CONTACT C. Earl Peek (PRWEB) August 22, 2003 -378-
Black Venture Capital Firm Files Discrimination Complaint against SBA for Discrimination in SBIC Venture Capital Program. Inspector General Finds Bias and Separate Treatment in Recent Report.
ATLANTA, GA (PRWEB) August 21, 2003 -Â Diamond Ventures, an Atlanta-based venture capital firm with a majority black management, today announced that it filed an unprecedented discrimination lawsuit against the Washington, D.C.- based Small Business Administration in the District Court of Washington, D.C. alleging bias in its selection process and prejudice in its application policies and procedures towards minority applicants.
Diamond Ventures, which has a management team with more than 70 years of combined experience in all aspects of business finance, lending, operations, venture capital, and business valuations, initially applied to the SBA for a venture capital license in January 2002. The management team has completed over 1,000 financings including 50 investments with a return of over 400% while other Small Business Investment Companies (ÂSBICÂsÂ) have averaged a 9.28% return for the last 15 years, per SBA reports.
In February 2003 Jeff Pierson, Associate Administrator for the SBAÂs Investment Division denied the application stating that the team lacked Âqualifications and ability to operate a Small Business Investment Company (SBIC) and SBA has Âsignificant concernsÂ with DiamondÂs investment philosophy of investing in Blacks, Asians, Women, Hispanics, and Native Indians.
In response to the SBAÂs assessment, C. Earl Peek, Managing Partner of Diamond said, ÂOur management team demonstrated a solid track record in financings and private investments for over 20 consecutive years- itÂs awful to see SBAÂs take this stance, while it hasnÂt licensed any black firms and less than 5 of the existing 450 SBICÂs are Black, Hispanic, Women, Native Indian, or Asians in total. SBAÂs comments are a pretext for discrimination.
Peek further said, ÂWe find it both inexplicable and disturbing that the SBA has approved firms with the same or similar management team profiles with investment return track records substantially less than DiamondÂs management team.Â
Public reports show:
Janice Mathis, Southeast Regional Director of Rainbow-Push cited a September 2000 SBA Inspector General Report on the organizationÂs activities with women and minorities which stated that, ÂNone of the data for women or minority firms was reliable because it was incomplete and unverifiable.Â
Mathis noted, with the combined records of disparate treatment of minorities in access to capital and the associated lack of funds, itÂs not a surprise that black businesses cannot compete and fail more often than their white counterpartsÂ. ÂOne of the key focuses of our fund is to invest in inner-city, underserved, and rural areas, where there is little hope for developmental capital,Â said Peek.
ÂNo matter what the outcome is regarding Diamond Ventures, SBA will need to address the serious disparity and availability of financing to minorities and women and in inner-city, underserved, and rural areasÂ Peek added.
Diamond Ventures is an Atlanta-based firm that specializes in investing and financing inner city businesses, real estate and commercial properties. Its partners collectively have more than 70 years experience in lending, investments, business advisory services, and venture capital.
Photo Caption: C. Earl Peek and Lonnie A. Saboor with Former Senior Vice-President Roger Bower of RBC Tucker Federal after its first commitment to the venture fund.