Trump administration officials Gavin Clarkson, second from left, and John Tahsuda, third from left, are seen at a National Native American Heritage Month celebration at the Department of the Interior in Washington, D.C., on November 1, 2017. Photo: Bureau of Indian Affairs

National | Politics

ProPublica: Trump appointee resigns after report on troubled Indian loan program

Wednesday, November 15, 2017

Trump Appointee Resigns After ProPublica Report

The Bureau of Indian Affairs official was overseeing a loan program that was in litigation over a loan guarantee he obtained while in private business.
By Isaac Arnsdorf
ProPublica
propublica.org

A senior official in charge of a federal loan guarantee program resigned after ProPublica reported his prior role in obtaining a guarantee under the same program as part of a deal that failed.

The official, Gavin Clarkson, stepped down Monday as deputy assistant secretary for policy and economic development in the Interior Department’s Bureau of Indian Affairs. He was appointed in June and his position did not require Senate confirmation.

At the Bureau of Indian Affairs, Clarkson supervised a program that provides loan guarantees to Indian businesses. As ProPublica reported, in his previous role as a businessman and academic, he had arranged financing and a $20 million guarantee, under the same program, for a loan that helped an Indian tribe buy a Wall Street brokerage.

The loan did not appear to meet the department’s guidelines for a guarantee but one was approved anyway. The brokerage ultimately went bankrupt and the loan was defaulted on. The department is still fighting that liability in court. (Even though the loan went sour, Clarkson and his company were paid $327,500, according to a filing in a related lawsuit.)

The transaction was criticized by the Interior Department’s internal watchdog in two separate reports this year. In a report this March, the inspector general found that the loan guarantee Clarkson arranged “departed from” guidelines and raised several red flags that made it “particularly risky.” The IG didn’t find any criminal violations, and a related grand jury investigation did not return any indictments.

In a second report, which was released yesterday, the IG said the loan program lacked “adequate controls.”

Clarkson faced pressure to resign because he hadn’t disclosed his role in the scandal, according to a department official.

A department spokeswoman declined to comment, and Clarkson didn’t answer requests for comment.

Office of Inspector General Reports:
Stronger Internal Controls Needed Over Indian Affairs Loan Guarantee Program (November 2017)
Summary: Guaranteed Loan to Lower Brule Ignored Risk Factors (March 2017)

Isaac Arnsdorf is a reporter at ProPublica, covering national politics. He can be reached at Isaac.Arnsdorf@propublica.org, on Facebook, via Twitter @iarnsdorf or by phone at 917-512-0256. His Signal (secure) number is 203-464-1409.

This story originally appeared on ProPublica. It is published under a Creative Commons license.