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Katie G. O'Brien, Esq.

Katie's practice areas include finance, real estate, contracts and corporate law. Katie assists commercial lenders with loan documentation and closing issues and with the drafting of corporate and finance documents. Katie also advises small businesses on regulatory and licensing matters at both the state and federal levels, as well as corporate governance and transactional matters.

Katie is admitted to practice before the Supreme Courts of Pennsylvania and New Jersey. She is a member of the American Bar Association, the Pennsylvania Bar Association, and the Philadelphia Bar Association. 

Katie is a graduate of the Pennsylvania State University, where she graduated with Distinction and earned a Bachelor of Science degree, and Temple University Beasley School of Law, where she earned a Juris Doctor degree and was a member of the Temple University Political and Civil Rights Law Review.

 

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Best Practices: Recovery Act and Oversight by OIG

By Christopher M. Evans, Esq. 

Chris
Christopher M. Evans, Esq.
  

               Lenders in the unenviable position of submitting guaranty purchase or repurchase requests to the National Guaranty Purchase Center (the "NGPC") of the United States Small Business Administration (the "SBA") in Herndon, VA are often justifiably concerned about whether a submitted file contains all of the requisite documentation to preserve the guaranty.  Likewise, when the NGPC recommends that the SBA honor the guaranty, and the recommendation is approved, Lenders are justifiably relieved that the file submitted met the SBA's requirements.  However, the SBA Office of the Inspector General (the "OIG") is charged with the responsibility of supervising and conducting audits, inspections, and investigations of SBA programs.  The OIG also has the responsibility of managing oversight of the NGPC.  Given this role of the OIG, even an approved NGPC recommendation is not always the end of the story.  Through the American Recovery and Reinvestment Act of 2009 (the "Recovery Act"), the SBA is required to increase both OIG oversight of and financial reporting on its programs to best manage the integrity and mitigate the risks of all SBA programs.  This means that the OIG also has an increased role in the oversight of NGPC recommendations and procedures with respect to loans closed under the Recovery Act ("Recovery Act Loans"). 

 

                The OIG of the SBA has two divisions: the Auditing Division and the Investigations Division.  The Auditing Division's purpose is to determine if SBA programs are free from waste, fraud, and abuse, and whether such programs are operating efficiently and effectively.  The Investigations Division is tasked with the responsibility of performing criminal investigations for referral to the Department of Justice for prosecution.  Audits or reviews performed by the Auditing Division can often result in recommendations to SBA for corrective actions.  This means that a NGPC recommendation that the SBA honor the guaranty may not be reversed directly by the OIG, but the OIG does have the power to recommend such corrective action.  The Investigations Division, on the other hand, usually works closely with the SBA's lending partners on criminal investigations of borrowers or third parties. 

 

                SBA Lenders should be aware of the increased oversight by the OIG and the SBA of Recovery Act Loans.  Lenders should be aware that most OIG Investigations Division inquiries do not necessarily impute any guilt or even the suspicion of guilt to the Lender.  Lenders should also keep in mind that the OIG's Auditing Division does not have the authority to issue repairs or denials, which is the responsibility of the Office of Capital Access.  The OIG's Auditing Division does, however, recommend corrective action to the SBA.  In either case, Lenders should always work towards cooperating with the OIG and maintaining complete transparency with an OIG audit or investigation.  Finally, Lenders must be prepared to perform self-audits and disclose any inconsistencies or improprieties to the OIG before the OIG finds them independently.   

 

               For more information on other issues related to SBA audits or investigations, contact the author at [email protected] or 215-542-7070. 

 

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...that Starfield and Smith, P.C. advises its lender clients on both SBA and Federal Bank regulatory matters? 

For more information on this and the other services Starfield and Smith, P.C. provides to its lender clients, please contact David Starfield at (215) 542-7070 or email David at [email protected].

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