. Secretary Mnuchin’s request for an urgent call with Secretary Esper
concerning Yellow’s certification shortly after DOD career staff informed Treasury that Yellow
would not be certified, and Secretary Esper’s rapid certification of the company following that
call, raise serious questions about the candor of Secretary Mnuchin’s testimony on this matter.
Secretary Mnuchin’s testimony implied that Treasury merely relied on DOD’s independent
judgment and suggested that DOD’s certification was what prompted Treasury to prioritize
Yellow’s application. The documents obtained by the Select Subcommittee, however, show
that—contrary to his testimony—Secretary Mnuchin was actively involved in and may have
even influenced DOD’s certification decision.71
Treasury’s rapid approval of the loan to Yellow stands in stark contrast to the long
process faced by other applicants for national security loans. None of the other companies that
applied for national security loans during the same period as Yellow, in late April and early May
2020, had their loan applications approved until late October 2020, even as they sought loan
amounts that were much smaller than Yellow’s (between $500,000 and $10 million).72
C. The Trump Administration Approved the Loan to Yellow on Terms That Violated
CARES Act Risk and Use of Funds Requirements.
The Trump Administration’s loan to Yellow violated CARES Act requirements intended
to protect taxpayers and ensure that loan funds only went to aid companies in coping with the
impacts of the coronavirus crisis. The Trump Administration agreed to loan terms that allowed
Yellow to use more than half its pandemic loan funds for long-term capital investments in
replacing an aging truck and trailer fleet, despite the CARES Act specification that loans were to
offset “losses incurred as a result of the coronavirus.” Further, despite CARES Act requirements
that national security loans either be “sufficiently secured” or made at an interest rate reflective
of the risk and comparable to pre-pandemic market rates, the loan to Yellow was made at an
interest rate well below that charged to Yellow by private creditors led by Apollo only six
months before the onset of the pandemic, even though Apollo received higher-ranking collateral
interests than Treasury. Before Treasury agreed to such generous terms, Yellow’s own counsel
had concluded that Yellow would likely be required to pay a higher interest rate and give a
higher-priority collateral interest to Treasury because of the CARES Act risk and interest rate
requirements.
1. The Trump Administration Allowed Yellow to Use Most of Its Loan Funds for Long-
Term Capital Investment, Violating the CARES Act Requirement That Loans Be
Made to Offset “Losses Incurred as a Result of the Coronavirus.”
The CARES Act authorized Treasury to make national security loans to provide
“liquidity” to businesses “related to losses incurred as a result of the coronavirus.”73 Treasury
guidance implemented this requirement by specifying that companies seeking relief could apply
12
for loans for “covered losses” caused directly or indirectly by the pandemic.74 The loan Treasury
approved to Yellow, however, went far beyond offsetting the losses Yellow incurred as a result
of the pandemic both in its size and in the manner in which Treasury allowed Yellow to use the
loan funds.
Treasury agreed to allow Yellow to use $400 million of its $700 million loan for
substantial long-term capital investments in replacing the company’s aging truck and trailer fleet,
with only $300 million of the loan approved to meet near-term obligations.75 Yellow’s
application materials, the company’s recent rate of capital investment, Treasury’s initial
proposed terms to the company, and the statements of Yellow’s Chief Financial Officer (CFO)
all make clear that the loan’s substantial allotment of funds for long-term capital investment
violated CARES Act requirements.
i. Yellow’s Loan Application Claimed, but Did Not Substantiate, That Its Request
Was to Offset “Covered Losses” Incurred as a Result of the Coronavirus.
Yellow sought a loan from Treasury totaling $710 million—only slightly more than the
$700 million Treasury ultimately approved—and characterized the full $710 million request as
compensating for “covered losses” incurred as a result of the pandemic.76 The company
requested $345 million “to fund newly created debt related to deferring contractual obligations in
2020,” itemized those losses into six categories, and asserted that all those obligations had been
incurred since the onset of the COVID-19.77 But Yellow also requested a further $365 million—
more than half its purported “covered losses”—explicitly for “capital investment required to
replenish the fleet and modernize the technology infrastructure.”78
Unlike Yellow’s request for funds to offset debts and deferred obligations incurred after
the onset of the pandemic—which included an itemized breakdown of debts incurred as a result
of the pandemic’s impact—Yellow’s request for $365 million for capital investment only
vaguely justified the request’s connection to pandemic losses with the indefinite statement that
Yellow had cut an unspecified “significant portion of its capital plan for 2020.”79 Moreover,
Yellow’s application made clear these funds were largely being sought to remedy an existing
problem—an aging truck and trailer fleet—that plainly pre-dated the pandemic, stating that
Yellow’s “average age for tractors is ~11 years; industry average is 5 years.”80 The application
further emphasized the financial benefits to Yellow of increased capital expenditures, but did not
substantiate the claim that the funds would be used for losses caused by the pandemic.81
Yellow executives knew they were seeking to take advantage of American taxpayers.
Yellow’s CFO made clear to creditors, including Apollo, that the company’s request for a $710
million national security loan went beyond the funds needed to offset pandemic losses and
included a request for additional capital funds. In a May 1, 2020 email titled “Treasury App
Sources & Uses of Cash,” Yellow CFO Jamie Pierson sent the company’s existing creditors a
summary of its $710 million loan request, with $365 million of the request designated for capital
investments in new tractors, trailers, and technology.82 Pierson explained: “While we had our
13
hand in the cookie jar, we thought we would try to get a little ‘catch up’ capex [capital
expenditures] while we were at it.”83
ii. The $400 Million Authorized for Capital Investment Was Far in Excess of
Yellow’s Pre-Pandemic Rate of Capital Expenditures.
Although Yellow represented that its capital investment funds request would merely
allow it to fulfill its pre-pandemic investment plan,84 the company’s actual capital expenditures
preceding the pandemic were far lower than the amount the company sought and received for
capital investment through the Treasury loan. In the first quarter of 2020, most of which
preceded the pandemic’s impact in the United States, Yellow spent only $13 million on capital
expenditures.85 In the two years immediately preceding the pandemic, Yellow’s total capital
expenditures were less than half of its loan request for funds for capital investment—$145.4
million in 2018 and $143.2 million in 2019.86 After receiving the Treasury funds earmarked for
capital investments, Yellow’s capital expenditures increased dramatically. In the first quarter of
2021, just as Yellow began to receive significant disbursement of the Treasury funds designated
for capital investment, the company increased its capital expenditures 15-fold from the first
quarter of 2020 to $202 million, substantially more than it had spent on capital investment on an
annual basis in the years before the pandemic.87 In 2021, Yellow’s total capital expenditures
surged to $497.6 million, more than three times its total capital expenditures in the years
immediately preceding the pandemic.88
Although Treasury ultimately approved Yellow’s use of a full $400 million for capital
expenditures, Department officials initially evinced skepticism about Yellow’s request.
