When Dirk Lammers, an AP reporter in Sioux Falls, S.D., called me in New York one afternoon, I didn't know he had a really great story idea. I knew just enough, however, to know I wouldn't mind a small piece of it. "What's a South Dakota radio station doing with a Sept. 11 Small Business Administration loan?" he wanted to know. Lammers had found out about the radio station, "Hit Kickin' Country KBFS-AM" from a database of U.S.
Small Business Administration disaster loans obtained from the IRE and NICAR Database Li- brary. He had been researching drought issues. I downloaded the dBASE file myself from the Database Library's subscription service Web site, unzipped it and imported it into Microsoft Access. Sure enough, the radio station's owner, Ultimate Caps Inc. of Belle Fourche, S.D., was on the list, along with 10,000 other borrowers.
Lammers had done some preliminary research; it turned out that all borrow- ers had to file the standard financial paperwork, plus an explanation of how the Sept. 11 attacks had affected their business. The SBA told me I would have to file federal Freedom of Information Act requests with four different regional of- fices, and it could take a while before getting the results back. Lammers and I reconsidered.
Instead of filing for all 10,000 explanations, we decided to pick out two- or three-dozen loans to businesses that sounded inter- esting in different parts of the country. We found a pet boutique in Utah; a perfume bar in the Virgin Islands; a gun dealer in Guam; a car wash in Phoenix; and quite a few bars and restaurants. We filed the FOIAs in mid-March; docu- ments began trickling back in mid-April, in various stages of redaction.
Some just had the company financials covered, per the FOIA exemption that protects busi- ness trade secrets and financial infor- mation; others were completely blacked out. We appealed the redaction of one batch that was completely unusable. The data, slightly better this time, arrived in mid-May. The documents offered a glimpse into the rationales granting the loans. An Oregon winery suffered because, as its owner later joked, "people started hit- ting the hard stuff." A Maryland skydiv- ing school almost started laying off staff because small planes were grounded for more than a month after Sept.
11, and besides, who felt like jumping out of an airplane? The Utah dog boutique was hit hard because no one was going on vacation, and dog boarding was a big part of their business. The story, I thought, might focus on the integration of the economy, the idea that the attacks in New York had enormous ramifications for a restaurant owner in San Diego. But we decided we needed to do more reporting. Since the story in- volved a federal agency, we contacted our newly created multimedia investi- gations team in Washington, D.C., to help us coordinate all the elements that would be needed-audio, video, online and photos.
We decided to send a copy of the spreadsheet to AP bureaus in all 50 states. We also began running more queries on the data to answer some questions: Which cities had gotten the most? Which states? What industries needed the most help? How many happened inside and outside the immediate disaster area? One of the first things we discovered was that barely half of all loans had gone to small businesses in New York City or Fairfax County, Va., where the Pentagon is located.
We decided to focus upon the companies outside the immediate areas of the attacks and split the list of companies whose documents we obtained under the FOIA request to see what else was there. Lammers was also talking to experts. He called me one day with alarming news. "Have you heard of STAR loans?" "Huh?" "Apparently, there's a whole lot more money out there." "More than $1.2 billion?" I was scheduled to interview Hector Bar- reto, the SBA administrator, in another week.
I called the public affairs office. "So there's $1.2 billion in the economic injury disaster loan (EIDL) program?" I asked. "Right," public affairs officer confirmed. "And is the STAR program part of that "No!" she said. "That's another $3 billion or $4 billion." It took about two weeks but I obtained from the SBA a Microsoft Excel spread- sheet with about 8,000 rows of data. Sure enough, there were about $3.7 billion in STAR loans.
We imported the new data into Ac- cess, and put together an abbreviated spreadsheet so it would be easier for journalists in AP bureaus to interpret. We included the business name, type, ad- dress, city, state, ZIP code, date of loan and amount for each borrower. We now had records of close to 19,000 loans, totaling $4.9 billion. We began looking for patterns again in Access and found some beauties, such as $6 million in loans to more than 50 Dunkin' Donuts franchises.
