Deported Man Stiffed City on $70,000 PEDP Loan

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Tuesday, September 18, 2012

Dan McGowan, GoLocalProv News Editor

The owner of a concrete company that received a $70,160 taxpayer-funded loan from the Providence Economic Development Partnership (PEDP) was deported before ever making a single payment on the loan, GoLocalProv has learned.

Records show Rodney Bustillo, now 48, was first approved for the loan in May 2003 by a 5-1 vote from the PEDP’s board of directors. The ten-year, four percent interest loan was supported on the condition that Bustillo provide “verification of payments made for all work-out agreements in connection with delinquent accounts” on his credit report, according to minutes from the board meeting.

But by October 2004, an immigration judge had ordered the he be deported stemming from a felony drug trafficking conviction in 1995. The immigration case was complicated because he had been in the country legally since 1970 and served in the military, Bustillo said in a phone interview Monday.

“It was bulls*it,” Bustillo said. “People lied to me. Lawyers lied to me.”

Bustillo maintains that police illegally searched his home prior to his original arrest and found only a pipe and crack-cocaine residue the belonged to another person living in the home. He claims a lawyer convinced him to plead out and accept a small prison sentence.

When he was released less than a month into the sentence, the United States Immigration and Naturalization Service (INS) was waiting for him.

“I had no idea what they wanted,” he said. “I had been in the country since I was five-years-old. No one ever said anything about my citizenship.”

PEDP Never Asked About Felony, Citizenship

Over the next several years, Bustillo claims he spent “thousands and thousands of dollars” fighting to remain in the country. At one point, records show a judge a granted him “discretionary relief,” but the Government successfully appealed and by 2006, he was deported to Honduras, where he now resides.

So how did a man with felony drug conviction on his record and his citizenship in question manage to secure a taxpayer-backed loan from the PEDP?

“They never asked me nothing about that,” Bustillo said. “I would have told them, but nobody asked.”

The PEDP’s former legal counsel, Joshua Teverow, did not respond to a request for comment for this story.

By the time he applied for his loan, Bustillo said he had built his company, Bustillo Concrete, into a multi-million dollar business that had contracts with both the city and the state. He said he had at least 16 employees when he was sent away for good, which ultimately forced the business to collapse.

“We were paying union wages,” he said. “I had rehabilitated myself. I had some trouble when I was younger, but you could say I was a success story.”

PEDP Under Fire

But the loan was no success.

Records show the PEDP approved Bustillo for a four-month payment moratorium prior to his first payment on the loan because business was slow in the winter of 2004. When it came time to begin repaying the loan, Bustillo has already been detained. He was never free again.

Bustillo’s $70,160 loan was among the 29 loans written off by the PEDP this past June, leaving the city on the hook for over $2 million counting interest and penalties. According to information obtained through a public records request earlier this month, 12 of the 29 businesses that had their loans written off failed to make more than three payments to the city. Seven, including Bustillo’s company, never made a single payment.

The PEDP’s handling of taxpayer funds has come under fire over the last year after GoLocalProv first reported a significant portion of the agency’s loan portfolio included severely delinquent loans. In July, a report issued by the Department of Housing & Urban Development (HUD) cited the city for failing to exercise “adequate oversight” over the PEDP during a ten-year span from 2002 through 2011. From 2004 until the end of his second term as Mayor in 2010, current Congressman David Cicilline served as chairman of the board (he was not yet on the board when Bustillo was approved for his loan).

Although the PEDP has always been known as a “last resort lender” for businesses that could not qualify for loans through traditional banks, the question of agency’s success rate has long been a topic of discussion during board meetings. In April 2004, former PEDP executive director Donald Eversley raised concerns that several requests for “loan forgiveness” were being made, according to meeting minutes.

“We have to be careful when appeals are made for a civic purpose or a political purpose,” Eversley stated.

During that meeting, Eversley also noted that “the perception on the street is that the PEDP loan can be gotten fairly easily and don’t have to be paid back.”

Let Private Industry Take the Risks

According to University of Rhode Island business professor Dr. Edward Mazze, agencies like the PEDP or the Rhode Island Economic Development Corporation (EDC) have too often looked for the number of new jobs being created or political favors rather than properly vetting companies applying for taxpayer funds.

“There was little due diligence before approving the loan and no or little oversight after the loan was made,” Mazze said. “Factors such as the borrower's character, capacity to repay the loan, collateral, business experience and cash flow were rarely considered.”

Mazze said the answer is clear: Government needs to get out of the business of handing out loans.

“To prevent these practices from happening again, the city and state should get out of the lending business,” he said. “Let private industry take the risks.”

Bustillo maintains that he would have repaid every dime of the loan had he not been deported. He said he is still attempting to get back to the United States because he wants to see his family and “I’ve been paying taxes since I was 14, I want my money.”

“To tell the truth. It was not paid not due to me or my company, it was because of your main man [George W.] Bush sending me away from my kids and my company,” he said. “I tried to pay but cannot do it from here, sorry. Now if you can help me get back home I would be glad to pay back.”

 

Dan McGowan can be reached at dmcgowan@golocalprov.com. Follow him on Twitter: @danmcgowan.

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