Counselor to the Secretary Adam Lerrick, the Treasury official who led the financial analysis of
Yellow’s loan application, asked how Yellow could reconcile its substantial request for funds for
capital investment with its much lower rate of recent capital expenditures.89 Yellow’s response
highlighted the benefits to the company of more intensive capital investment and a transition to a
purchasing rather than leasing model, but did not explain how this transition was connected to
14
losses incurred due to the pandemic.90 Further evidencing Treasury’s skepticism about Yellow’s
request that most of its loan funds be used for long-term capital investment, Treasury proposed a
smaller total loan of only $500 million on the night of June 24, 2020, with only $150-200 million
for capital expenditures.91 By the next morning, however, Treasury sent a new proposal that
increased the total loan to $700 million, with up to $400 million for long-term capital investment
in trucks and trailers.92 Mr. Lerrick told the Select Subcommittee during an interview that
Treasury’s rapid overnight reversal was based on “discussions” with Yellow.93 Treasury’s rapid
reversal raises questions about whether there was political pressure to ensure that Yellow
received a loan on generous terms regardless of an objective assessment of whether the funds
would only offset losses incurred due to the pandemic. These more generous terms were
proposed the same day that Secretary Mnuchin requested a call with Secretary Esper regarding
Yellow’s certification.94 It is possible that these changes are also a result of President Trump’s
perception that a generous loan to Yellow would be politically advantageous.
Mr. Lerrick told the Select Subcommittee that Treasury asked for projections to confirm
that the company had pre-pandemic plans to make such substantial capital investments.95 The
company’s public filings and level of capital investment before the pandemic, however, strongly
suggest it would not actually have been able to scale up its capital investment so dramatically
even in the absence of the pandemic. Yellow told Treasury that it had planned to fund its capital
investments from “cash flow.”96 But Yellow—which had an operating income of just $16
million in 2019—had warned investors in early 2020 that it might be unable to generate
sufficient cash flow to make sufficient capital investments, just as it had warned the year prior,
when it ended up spending only $143 million on capital expenditures.97 Yellow’s performance
and level of investment before the pandemic makes clear that the company was not plausibly on
track to fund $400 million in capital investment out of its cash flow before the onset of the
pandemic. Treasury’s loan was used make large capital investments unrelated to “losses
incurred as a result of the coronavirus.”
iii. Yellow’s Request and Treasury’s Approval of a Large Tranche of Loan Funds for
Capital Investment Was Motivated by a Desire to Fix a Long-Standing Capital
Deficit, Not to Offset Losses Incurred as a Result of the Pandemic.
Mr. Lerrick told the Select Subcommittee in an interview that it became clear that the
increased loan amount for substantial capital expenditures was necessary to increase the
“viability” and “profitability of the company.”98 However, the CARES Act directed Treasury to
make loans to offset “losses incurred as a result of the coronavirus” not to increase the
profitability of a loan applicant’s business model.99 Yellow’s pre-pandemic capital investment
rates, credit “weaknesses,” and “thin margins” meant that the $400 million Treasury approved
for the company’s use for capital investment went far beyond filling losses caused by the
pandemic.100 Yellow’s application itself made plain that the need for these investment funds was
created by a longstanding investment deficit unrelated to the pandemic: the average age of the
company’s trucks was 11 years, compared to an industry average of five years.101 The pre-
existing “weaknesses in [Yellow]’s credit profile” and “thin margins” identified by Moody’s
Investor Service, along with the much higher interest rate Yellow received from Apollo to
restructure existing debts, strongly suggested that, even without the impact of the pandemic,
Yellow would not have been able to obtain private financing on such favorable terms to make
15
such a substantial long-term investment in replacing its fleet.102 As discussed above, Yellow’s
CFO also made clear to Yellow’s private creditors that the company’s capital expenditure
request went beyond seeking to fill a gap created by the pandemic.
2. The Trump Administration Approved the Loan to Yellow on Terms That Violated the
CARES Act’s Risk and Interest Rate Requirements.
The CARES Act provided that Treasury could only make national security loans with a
reasonable level of risk and required that loans that were not sufficiently secured with collateral
must be made at an interest rate reflecting the risk that was no lower than a market interest rate
would have been for a similar loan before the pandemic. Specifically, the CARES Act directed
that the Treasury Secretary could only make national security loans that were “prudently
incurred,” and that the loans must be “sufficiently secured” or “made at a rate that … reflects the
risk of the loan” and “not less than an interest rate based on market conditions for comparable
obligations prevalent prior to the outbreak of the coronavirus disease 2019 (COVID-19).”103 As
illustrated by the legal analysis of Yellow’s own counsel, Treasury’s acceptance of a third-
ranking claim to Yellow’s existing collateral and the agency’s agreement to make the loan at an
interest rate significantly lower than a large private loan Yellow received in late 2019 violated
these CARES Act requirements.
i. The Trump Administration Agreed to Accept a Higher Level of Risk Than
Yellow’s Existing Private Creditors.
In making a $700 million loan to Yellow, Treasury agreed to take a collateral interest
behind Yellow’s other creditors on Yellow’s major existing assets. Specifically, Treasury took
only a third-ranking interest on Yellow’s accounts receivable and capital assets behind the ABL
facility lender banks and the creditor group led by Apollo. Apollo retained a first priority
collateral interest on Yellow’s equipment, real estate, and other equity interests and a second
priority interest on Yellow’s accounts and cash. The ABL facility retained a first priority
collateral interest on the latter and a second priority interest on the former.104 Treasury took a
third-ranking interest behind these creditors on all existing assets, with the result that the
American taxpayers assumed significantly more risk than those creditors.105
ii. The Loan to Yellow Was Not “Sufficiently Secured” and the Interest Rate
Charged Reflected Neither the Risk of the Loan nor Market Conditions Prior to
the Pandemic.
