SBA investigates previous crimes of applicants for loans

The lack of personal history questions on business incentive applications through the city of Gary and the Indiana Finance Authority is in stark contrast to procedures at the U.S. Small Business Administration.

The contrast comes to light following the revelation that the owners of a concrete block manufacturer received a package of incentives despite having been convicted nine years ago for business crimes including tax fraud.

The city of Gary and the state earlier this year announced they had offered IB&B LLC, owned by William Critser and Jean Critser, an incentives package of tax breaks, an $8.7 million low-interest loan and a $25,000 training grant.

In June of 1997, William Critser had stood in federal court and pleaded guilty to using a phony billing scheme to bilk the operator of the Gary Sanitary Landfill with "ghost" shipments of clay.

He also admitted to failing to report business income on his 1991 tax returns. His ex-wife, Jean Critser, also pleaded guilty to failing to report income.

Unlike four of the five applications Critser filled out for his incentives -- which didn't ask about past criminal history -- the SBA requires a statement of personal history from all members of the small business for any loan it guarantees. The applicant must answer if he or she has ever been convicted, arrested or charged with any criminal offense.

If the applicant answers "yes" to any of those, he or she is then subject to an investigation by the SBA's Office of Inspector General. Fingerprints can also be required and checked against the FBI's criminal database.

"While our main goal is to help people start companies to help grow the economy ... we have a fiduciary duty to the public for any money we are overseeing," said G. Gail Gesell, director of SBA's Indiana District office.

The inspector general reports back to the SBA district office on the applicant's background, the facts on any previous brushes with the law and a recommendation on whether or not the loan should go forward.

That investigation can be waived if the offense was minor and well in the past, such as an arrest for marijuana possession in someone's youth. But crimes such as tax avoidance, fraud and theft are all likely to trigger an investigation, Gesell said.