Spread among the brick industrial buildings in St. Joseph, Missouri – once the starting point for the pony express – is the story of the government spending pandemic that went wrong. Among nearly half a dozen ruined structures, some with posted signs warning of conditions that “may pose an imminent and substantial danger to human health or the environment” are persistent reminders about HPI Products Inc. This is the local pesticide company who hasn’t cleaned up a mess made more than a decade ago.
St. Joseph endured 25 years of HPI workers dumping industrial wastewater into the city’s sewage system. In 2007, the United States Environmental Protection Agency ordered HPI to stop illegally storing hazardous waste in corroded drums and to leak into its warehouse. In 2009, the Justice Department secured a guilty plea from HPI owner William Garvey in federal court for violating the Clean Water Act and hazardous waste storage laws. Garvey was sent to prison. The following year, the EPA obtained a consent decree against the company to pay cleaning costs. Following EPA violations, HPI Products Inc. was excluded – meaning it cannot seek federal contracts or federal government financial assistance – on January 1, 2010.
Despite its long history of mismanagement and eventual exclusion, the HPI was approved this spring for a $ 441,580 loan through the United States Small Business Administration’s Payment Check Protection Program, part of the economic relief package. of the massive federal government pandemic, according to a review by NBC News.
Companies prevented by the federal government should not receive these low interest loans guaranteed by the federal government, in accordance with the requirements of the PPP program. But the House Subcommittee on the Coronavirus Crisis reported in September that it found that more than 600 loans, totaling more than $ 96 million, went to companies that were excluded from doing business with the government. Then, on January 11, the SBA inspector general reported that the number of loans to excluded companies appears to be more than 950. But none of the reports mentioned these companies.
NBC News, which obtained the loan details under the Freedom of Information Act following a federal court decision, was able to identify at least 60 excluded companies worth $ 32.4 million that were approved for PPP loans. NBC News was among a dozen news organizations that, together, sued SBA for disclosing information under the FOIA. House officials were able to find more companies because they received additional identifying information not provided by the SBA to news organizations.
The latest report by the SBA inspector general said he found “serious concerns about overpayments” in the PPP program, including money going to excluded companies. He said that enough has not yet been done by the SBA to prevent these companies from obtaining loans and that their loans are forgiven.
US Representative James E. Clyburn, DS.C., chairman of the House Selection Subcommittee, said in a statement to NBC News: “The worrying findings from the SBA Inspector General’s Office are unfortunately consistent with the Subcommittee’s report Selection in September that the SBA approved hundreds of PPP loans for ineligible borrowers who were excluded or suspended from federal contracts. ”
“The Treasury and the SBA must immediately improve supervision and accountability to ensure that taxpayer dollars are not wasted,” he added. “I am hopeful that the next government will implement timely measures to improve supervision.”
Dodge requirements
Since the start of the PPP program, companies seeking loans must confirm that they have not been excluded. An SBA spokesman said the responsibility rests with companies to provide accurate information, not the banks or the agency to verify that information.
The agency may consider federal or civil criminal prosecution for misrepresentation on government loan application forms, such as failure to disclose its exclusion. But the Justice Department’s records still do not show such cases, and the SBA was unable to point out any actions that cited the exclusion as a reason for legal action.
But the SBA said it is examining requests for loan forgiveness and would reject applications from any excluded companies it finds. “Suspension is one of those items that make the borrower ineligible” for forgiveness, and they would need to repay the loan, said an SBA spokesman.
With the latest round of PPP loans, approved on December 27 as part of a $ 900 billion economic package, SBA officials say they are trying harder to eradicate fraud. This time, the SBA is running a computerized check of each company seeking a loan. Applications will be analyzed by the agency using Treasury Department data systems to confirm the identity of the companies. These computerized checks, which should take less than a day, include confirmation of the tax identification number and other information, according to an agency representative.
Following the release of the inspector general’s report this week, the SBA said its efforts to better track fraud include working with the Treasury Department’s Do Not Pay team to signal excluded companies. Although the inspector general reported that these steps have not yet been fully implemented, a SBA representative disagreed and said, “The guardrails are in place.”
Exclusion triggers
Many of the companies identified by NBC News have been stopped by the EPA for violations of the Clean Air or Clean Water laws. Others were excluded by the Department of Homeland Security, Department of Labor and General Services Administration.
In Missouri, HPI continued to cause a series of violations for the small town of St. Joseph. According to a lawsuit filed by the city on November 30, 2020, separate from the actions of the EPA, HPI has failed to comply with the city code and continues to mix and store pesticides in its “increasingly abandoned facilities”.
“He has been so successful in not obeying,” said Janet Storts, a local activist. Speaking about HPI’s PPP loan, she noted that the company “just received another $ 400,000 for not doing it right.”
The EPA confirmed that HPI is excluded after criminal conviction under the Clean Water Act. In the case of HPI, the exclusion is specific to the location of São José where the crime occurred, the same location listed for the approved PPP loan.
HPI did not respond to requests for comment.
Pollutant problems
Among other companies that NBC News has identified as receiving PPP loans and being excluded for violations by the EPA is Nupro Industries Corporation, an oil and lubricant manufacturer in Philadelphia whose Neatsfoot Oil products are used to care for items like baseball gloves and riding saddles. It was approved for a $ 300,000 PPP loan, although it has been excluded since 2012.
The company must monitor pollutants in its industrial wastewater, taking samples and testing pollutants such as pH and ethylbenzene, which can cause breathing problems and dizziness with acute exposure. From 2006 to 2007, Nupro diluted its test samples to appear to comply with pollutant limits, according to EPA records. Nupro was criminally prosecuted, pleaded guilty and paid a $ 200,000 fine.
AJ Berg, chief operating officer at Neatsfoot Oil Refineries Corporation, a subsidiary of Nupro, told NBC News that the problem was resolved. But he did not clarify which problem and did not answer follow-up questions.
Continuous headaches
Meanwhile, the city of São José is still struggling to clean up the mess that HPI left. Garvey still owns at least 11 buildings in St. Joseph. A third building the company previously owned was in poor condition and the city spent two years trying to get the company to repair the roof to no avail. After a storm in 2017, the building’s facade collapsed.
HPI did not pay for the demolition of the building, and instead the city dug in its own funds, spending $ 390,000. The money was withdrawn from three funds, including the state’s casino gaming initiative, which goes to Save Our Heritage donations. These grants help owners of historic buildings in the city make structural and external repairs.
But the city is still waiting for some justice. Aimee Davenport, the lawyer who represents St. Joseph in her current lawsuit against HPI, said in the lawsuit that the city is asking for past damages and fees associated with city compliance violations.
“It is an economic damage, a matter of public security and an environmental issue. All of that, ”said Davenport. “We are trying to get them back into compliance to protect all of this as soon as possible.”