Treasury’s approval of a loan to Yellow with the first tranche of the loan—totaling $300
million—secured only with a third-ranking priority on Yellow’s existing assets was not
“sufficiently secured” as required by the CARES Act. Although Treasury maintained that
Yellow was overcapitalized, Treasury agreed to assume risk where, in the event that the
company’s assets were liquidated, creditors with claims of over $1 billion on the company’s
assets would have higher priority than Treasury to the proceeds of all Yellow’s existing assets.106
Given the company’s projections that there would be excess trucking capacity in the near future
and the advanced age of Yellow’s trucking fleet, there were clear risks that taxpayers would not
be made whole in the event the company’s assets were liquidated in an unfavorable economic
16
environment because taxpayers’ interests ranked last in priority among Yellow’s major
creditors.107
Even as Treasury assumed risk greater than Yellow’s private creditors, Treasury agreed
to charge an interest rate significantly lower than Yellow had received from Apollo under market
conditions shortly before the onset of the pandemic. The interest rate that Treasury granted
Yellow—LIBOR plus 3.5%—was only slightly higher than the LIBOR plus 3% interest rate
charged to smaller companies in the CARES Act-authorized Main Street Lending Program for
significantly smaller, lower risk loans.108 The Treasury official who negotiated with Yellow over
the loan’s terms made clear that the loan involved “significantly higher risk” than Main Street
program loans that were made at a similar interest rate.109 The rate was much lower than the
LIBOR plus 7.5% interest rate that Apollo charged for its September 2019 $600 million loan,
even as Apollo received first-ranking priority to much of Yellow’s existing collateral.110
Treasury’s decision to charge an interest rate so much lower than the recent market rate
Yellow had received will ultimately cost taxpayers more than $60 million in interest payments
(and potentially more than $100 million given the repayment structure of the loan), despite the
higher risk assumed, and will provide Yellow with an equivalent windfall.111 This boon to
Yellow allowed the company’s executives’ to continue receiving millions of dollars of
compensation in the midst of an economic crisis. Public filings show that Yellow actually
steadily increased the total compensation flowing to top executives in its CEO, Chief Operating
Officer, and Chief Financial Officer positions from $4.3 million in 2019, to $8 million in 2020,
and then to $12.3 million in 2021, including by paying out millions of dollars in severance
packages to departing executives and hiring new executives at even higher compensation
levels.112 While not technically prohibited by the CARES Act, these large increases in executive
compensation further suggest that Yellow did not need to rely on such a substantial amount of
taxpayer funds to provide relief from losses caused by the pandemic.
The interest rate Treasury agreed to charge Yellow both failed to reflect the risk of the
loan to Yellow and was lower than the rate Yellow paid to Apollo under “market conditions for
comparable obligations prevalent prior to the outbreak of the coronavirus.”113 Indeed, Secretary
Mnuchin later conceded that this low interest rate loan to Yellow was “risky” and testified that
“we do not want to be in the long-term business of lending to this type of company.”114 These
generous terms violated the CARES Act interest rate and risk requirements that were intended to
protect taxpayers.115
iii. Yellow’s Own Counsel Concluded That the CARES Act Would Require Yellow to
Give the Government a Higher-Priority Collateral Interest and to Pay a Higher
Interest Rate than Treasury Ultimately Required.
The Select Subcommittee obtained a legal analysis conducted by Yellow’s own counsel
that demonstrates the Trump Administration agreed to terms even more generous than Yellow’s
own lawyers contemplated. The legal memorandum drafted by Yellow’s counsel concluded that
Yellow would be required to give a higher-ranking collateral interest to Treasury and pay a
higher interest rate than Treasury ultimately agreed to. Yellow submitted this legal
memorandum—which was prepared for its board and executives regarding CARES Act
17
requirements for national security loans—to Treasury along with its application materials.
Yellow’s counsel concluded that Treasury would need to receive “middle priority” liens on
Yellow’s collateral between “the current first-ranking creditors but ahead of the current second-
ranking creditors,” and that Treasury “would be compensated for this second ranking position
through an interest rate higher than the interest rate on the existing private loans in the first
ranking position.”116 Treasury ultimately agreed, however, to take third-ranking priority in
Yellow’s existing collateral, behind both major existing creditors. Even though it took a lower
priority security interest than Apollo, Treasury charged a significantly lower interest rate than
Apollo.117 That Treasury agreed to such generous loan terms raises further questions about the
role of political pressure in the process of approving the loan to Yellow given the “relatively
little” leverage Yellow, which was Mr. Lerrick told the Select Subcommittee was potentially
facing bankruptcy, purportedly had in its negotiations with Treasury.118
IV. Recommendations
1. Agency Leaders Should Rely on the Assessments of Career Officials with Expertise
when Assessing Whether a Company Is Eligible for Emergency Aid Directed at
Companies Critical to National Security.
The Trump Administration disbursed 95% of the funds it loaned for companies “critical
to maintaining national security” to a company that career DOD industrial base experts had
assessed was not critical to national security, and whose services could be replaced by many
other companies. The decision to certify that Yellow was eligible for such a loan quickly
followed a call between high-ranking political appointees who overrode the recommendation of
career experts without even requesting additional collection of information or analysis from
experts. To prevent misallocation of funds designated for maintaining national security in future
emergencies, agency leaders must rely on relevant experts and their objective analysis—not
political considerations.
2. Future Emergency Legislation Allocating Funds to Companies Critical to National
Security Should Require That Agency Leaders Include the Reasoning and Data
Supporting Eligibility Certifications.
To help ensure that agency leaders appropriately disburse funds designated for
maintaining companies vital to national security in future emergencies, emergency relief
legislation should require that certifications of a company’s criticality to national security be
accompanied by the reasoning and data supporting such certifications. Secretary Esper signed a
letter certifying that Yellow was critical to national security shortly after a call with Secretary
Mnuchin and did not include any explanation, rationale, or supporting data for that decision. The
certification, instead, contradicted the reasoned recommendations, analysis, and information
compiled by DOD’s career officials. Similar future emergency legislation should require that
determinations that companies are entitled to relief intended to support industry critical to
national security include an explanation of the rationale and information supporting such
determinations. In this case, it may have been more difficult for senior political appointees to
18
override the recommendation of industrial base experts if doing so required more than a phone
call and a capricious decision.
3. Future Emergency Legislation Should Prohibit the Distribution of Federal Aid to
Companies Facing Credible Allegations of Fraud Against a Federal Government
Agency.
The Trump Administration made this substantial loan to Yellow at a time DOJ was
actively litigating a False Claims Act case that alleged the company had engaged in systematic,
fraudulent overcharging of DOD for more than seven years and had made false statements to
facilitate its fraudulent charging practices. Though this lawsuit troubled career DOD officials, it
did not prevent Trump Administration political appointees from overruling the career officials
and approving such a substantial loan to Yellow. To better protect taxpayer dollars and ensure
accountability for misconduct, future emergency legislation should include safeguards to prevent
federal relief funds and loans from flowing to companies facing active or recent legal actions
brought by federal agencies that allege fraud against the federal government.
4. The Treasury Department Office of Inspector General Should Investigate to
Determine if Yellow’s Misleading Representations to the Government in Its Efforts
to Obtain a National Security Loan Rise to the Level of Knowing Material
Misstatements in Violation of the False Claims Act.
The Select Subcommittee also recommends that the Department of the Treasury Office of
Inspector General conduct a further investigation to determine whether Yellow’s application for
a national security loan, and statements it made in order to obtain the loan—including statements
pertaining to the existing False Claims Act suit, the planned uses of the loan funds, and the
company’s share of DOD trucking services—constitute knowing false claims and false
statements under the False Claims Act.
1
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Pub. L. No. 116-136 (2020) § 4003.
