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B-168307 1 (1970-02-06)

handle is hein.gao/gaobabkmb0001 and id is 1 raw text is: COM PTROLLER-GENERAL OF THEUNITE S 1aTEs E ~~~~_ WSI TO DC 20548 B-168307 RELEASED FEB 6 197 Dear Mr. Dellenback Reference is made to several recent meetings of members of my staff with you concerning your request that we review the foreclosure action in connection with a Small Business Administration (SBA) loan to Mr. and Mrs. Stanley D. Mustoe (Rose Motel, Phoenix, Oregon). You informed us that correspondence received from your constituents, Mr. and Mrs. Stanley D. Mustoe, and their attorneys indicated possible improper conduct by SBA representatives in SBA's administration of the foreclosure action on the loan to the Mustoes. You also requested that we review SBA's investiga- tion of your constituents' complaint since one of their attorneys charged that the investigation, which had been performed at your request, was biased. Our review included an examination of records contained in the SBA loan file as furnished to us by SBA officials in Washington, D. C., and of the SBA investigation report and discussions with Mr. Stanley D. Mustoe, his two attorneys, Mrs. Jeanette T. Marshall and Mr. Cliff W. Brower, and SBA officials in Portland, Oregon, and Washington, D. C. Our examination of the records and discussions did not result in identifying any impropex conduct by SBA representatives in their adminis- tration of the Mustoe loan or any evidence that SBA's investigation of the matter was biased. The available informdtion indicated that SBA's attempt to locate a buyer for the motel was prompted by the institution of a foreclosure suit by the seller of the motel, Mr. and Mrs. John J. Scupien, on their contract with the Mustoes for the purchase of the motel. It appears that SBA's piimary concern in the matter was to protect the Government's financial investment in the motel and that SBA's action might have been misundemstood by your constituents. In retrospect, it seems that the misunderstanding which arose on the part of your constitu- ents might have been avoided if SBA representatives had fully explained the actions they were taking and why they were being taken. In March 1968 SBA approved a $12,000 economic opportunity loan to Mr. and Mrs. Stanley D. Mustoe, doing business as the Rose Motel. Economic opportunity loans are authorized by title IV of the Economic Opportunity Act of 1964, as amended (42 U.S.C. 2901). Through the economic opportunity loan program, SBA places special emphasis on aid to small business concerns located in urban or rural areas of high unemploy- ment or to small business concerns owned by individuals with low income.

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