Your $20 Million Loan Went Bust? The Trump Team Has a Job For You

A government watchdog found irregularities in a loan guarantee arranged by Gavin Clarkson for an Indian tribe. Now Clarkson is in charge of the program that is on the hook for the mess.

by Isaac Arnsdorf

As a deputy assistant secretary for policy and economic development in the Department of the Interior’s Bureau of Indian Affairs, Gavin Clarkson oversees a small program that guarantees loans for Indian businesses. His “expertise in the areas of law, finance and economic development are a valuable asset,” noted Secretary of the Interior Ryan Zinke in a statement announcing the appointment, which took effect on June 11 and didn’t require Senate confirmation.

Zinke didn’t mention it, but Clarkson is particularly well acquainted with the loan guarantee program he now supervises: He played a key role in a convoluted transaction that flopped and left the Interior Department fending off a $20 million liability that is still in litigation years later. That sum represents about 25 percent of the amount the program can guarantee in a year, and until the case is resolved, that money cannot be used to guarantee new loans.

Clarkson, a member of the Choctaw Nation of Oklahoma, is a former law professor who has taught at the University of Michigan and New Mexico State, and been involved in several businesses. He referred questions to a department spokeswoman, who did not respond to questions sent by email.

The story begins with what sounds like an improbable idea: In 2008, the Lower Brule Sioux tribe in South Dakota decided to buy a nearly insolvent Wall Street financial services company. The tribe, which was receiving federal aid to reduce poverty, according to a report by Human Rights Watch, turned to Clarkson to obtain a loan, and a loan guarantee from the Interior Department. (The guarantees are intended to encourage banks and other entities to lend to Indian businesses that might not otherwise find funding. The government agrees to reimburse any covered debt that the borrower fails to pay off.)

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Source: ProPublica