2
Department of the Treasury, Q&A: Loans to Air Carriers and Eligible Businesses and National Security
Businesses (Apr. 10, 2020) (online at https://home.treasury.gov/system/files/136/CARES-Airline-Loan-Support-Q-
and-A-national-security.pdf).
3
Id.
4
Memorandum from Scott Baum, Acting Deputy Assistant Secretary of Defense for Industrial Policy, to
Ellen M. Lord, Under Secretary of Defense for Acquisition and Sustainment, Department of Defense (June 18,
2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/DOD%20Natsec%20Action%20Memo%
20with%20Criteria.pdf).
5
The DOD career official interviewed by the Select Subcommittee stressed that the answer to the questions
in DOD’s criteria would “not necessarily” weigh in favor or against certification, but the actual recommendations
provided to the Select Subcommittee make clear that the “commodity” type nature of a service and the availability
of alternate providers were used as factors in analyses recommending against certification. Select Subcommittee on
the Coronavirus Crisis, Transcribed Interview of Christine Michienzi (Jan. 20, 2022), at 15 (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-01-
20%20SSCC%20Interview%20of%20Dr.%20Christine%20Michienzi.pdf); Email from Christine Michienzi,
Deputy Assistant Secretary of Defense and Chief Technology Officer, to Scott Baum, Acting Deputy Assistant
19
Secretary of Defense for Industrial Policy, Department of Defense (June 25, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Michienzi%20to%20Baum%206.25.20%
20rec%20against%20certification.pdf); Email from Scott Baum, Acting Deputy Assistant Secretary of Defense for
Industrial Policy, to Ellen M. Lord, Under Secretary of Defense for Acquisition and Sustainment, Department of
Defense (June 25, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Baum%20to%20Lord%206.25.20%20rec
%20against%20and%20political%20angle.pdf).
6
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Pub. L. No. 116-136 (2020) § 4003.
7
Department of the Treasury, Q&A: Loans to Air Carriers and Eligible Businesses and National Security
Businesses (Apr. 10, 2020) (online at https://home.treasury.gov/system/files/136/CARES-Airline-Loan-Support-Q-
and-A-national-security.pdf).
8
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Pub. L. No. 116-136 (2020) § 4003.
9
Id.
10
Department of the Treasury, Press Release: Treasury to Provide Loan to YRC Worldwide (July 1, 2020)
(online at https://home.treasury.gov/news/press-releases/sm1049).
11
Department of the Treasury, Loans to Air Carriers, Eligible Businesses, and National Security
Businesses (online at https://home.treasury.gov/policy-issues/coronavirus/assistance-for-industry/loans-to-air-
carriers-eligible-businesses-and-national-security-businesses) (accessed Mar. 10, 2022).
12
Department of the Treasury, Press Release: Treasury to Provide Loan to YRC Worldwide (July 1, 2020)
(online at https://home.treasury.gov/news/press-releases/sm1049).
13
Department of the Treasury, Transaction Summary (online at
https://home.treasury.gov/system/files/136/YRC-Transaction-Summary.pdf) (accessed Mar. 10, 2022); Select
Subcommittee on the Coronavirus Crisis, Interview of Adam Lerrick (Feb. 16, 2022) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-02-
16%20SSCC%20Interview%20of%20Adam%20Lerrick.pdf).
14
Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Adam Lerrick (Feb. 16, 2022),
at 63 (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-02-
16%20SSCC%20Interview%20of%20Adam%20Lerrick.pdf); Congressional Oversight Commission, The Seventh
Report of the Congressional Oversight Commission (Nov. 30, 2020) (online at
https://coc.senate.gov/sites/default/files/2020-12/COC%20November%20Report%20with%20Appendix.pdf)
(Appendix F).
15
Select Subcommittee on the Coronavirus Crisis, Press Release: Select Subcommittee Launches
Investigation into $700 Million Loan Issued by Trump Administration to Troubled Trucking Company (June 3,
2021) (online at https://coronavirus.house.gov/news/press-releases/select-subcommittee-launches-investigation-700-
million-loan-issued-trump).
16
Letter from Chairman James E. Clyburn, Select Subcommittee on the Coronavirus Crisis, to Archivist of
the United States David S. Ferriero, National Archives and Records Administration (Oct. 5, 2021) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2021-10-
05.Clyburn%20to%20Ferriero%20re%20Treasury%20Nat%20Sec%20Loans.pdf).
17
Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Christine Michienzi (Jan. 20,
2022) (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-01-
20%20SSCC%20Interview%20of%20Dr.%20Christine%20Michienzi.pdf); Select Subcommittee on the
Coronavirus Crisis, Transcribed Interview of Adam Lerrick (Feb. 16, 2022) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-02-
16%20SSCC%20Interview%20of%20Adam%20Lerrick.pdf).
18
Email from Jack Rauch, Special Assistant to the President, White House, to Brian Morgenstern, Deputy
Assistant Secretary, Department of the Treasury (Apr. 3, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Rauch%20to%20Morgenstern%20.3.20%
20WH%20comms_Redacted.pdf).
20
19
Email from Erskine Wells, Principal, BGR Group, to Darren Hawkins, Chief Executive Officer, Yellow
Corporation (Apr. 8, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Wells%20to%20Hawkins%204.8.20_Red
acted.pdf).
20
Email from Erskine Wells, Principal, BGR Group, to Rohit Kumar, Principal, PwC, and Mike Kelley,
Chief Sustainability Officer and VP External Affairs, YRC Worldwide (May 6, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Email%20from%20Erskine%20Wells%2
C%20BGRC%2C%20to%20Todd%20Metcalf%20and%20Rohit%20Kumar%2C%20PwC%2C%20and%20Mike%
20Kelley%2C%20YRC%20Worldwide%20%28May%206%2C%202020%29.pdf).
21
Email from Joseph Russo, Special Assistant to the President, White House, to Mike Kelley, Chief
Sustainability Officer and VP External Affairs, YRC Worldwide (May 27, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Email%20from%20Special%20Assistant
%20to%20the%20President%20Joseph%20Russo%2C%20to%20Mike%20Kelley%2C%20YRC.pdf).
22
Email from Erskine Wells, Principal, BGR Group, to Mike Kelley, Chief Sustainability Officer and VP
External Affairs, YRC Worldwide, and Rohit Kumar, Principal PwC (May 4, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Erskine%20Wells%2C%20BGRC%2C%
20to%20Mike%20Kelley%2C%20YRC%20Worldwide%20and%20Todd%20Metcalf%20and%20Rohit%20Kumar
%2C%20PwC%20%28May%204%2C%202020%29.pdf); Email from Mike Kelley, Chief Sustainability Officer
and VP External Affairs, YRC Worldwide, to Christy Bailey, International Brotherhood of the Teamsters (May 4,
2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Email%20from%20Mike%20Kelley%2C
%20YRC%20Worldwide%2C%20to%20Christy%20Bailey.pdf).
