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USDA Backed $7.5 Million Stimulus Loan for Convicted Financial Felon

Posted By Lachlan Markay On June 21, 2012 @ 2:22 pm In Ongoing Priorities,Scribe | Comments Disabled

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The U.S. Department of Agriculture guaranteed a $7.45 million loan to a company owned by a convicted financial felon as part of the president’s stimulus package.

The loan guarantee, one of 515 given out by the USDA as part of the stimulus to fund rural development projects, helped David Myers and a partner purchase a home health agency in Mississippi.

Myers was sentenced to nine months in prison in 2009 for falsifying financial records at telecommunications giant WorldCom. The crime inflicted significant damage on the company and its employees, according to Bloomberg News [2]:

The $11 billion accounting fraud wiped out more than 17,000 jobs and $184.6 billion in market value from WorldCom’s high on June 1999. Myers’s cooperation with prosecutors led to the guilty plea of Scott Sullivan, WorldCom’s former chief financial officer, who became the star government witness in the trial of Chief Executive Officer Bernie Ebbers. Ebbers was convicted in 2005.

Federal law prohibits the government from directing funds to convicted felons within two years of their convictions, Myers pleaded guilty in 2002, five years before he was sentenced, making the USDA’s loan guarantee legal.

But former WorldCom employees told Bloomberg that the USDA should not be trusting Myers with taxpayer funds given his record.

“I don’t think criminals should be given federal stimulus money,” said one former employee. “Obviously he doesn’t know how to handle money honestly to begin with, or he wouldn’t have been involved with the fraud at WorldCom.”

The USDA defended its decision, claiming that Myers’ company “demonstrated strong repayment ability, sufficient security for the loan and the loan saved jobs and helped meet the tremendous need for health care in rural Mississippi.”

The USDA doesn’t know whether other felons received financing under the stimulus provision, according to Bloomberg.


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URL to article: http://blog.heritage.org/2012/06/21/usda-gave-7-5-million-stimulus-loan-to-convicted-financial-felon/

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[1] Image: http://blog.heritage.org/wp-content/uploads/worldcom.jpg

[2] Bloomberg News: http://www.businessweek.com/news/2012-06-21/obama-stimulus-aids-worldcom-felon-with-health-care-loan

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