Were Dunkin' Donuts really hurt by terror attacks? We did some more analysis, and found that the amount of SBA loans going to New York and Washington had dropped, to barely 11 cents on the dollar. I thought that was a very strong element of the story that could be combined with the overall "ripple effect" theme. We decided to send a copy of the spreadsheet to AP bureaus in all 50 states. In addition, we would create an online database for our members to lo- calize their own stories.
John Solomon, the head of our multimedia team, wanted me to go to Ground Zero and find out how New Yorkers felt about the distribu- tion of funds. I spent an afternoon around Ground Zero with a cameraman, listening to New Yorkers fume about trying to re- build their business in what now is - for Manhattan, anyway - a ghost town. We headed across the Brooklyn Bridge and interviewed Rep. Nydia Velasquez, the ranking Democrat on the House Small Business Committee.
"It's outrageous," she said. And, she offered, it would get worse: There had been a two-year deferral period on the loans. So while our earlier analysis might have shown a miniscule default rate, she predicted it would start to be- come huge. But there was something else disturbing that was beginning to happen: Soloman, Lammers and I were getting calls from AP bureaus who said borrowers denied receiving SBA loans.
We groaned. Dirty data is an everyday occurrence in com- puter-assisted investigations. A pattern emerged: People within the original loan recipient group did not have a problem discussing how Sept. 11 had harmed their business. But STAR loan recipients generally were outraged and denied that they had received any Sept. 11 loans. Fortunately, some were curi- ous and mad enough to call their lenders and confirm that they received Sept.
11 assistance. Lammers and I regrouped; he was on vacation in Florida, but was lugging around a cardboard box with all his story notes and papers, just in case. We were about a week away from the projected run date, and kept getting calls from bureaus. Finally, an SBA official gave us a bit of guidance: The agency had left it up to the banks to determine whether the Sept. 11 attacks had economically harmed borrowers, making them eligible for the STAR loans.
Some banks may have applied a loose standard and decided every business applying for an SBA loan had been hurt by the attacks. Dirk called the National Association of Guaranteed Lenders to confirm our information. The president of the as- sociation shrugged it off. Everyone had been affected. But there was one thing we ought to know, he added: The SBA had been worried that it would run out of money in its traditional loan program, so it had encouraged banks to put as many people in the Sept.
11 program as possible. The anecdotes started flowing into our e-mail from around the country. "That's scary," said one businessman who provided clowns for special events. No one had told him he had gotten a STAR loan. We decided to focus upon the companies outside the immediate areas of the attacks. The story landed on front pages across the country, accompanied by more than three dozen state AP sidebars.
Three U.S. senators called for an investiga- tion. Nearly a month after the story ran, Lam- mers and I looked at other angles. We have reported that the SBA has been slow to approve loans for the victims of Hurricanes Katrina and Rita. And we reported on how recipients of Sept. 11 loans have been defaulting in large numbers. We learned (or, I should say, relearned) quite a few things from the story: 1.
The computer analysis is the first step. It gives you the questions, not the answers. 2. Don't assume there is ever just one government program that handles all needs. We are quite sure there are more Sept. 11-related programs around, and all of them bear examina- tion. 3. "Follow the money" has become such a cliché that I hate to mention it. So it is probably more relevant to remember there are two times when big money is made: When empires are being built, and when they are being destroyed.
In this case, we had both elements. 4. Question your assumptions. Bounce your ideas off other people. Also re- member Dumbledore's maxim: We may be rather cleverer than most wizards, but as clever wizards, our mistakes are correspondingly larger. Don't be carried away by your own cleverness. Not all computer investigations need to involve a scripted VB module that invokes a batch file to download 50 gigabytes of text files and runs them through a series of nested SAS macros.
Sometimes, simple is better. Contact Frank Bass by e-mail at fbass@ap.org.