23
Email from Erskine Wells, Principal, BGR Group, to Darren Hawkins, Chief Executive Officer, Yellow
Corporation (May 25, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Wells%20to%20Hawkins%205.25.20_Re
dacted.pdf).
24
Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Adam Lerrick (Feb. 16, 2022),
at 18 (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-02-
16%20SSCC%20Interview%20of%20Adam%20Lerrick.pdf) (Mr. Lerrick, former counselor to Secretary Mnuchin,
attributed the increase in the intensity of Treasury’s work on Yellow’s application to the company’s worsened
financial situation).
25
Email from Erskine Wells, Principal, BGR Group, to Rohit Kumar, Principal, PwC and Darren Hawkins,
CEO, Yellow Corporation (June 16, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Wells%20to%20Kumar%20and%20Haw
kins%206.16.20.pdf).
26
Email from Secretary Steven Mnuchin, Department of the Treasury, to Chief of Staff Mark Meadows,
Executive Assistant to the President Molly A. Michael, and Assistant to the President Larry Kudlow, White House
(July 1, 2020) (online at www.documentcloud.org/documents/20989594-treas-20-0568-bcd#document/p1); Email
from Secretary Steven Mnuchin, Department of the Treasury, to Chief of Staff Mark Meadows and Executive
Assistant to the President Molly Michael, White House (July 1, 2020) (online at
www.documentcloud.org/documents/20989594-treas-20-0568-bcd#document/p1).
27
Email from Erskine Wells, Principal, BGR Group, to Alexis Ross, Deputy Chief of Staff to the Secretary
of Defense, Department of Defense (June 19, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Wells%20to%20Ross%206.19.20%20pot
us%20call.pdf).
28
Email from Career Staff, Department of Defense, to Bryan Fenton, Lieutenant General, and Jennifer
Stewart, Chief of Staff to the Secretary of Defense, Department of Defense (June 26, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/staffer%2C%20Department%20of%20De
fense%2C%20to%20Fenton%206.26.20%209.35AM.pdf).
29
Email from Secretary Steven Mnuchin, Department of the Treasury, to Chief of Staff Mark Meadows,
Executive Assistant to the President Molly A. Michael, and Assistant to the President Larry Kudlow, White House
21
(July 1, 2020) (online at www.documentcloud.org/documents/20989594-treas-20-0568-bcd#document/p1); Email
from Secretary Steven Mnuchin, Department of the Treasury, to Chief of Staff Mark Meadows and Executive
Assistant to the President Molly Michael, White House (July 1, 2020) (online at
www.documentcloud.org/documents/20989594-treas-20-0568-bcd#document/p1).
30
Id.
31
Email from Christine Michienzi, Deputy Assistant Secretary of Defense and Chief Technology Officer,
to Scott Baum, Acting Deputy Assistant Secretary of Defense for Industrial Policy, Department of Defense (June 25,
2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Michienzi%20to%20Baum%206.25.20%
20rec%20against%20certification.pdf); Select Subcommittee on the Coronavirus Crisis, Interview of Christine
Michienzi (Jan. 20, 2022) (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-
01-20%20SSCC%20Interview%20of%20Dr.%20Christine%20Michienzi.pdf).
32
Less-than-Truckload (LTL) trucking services involve the delivery of small-to-moderately sized
shipments of goods that do not require a full truck and trailer. See generally RAND Corp., Army Stock Positioning
(2017) (online at www.rand.org/pubs/research_reports/RR1375.html).
33
Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Christine Michienzi (Jan. 20,
2022, at 18 (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-01-
20%20SSCC%20Interview%20of%20Dr.%20Christine%20Michienzi.pdf).
34
Id. at 27.
35
Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Christine Michienzi (Jan. 20,
2022), at 13−17 (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-01-
20%20SSCC%20Interview%20of%20Dr.%20Christine%20Michienzi.pdf); Memorandum from Scott Baum, Acting
Deputy Assistant Secretary of Defense for Industrial Policy, to Ellen M. Lord, Under Secretary of Defense for
Acquisition and Sustainment, Department of Defense (June 18, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/DOD%20Natsec%20Action%20Memo%
20with%20Criteria.pdf).
36
Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Christine Michienzi (Jan. 20,
2022), at 19 (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-01-
20%20SSCC%20Interview%20of%20Dr.%20Christine%20Michienzi.pdf).
37
Department of Defense, Analysis of Yellow Corporation Worldwide Utilization and Potential Impact
(June 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/DOD%20analysis%20of%20Yellow%20
Utilization%20and%20Impact.pdf).
38
Email from Lieutenant Colonel, U.S. Army Surface Deployment and Distribution Command, to Stephen
Farmen, Major General, U.S. Army Surface Deployment and Distribution Command (June 11, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/LTC%20to%20Farmen%206.11.20%20sh
ot%20down_0.pdf).
39
Department of Defense, Analysis of Yellow Corporation Worldwide Utilization and Potential Impact
(June 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/DOD%20analysis%20of%20Yellow%20
Utilization%20and%20Impact.pdf).
40
Id.
41
Department of the Treasury, Press Release: Treasury to Provide Loan to YRC Worldwide (July 1, 2020)
(online at https://home.treasury.gov/news/press-releases/sm1049); Excerpt, Yellow Corporation Application for
CARES Act Loan (Apr. 24, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Excerpt%20Yellow%20App%2068%20p
ercent.pdf).
42
Department of Defense, Analysis of Yellow Corporation Worldwide Utilization and Potential Impact
(June 2020) (online at
22
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/DOD%20analysis%20of%20Yellow%20
Utilization%20and%20Impact.pdf).
43
Id.
44
Letter from Chief Executive Officer Darren Hawkins Yellow Corporation, to Chairman James E.
Clyburn, Select Subcommittee on the Coronavirus Crisis (June 10, 2021) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Yellow%20Corporation.20210610.Respo
nse%20to%20Clyburn%20re%20Initial%20Response%20to%20June%203%20Letter.pdf).
45
Email from Christine Michienzi, Deputy Assistant Secretary of Defense and Chief Technology Officer,
to Staffers, Department of Defense (June 23, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Michienzi%20to%20folks%206.23.20%2
0flagging%20DOJ%20suit.pdf).
46
Complaint in Intervention, U.S. ex. Rel. Hannum v. YRC Freight, Case No. 08-cv-811 (W.D.N.Y. filed
Dec. 12, 2018), ECF No. 72.
47
Email from Counsel, Yellow Corporation, to Adam Lerrick, Counselor to the Secretary, Department of
the Treasury (June 18, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Email%20from%20Counsel%20to%20Ye
llow%20to%20Lerrick%206.18.20%20DOj%20suit%20-6678_Redacted.pdf).
