Judge Orders Mediation in SBA Discrimination Lawsuit

Judge Orders Mediation in SBA Discrimination Lawsuit


A federal judge has ordered mediation in a landmark discrimination case against the U.S. Small Business Administration brought by Diamond Ventures, LLC.

Diamond Ventures filed the lawsuit in 2003, alleging that discriminatory practices in the SBA’s Small Business Investment Company (SBIC) have adversely impact minority and women-owned businesses after the firm’s own SBIC applications were rejected twice. Through matching funds requested from the SBA, Diamond Ventures’ ultimate goal was to spur business development in low-income communities.

“Judge (Gladys) Kessler started the hearing saying the case needed to be resolved,” said C. Earl Peek, managing parter and co-founder of Diamond Ventures, in an exclusive interview with Politic365. “The case had been on her docket for some time, actually over seven years, and she wants the parties at this point to have a resolution.”

Peek is inclined to agree.

“The time has come,” he said. “In the end, the evidence speaks for itself.”

SBA statistics considered in the case reportedly show just two people of 350 licensed managers in the program were African-American managers; the SBA’s own statistics show black owned firms received less than 3 percent of SBA approved financing; and .49 percent of all SBA dollars were to black-owned firms, illustrating that SBA’s policies for decades have had a disparate discriminatory impact on blacks and minorities.

SBA officials have declined to comment on the case, but a spokesman told the New York Times that the SBA is “committed to licensing minority applicants as SBICs.”

An experienced mediator has been appointed to the case, Peek said, and he expects mediation to begin within the next week. Another status hearing is scheduled for May 15.

Diamond Ventures is seeking legal fees, damages from lost profits when the SBA denied its applications, its SBIC license and the $100 million in leverage in the firm’s initial request.

On a broader scale, Peek said the firm wants SBA to change its operations and its practices that is not detrimental to the program, but opens it up “to the diversity of men and women who are qualified but don’t fit the mold of what (the SBA) sees traditionally.”

According to a company press release, Diamond will push for a jury trial if the claims aren’t amicably resolved during the mediation.

Peek remains optimistic about the outcome.

“This is hopefully, and with God’s grace, going to be a victory,” he said. “Not just a victory for Diamond Ventures, but for the American community. And for minorities and women who aspire to help their communities.”