July 28, 2021
C-Suite Wednesday – First Three Witnesses at Stand During Kerri Agee Trial
Here are some of the key points brought up while the first three witnesses have been called to stand:
Witness # 1: Theresa Hendrix – Supervisory Loan Specialist at the Citrus Heights Loan Guaranty Processing Center
• Theresa Hendrix has been working for the SBA since 2004, and she has worked on around 36,000 loans since she has been with the SBA.
• In the past, the SBA did not require details about working capital as long as proceeds were used for day-to-day costs. Working capital is not defined in the SOP except for in the SOP 5010 section.
• The SBA does not provide training for lenders and LSPs so they can have a better understanding of the SOP. They also don’t require certifications from the lenders/LSPs.
• There have been about 13 SOP manuals in roughly the last 20 years, so the guidelines are constantly changing and being updated.
• When Theresa Hendrix transitioned from lead loan specialist to supervisory loan specialist in 2013/2014, she first met Nicole.
• Nicole Smith and Kerri Agee flew into the Citrus Heights LGPC to meet with the director or deputy director at one point. Theresa would have the most contact with Nicole Smith regarding applications, guidelines, and other questions. Often, if Nicole couldn’t achieve the desired goal while on the phone with Theresa, Theresa would hear from Kelly Isley or Kerri Agee soon after.
Witness #2: Michelle Serrano – Deputy Director of Express Purchases at the Fresno Commercial Loan Service Center
• She has worked for the SBA since 2005. She started as a loan officer in the servicing department from August 2005 to May 2008. She was promoted to the supervisor of the servicing department from May 2008 to January 2013.
• Members of banc-serv would contact her to talk about supervising, the status of purchase demand kits, any disagreements, how to liquidate, and anything else they needed guidance on. She believes she has talked to Kelly Isley, Chad Griffin, and possibly Matt Smith.
• In one case, a loan defaulted, so banc-serv packaged a ten-tab for the lender. Upon SBA review, they saw that the use of proceeds was to pay off student loans. SBA decided there was a repair due to the ineligible use of proceeds, and banc-serv saw issue with this and contacted Serrano.
• The defense attorneys are paying close attention to the numerous SOP changes. The SOP would even change twice in a year on certain occasions. Michelle said that “it gets daunting on the liquidation side”.
• When talking about Chad Griffin and Matt Smith, Michelle says she has had interactions with them. These interactions were either minimal or there was no documentation of these interactions.
• Kerri Agee’s attorney brings up that the SOP does not define “delinquent”.
Witness #3: Christopher Conn – Special Agent at the SBA/FDIC
• Conn is currently a Special Agent at the FDIC OIG, but he was working as a Special Agent at the SBA OIG during the investigation. He worked for the SBA for five years.
• A portion of a loan request was deemed ineligible and was moved into working capital. Conn had a conversation with Theresa at one point. She had indicated that there was a pattern of behavior from banc-serv where they would move portions that were ineligible into working capital.