48
Complaint in Intervention, U.S. ex. Rel. Hannum v. YRC Freight, Case No. 08-cv-811 (W.D.N.Y. filed
Dec. 12, 2018), ECF No. 72.
49
Department of Justice, Press Release: United States Sues Freight Companies for Systematic
Overcharging of Shipments (Dec. 14, 2018) (online at www.justice.gov/opa/pr/united-states-sues-freight-companies-
systematic-overcharging-shipments).
50
Decision & Order, U.S. ex rel. Hannum v. YRC Freight et al., 08-CV-811-A (May 10, 2021, W.D.N.Y.),
ECF No. 111 (denying Yellow subsidiaries’ motion to dismiss with respect to five of six counts); Yellow Settles
Federal Claim It Overcharged Pentagon, Wall Street Journal (Mar. 10, 2022) (online at
https://wsj.com/articles/yellow-settles-federal-claim-it-overcharged-pentagon-11646913601).
51
See Mem. In Supp. Of Mot. For Order Preliminarily Approving Settlement, Lewis v. YRC Worldwide
Inc., Case No. 1:19-cv-00001-GTS-ATB (Apr. 15, 2021, N.D.N.Y), ECF No. 95-1; Amended Complaint, Lewis v.
YRC Worldwide Inc., Case No. 1:19-cv-00001-GTS-ATB (June 19, 2019, N.D.N.Y), ECF No. 75.
52
Id.
53
Email from Christine Michienzi, Deputy Assistant Secretary of Defense and Chief Technology Officer,
to Scott Baum, Acting Deputy Assistant Secretary of Defense for Industrial Policy, Department of Defense (June 25,
2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Michienzi%20to%20Baum%206.25.20%
20rec%20against%20certification.pdf); Select Subcommittee on the Coronavirus Crisis, Interview of Christine
Michienzi (Jan. 20, 2022) (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-
01-20%20SSCC%20Interview%20of%20Dr.%20Christine%20Michienzi.pdf).
54
Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Christine Michienzi (Jan. 20,
2022), at 59 (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-01-
20%20SSCC%20Interview%20of%20Dr.%20Christine%20Michienzi.pdf).
55
Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Christine Michienzi (Jan. 20,
2022), at 59 (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-01-
20%20SSCC%20Interview%20of%20Dr.%20Christine%20Michienzi.pdf); Email from Scott Baum, Acting Deputy
Assistant Secretary of Defense for Industrial Policy, to Ellen M. Lord, Under Secretary of Defense for Acquisition
and Sustainment, Department of Defense (June 25, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Baum%20to%20Lord%206.25.20%20rec
%20against%20and%20political%20angle.pdf).
56
Secretary Mnuchin had previously testified that Treasury received letters supporting a loan to Yellow
from a number of members of Congress. Both DOD career officials’ recommendations noted that Senators Wicker
23
and Inhofe sent letters to DOD in support of Yellow’s certification, and the Select Subcommittee has been unable to
confirm whether those letters were the “political aspect” of the certification decision discussed by the Treasury and
DOD General Counsels. Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Christine
Michienzi (Jan. 20, 2022), at 58 (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-01-
20%20SSCC%20Interview%20of%20Dr.%20Christine%20Michienzi.pdf); Email from Scott Baum, Acting Deputy
Assistant Secretary of Defense for Industrial Policy, to Ellen M. Lord, Under Secretary of Defense for Acquisition
and Sustainment, Department of Defense (June 25, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Baum%20to%20Lord%206.25.20%20rec
%20against%20and%20political%20angle.pdf).
57
Email from Laura Black, Director, Office of Investment Security, Policy and International Relations,
U.S. Department of the Treasury, to Christine Michienzi, Deputy Assistant Secretary of Defense and Chief
Technology Officer, Department of Defense (June 24, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Black%20to%20Michienzi%206.24.20%
20changing%20decision%20briefed%20up%20chain_Redacted.pdf); Select Subcommittee on the Coronavirus
Crisis, Transcribed Interview of Christine Michienzi (Jan. 20, 2022), at 54 (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-01-
20%20SSCC%20Interview%20of%20Dr.%20Christine%20Michienzi.pdf) (Dr. Michienzi clarified that she meant
to convey that DOD likely would not certify Yellow).
58
Email from Executive Assistant to the Secretary, Department of the Treasury, to Director of Scheduling,
Office of the Secretary of Defense, Department of Defense (June 25, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Executive-Ass-Sec-Treas-Dir-
Scheduling-DOD-62520.pdf).
59
Id.
60
Email from Executive Assistant to the Secretary, Department of the Treasury, to Director of Scheduling,
Office of the Secretary of Defense, Department of Defense (June 26, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Executive-Sec-Treas-Sec-Dir-Scheduling-
dod-confirming-930.pdf); Email from Ellen M. Lord, Under Secretary of Defense for Acquisition and Sustainment,
to Jennifer Stewart, Chief of Staff to the Secretary of Defense, Department of Defense (June 26, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Lord%20to%20Stewart%206.25.20%20c
onfirming%20call%20took%20place.pdf).
61
Email from Jennifer Stewart, Chief of Staff to the Secretary of Defense, to Bryan Fenton, Lieutenant
General, Department of Defense (June 26, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Stewart%20to%20Fenton%206.26.20%20
sec%20prepping%20original%20tps.pdf).
62
Id.
63
Id.
64
Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Christine Michienzi (Jan. 20,
2022), at 62 (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-01-
20%20SSCC%20Interview%20of%20Dr.%20Christine%20Michienzi.pdf) (agreeing that the “Ellen” referenced
likely referred to Under Secretary Ellen M. Lord).
65
Email from Jennifer Stewart, Chief of Staff to the Secretary of Defense, to Bryan Fenton, Lieutenant
General, Department of Defense (June 26, 2020, 9:17 am) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Stewart%20to%20Fenton%206.26.20%20
sec%20prepping%20original%20tps.pdf).
66
Id.
67
Letter from Secretary Mark Esper, Department of Defense, to Secretary Steven Mnuchin, Department of
the Treasury (June 26, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Letter%20from%20Mark%20Esper%2C
24
%20Secretary%20of%20Defense%2C%20to%20Steven%20Mnuchin%2C%20Department%20of%20the%20Treas
ury.pdf).
68
Department of the Treasury, Press Release: Treasury to Provide Loan to YRC Worldwide (July 1, 2020)
(online at https://home.treasury.gov/news/press-releases/sm1049).
69
Congressional Oversight Commission, Examination of Loans to Businesses Critical to Maintaining
National Security (Dec. 10, 2020) (online at https://coc.senate.gov/examination-loans-businesses-critical-
maintaining-national-security).
70
Id.
71
Secretary Mnuchin also testified that there was a “tremendous risk to the Department of Defense” from
Yellow’s potential failure, though this flatly contradicted the analysis conducted by DOD staff that found Yellow’s
services could be replaced by “plenty of other trucking companies” and that the company was being sued for
fraudulently overcharging DOD. Congressional Oversight Commission, Examination of Loans to Businesses
Critical to Maintaining National Security (Dec. 10, 2020) (online at https://coc.senate.gov/examination-loans-
businesses-critical-maintaining-national-security).
72
How a $17 Billion Bailout Fund Intended for Boeing Ended up in Very Different Hands, Washington
Post (Nov. 25, 2020) (online at www.washingtonpost.com/business/2020/11/25/boeing-national-security-bailout-
loans/).
73
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Pub. L. No. 116-136 (2020) § 4003(a).
74
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Pub. L. No. 116-136 (2020) § 4003(a);
Department of the Treasury, Q&A: Loans to Air Carriers and Eligible Businesses and National Security Businesses
(Apr. 10, 2020) (online at https://home.treasury.gov/system/files/136/CARES-Airline-Loan-Support-Q-and-A-
national-security.pdf).
75
Department of the Treasury, Transaction Summary (online at
https://home.treasury.gov/system/files/136/YRC-Transaction-Summary.pdf) (accessed Mar. 10, 2022).
76
Excerpt, Yellow Corporation Application for CARES Act Loan (Apr. 24, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Excerpt%2C%20Yellow%20Corporation
%20Application%20for%20a%20CARES%20Act%20Nat%20Sec%20Loan%20%20-51.pdf). Yellow’s application
form referred Treasury to this presentation to substantiate its “covered losses.”
77
Excerpt, Yellow Corporation Application for CARES Act Loan (Apr. 24, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Excerpt%2C%20Yellow%20Corp%20Ap
plication%2000043-44.pdf).
78
Id.
79
Id.
80
Id.
81
Id.
82
Email from Jamie Pierson, Chief Financial Officer, Yellow Corporation, to Apollo Global Management
(May 1, 2020) (YRCW-0000983−84) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Pierson%20to%20Boehmer%20Apollo%
205.1.20%20cookie%20jar_Redacted.pdf).
83
Id.
84
Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Adam Lerrick (Feb. 16, 2022),
at 54 (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-02-
16%20SSCC%20Interview%20of%20Adam%20Lerrick.pdf).
85
YRC Worldwide (YRCW) Q1 2021 Earnings Call Transcript, The Motley Fool (May 6, 2021) (online at
https://fool.com/earnings/call-transcripts/2021/05/06/yrc-worldwide-yrcw-q1-2021-earnings-call-transcrip/).
25
86
Securities and Exchange Commission, Form10-K, YRC Worldwide Inc. (Mar. 11, 2020) (online at
https://investors.myyellow.com/node/27841/html).
87
YRC Worldwide (YRCW) Q1 2021 Earnings Call Transcript, The Motley Fool (May 6, 2021) (online at
https://fool.com/earnings/call-transcripts/2021/05/06/yrc-worldwide-yrcw-q1-2021-earnings-call-transcrip/);
Presentation, Yellow Corporation Second Quarter 2021 Earnings Conference Call, Yellow Corporation (online at
https://investors.myyellow.com/static-files/a5cdb961-e5e9-4d4b-ae55-695452436d49) (accessed Apr. 8, 2022);
Presentation, Yellow Corporation First Quarter 2021 Earnings Conference Call, Yellow Corporation (online at
https://investors.myyellow.com/static-files/9b3eaab0-cc56-45b5-9c7b-e2e84143de9d) (accessed Apr. 8, 2022).
88
Securities and Exchange Commission, Form10-K, Yellow Corporation (Feb. 4, 2022) (online at
https://investors.myyellow.com/static-files/044bfcb8-cd61-42eb-9f6d-060e9f44d61c).
89
Email from Counsel, Yellow Corporation, to Adam Lerrick, Counselor to the Secretary, Department of
the Treasury (June 18, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Cohen%20to%20Lerrick%206.18.20%20
capex%20request%20exchange_Redacted.pdf).
90
Id.
91
Email from Adam Lerrick, Counselor to the Secretary, Department of the Treasury, to Counsel, Yellow
Corporation (June 24, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Lerrick%20to%20Cohen%20Counsel%20
for%20Yellow%206.24.20%20term%20sheet.pdf).
92
Email from Adam Lerrick, Counselor to the Secretary, Department of the Treasury, to Counsel, Yellow
Corporation (June 25, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Lerrick%20to%20Cohen%20Counsel%20
to%20Yellow%206.25.20%20term%20sheet.pdf).
93
Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Adam Lerrick (Feb. 16, 2022),
at 57 (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-02-
16%20SSCC%20Interview%20of%20Adam%20Lerrick.pdf).
94
See Email from Executive Assistant to the Secretary, Department of the Treasury, to Director of
Scheduling, Office of the Secretary of Defense, Department of Defense (June 26, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Executive-Sec-Treas-Sec-Dir-Scheduling-
dod-confirming-930.pdf); Email from Ellen M. Lord, Under Secretary of Defense for Acquisition and Sustainment,
to Jennifer Stewart, Chief of Staff to the Secretary of Defense, Department of Defense (June 26, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Lord%20to%20Stewart%206.25.20%20c
onfirming%20call%20took%20place.pdf).
95
Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Adam Lerrick (Feb. 16, 2022),
at 60 (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-02-
16%20SSCC%20Interview%20of%20Adam%20Lerrick.pdf).
96
Id.
97
Securities and Exchange Commission, Form 10-K, YRC Worldwide Inc. (Feb. 19, 2019) (online at
https://investors.myyellow.com/static-files/08c6f767-b0eb-49b4-b5ee-6b0a07b414d1); Securities and Exchange
Commission, Form 10-K, YRC Worldwide Inc. (Mar. 11, 2020) (online at
https://investors.myyellow.com/node/27841/html).
98
Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Adam Lerrick (Feb. 16, 2022),
at 57−58 (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-02-
16%20SSCC%20Interview%20of%20Adam%20Lerrick.pdf).
99
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Pub. L. No. 116-136 (2020) § 4003.
100
Truckers Cut Spending as Factory Slowdown Weighs on Operators, Wall Street Journal (Apr. 7, 2020)
(online at www.wsj.com/articles/truckers-cut-spending-as-factory-slowdown-weighs-on-some-operators-
11586295247).
26
101
Excerpt, Yellow Corporation Application for CARES Act Loan (Apr. 24, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Excerpt%2C%20Yellow%20Corp%20Ap
plication%2000043-44.pdf).
102
Rating Action: Moody's Downgrades YRC Ratings, Corporate Family Rating to Caa1; All Ratings on
Review for Further Downgrade, Moody’s Investor Service (Mar. 31, 2020) (online at
https://moodys.com/research/Moodys-downgrades-YRC-ratings-Corporate-Family-Rating-to-Caa1-all--
PR_421071).
103
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Pub. L. No. 116-136 (2020) §
4003(c).
104
Excerpt, Yellow Corporation Application for CARES Act Loan (Apr. 24, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Excerpt%20Yellow%20Corp%20Applica
tion%20debt%20structure%20-6492.pdf); Congressional Oversight Commission, The Seventh Report of the
Congressional Oversight Commission (Nov. 30, 2020) (online at https://coc.senate.gov/sites/default/files/2020-
12/COC%20November%20Report%20with%20Appendix.pdf) (Appendix F).
105
Treasury did take a first-priority interest on newly purchased assets bought with Treasury’s loan funds,
but this interest only secured the portion of the loan that was to be used for long-term capital investment in tractors
and trailers—which itself violated the CARES Act requirement that loans be made to offset losses incurred as a
result of the coronavirus. Congressional Oversight Commission, The Seventh Report of the Congressional Oversight
Commission (Nov. 30, 2020) (online at https://coc.senate.gov/sites/default/files/2020-
12/COC%20November%20Report%20with%20Appendix.pdf) (Appendix F).
106
Excerpt, Yellow Corporation Application for CARES Act Loan (Apr. 24, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Excerpt%20Yellow%20Corp%20Applica
tion%20debt%20structure%20-6492.pdf); Congressional Oversight Commission, The Seventh Report of the
Congressional Oversight Commission (Nov. 30, 2020) (online at https://coc.senate.gov/sites/default/files/2020-
12/COC%20November%20Report%20with%20Appendix.pdf) (Appendix F).
107
Excerpt, Yellow Corporation Application for CARES Act Loan (Apr. 24, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Excerpt%2C%20Yellow%20Corp%20Ap
plication%2000043-44.pdf); Excerpt, Yellow Corporation Application for CARES Act Loan (Apr. 24, 2020) (online
at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Excerpt%20Yellow%20appl%20excess%
20trucking%20capacity%206740.pdf).
108
Federal Reserve, Uptake of the Main Street Lending Program (Apr. 16, 2021) (online at
https://federalreserve.gov/econres/notes/feds-notes/uptake-of-the-main-street-lending-program-20210416.htm);
Department of the Treasury, Transaction Summary (online at https://home.treasury.gov/system/files/136/YRC-
Transaction-Summary.pdf) (accessed Mar. 10, 2022).
109
Email from Adam Lerrick, Counselor to the Secretary, Department of the Treasury, to Counsel for
Yellow Corporation (June 25, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Lerrick%20to%20Cohen%20Counsel%20
to%20Yellow%206.25.20%20main%20street%20lower%20risk%20UST-HSSCC-00007214.pdf).
110
YRC Worldwide Inc., Press Release: YRC Worldwide Announces New Term Loan Agreement (Sep. 11,
2019) (online at https://investors.myyellow.com/news-releases/news-release-details/yrc-worldwide-announces-new-
term-loan-agreement).
111
The Treasury official who negotiated the loan with Yellow argued that the equity stake in the company
Treasury received compensated for Yellow’s lower interest rate, but the CARES Act contains no exception to its
interest rate requirements due to the size of equity interest received by Treasury. Instead, the CARES Act provision
directed Treasury to take an “equity interest” or an “interest rate premium,” which is reasonably read in the statute’s
context as an interest rate even higher than one that would have been received under market conditions before the
pandemic. Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Adam Lerrick (Feb. 16, 2022),
at 66 (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-02-
16%20SSCC%20Interview%20of%20Adam%20Lerrick.pdf); Coronavirus Aid, Relief, and Economic Security
(“CARES”) Act, Pub. L. No. 116-136 (2020) § 4003(d) (emphasis added).
27
112
Securities and Exchange Commission, Schedule 14A, Yellow Corporation (Apr. 14, 2022) (online at
https://investors.myyellow.com/static-files/3e794291-4fa9-43b5-beec-d7344fd8a75e); Securities and Exchange
Commission, Schedule 14A, Yellow Corporation (Apr. 13, 2021) (online at https://investors.myyellow.com/static-
files/479a5cb9-f3bc-4fd0-be5b-daaefc65f63f).
113
Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, Pub. L. No. 116-136 (2020) §
4003(b).
114
Congressional Oversight Commission, Hearing on Examination of Loans to Businesses Critical to
Maintaining National Security (Dec. 10, 2020) (online at https://coc.senate.gov/examination-loans-businesses-
critical-maintaining-national-security).
115
The former Treasury official stated that Treasury’s receipt of a significant equity stake in Yellow
adequately compensated taxpayers, but the CARES Act did not create an exception to national security loan interest
rate requirements for companies that agreed to give Treasury an equity stake. Select Subcommittee on the
Coronavirus Crisis, Transcribed Interview of Adam Lerrick (Feb. 16, 2022), at 65 (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-02-
16%20SSCC%20Interview%20of%20Adam%20Lerrick.pdf).
116
Memorandum from Counsel, to the Yellow Corporation, to Matthew Doheny, Chairman of the Board,
and Darren Hawkins, Chief Executive Officer, Yellow Corporation (Apr. 1, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Mem%20from%20Counsel%20Cohen%2
0to%20Doheny%20and%20Hawkins%20Apr%201.pdf).
117
The Treasury official who negotiated the loan with Yellow asserted that the equity stake in the company
Treasury received compensated for Yellow’s low interest rate. Select Subcommittee on the Coronavirus Crisis,
Transcribed Interview of Adam Lerrick (Feb. 16, 2022), at 65 (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-02-
16%20SSCC%20Interview%20of%20Adam%20Lerrick.pdf). Yellow’s counsel, however, also envisioned that
Treasury would take an “equity interest” in the company, showing that Yellow’s own counsel did not believe that an
equity interest in the company could be used to give a loan at a lower interest rate than was prescribed by the statute.
Memorandum from Counsel to the Yellow Corporation, to Matthew Doheny, Chairman of the Board, and Darren
Hawkins, Chief Executive Officer, Yellow Corporation (Apr. 1, 2020) (online at
https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/Mem%20from%20Counsel%20Cohen%2
0to%20Doheny%20and%20Hawkins%20Apr%201.pdf).
118
Select Subcommittee on the Coronavirus Crisis, Transcribed Interview of Adam Lerrick (Feb. 16, 2022),
at 75 (online at https://coronavirus.house.gov/sites/democrats.coronavirus.house.gov/files/2022-02-
16%20SSCC%20Interview%20of%20Adam%20Lerrick.pdf).
28
File and source
- File
- 2022-04-27-SSCC-Yellow-Corporation-loan-staff-report.pdf
- Size
- 4,689,307 bytes
- SHA-256
- ecd352f6476c40ed70915f7f814842fb05d1715972788a2d84058ec74851c44b
- Original
- www.govinfo.gov