B-174104, JAN 24, 1972

B-174104, JAN 24, 1972

SALE OF LAND - IRREGULAR PRACTICES CONCERNING AN ALLEGATION BY RINKMATE RESURFASIR OF IRREGULAR PRACTICES IN CONNECTION WITH THE SALE OF LAND IN MORRIS COUNTY, N. J., BY THE SMALL BUSINESS ADMINISTRATION (SBA). THE COMP. GEN. CAN BE OF NO ASSISTANCE SINCE THERE IS NO EVIDENCE OF COLLUSION BETWEEN THE SBA AND ANY OTHER BIDDERS. FURTHERMORE, THIS COMPLAINT SHOULD BE ADDRESSED TO THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, WHICH APPOINTED THE SBA AS RECEIVER.

TO RINKMATE RESURFASIR:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF SEPTEMBER 13, 1971, IN WHICH YOU ALLEGE THAT CERTAIN IRREGULAR PRACTICES OCCURRED IN CONNECTION WITH THE SALE OF 2 1/2 ACRES OF LAND IN MORRIS COUNTY, NEW JERSEY, BY THE SMALL BUSINESS ADMINISTRATION (SBA).

THE SBA HAS ADVISED THIS OFFICE THAT THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, FOLEY SQUARE, NEW YORK, NEW YORK 10007, IN CIVIL ACTION NO. 66 CIV. 279, APPOINTED THE SBA AS RECEIVER FOR TWO SMALL BUSINESS INVESTMENT COMPANIES AND APPROVED THE SALE OF THE LAND IN QUESTION BY THE ADMINISTRATION. IN THIS REGARD, THE SBA HAS FURNISHED US A REPORT ON THE PROCEDURES IT USED IN SELLING THE SUBJECT PROPERTY, WHICH IS QUOTED IN PERTINENT PART:

"THIS PROPERTY IS JOINTLY OWNED BY ALAR SBIC AND HUDGINS SBIC, RECEIVERSHIPS IN WHICH THE AGENCY IS THE COURT-APPOINTED RECEIVER.

"IN COMPLIANCE WITH NATIONAL DIRECTIVES, THE ADVERTISEMENT OF SALE OFFERING, AUTHORIZED BY SBA FORM #327 DATED AUGUST 4, 1971, APPEARED IN THE NEW YORK TIMES AND PATERSON NEWS. THE ADVERTISEMENT STATED THE AGENCY RESERVES THE RIGHT TO REJECT ALL BIDS. IN RESPONSE TO THE ADVERTISEMENT, 31 INQUIRIES WERE RECEIVED AND SEVEN SEALED BIDS WERE SUBMITTED. THE SEALED BID OFFERING PROVIDED FOR CASH AND/OR FINANCING OFFERS.

"SUBJECT REAL PROPERTY APPRAISED ON MARCH 12, 1970 WAS ASSIGNED A UNIT VALUE OF $5,000 OR $12,500, AND MORE RECENTLY APPRAISED ON JULY 26, 1971 AT $8,500 A UNIT VALUE OR $21,250.

"THE SEALED BIDS RECEIVED WERE AS FOLLOWS:

1. GENE CAPALBO $16,100 (25% CASH-75% 10

YEAR FINANCING)

2. SOLOMON REAL ESTATE 750

3. ROELOF SCHANK 6,600

4. SHARLANE, INC. 10,100 (70%-5 YEAR FINANCING)

5. JOSEPH GULIA 9,000

6. J. P. BELT ON 6,200 OR $8,400 (70% FIVE

YEAR FINANCING REQUESTED)

7. WILBUR FREDERICKS 15,025 *ATTENDED SEALED BID

SALE

"ALL BIDS WERE BELOW JULY 26, 1971 APPRAISED VALUE. AFTER CONSULTATION WITH SBA APPRAISER THE RECEIVERS FOR ALAR SBIC AND HUDGINS SBIC, ALL BIDS WERE REJECTED. THE TOP THREE BIDDERS ON AUGUST 30, 1971 WERE CONTACTED BY PHONE, WERE ADVISED THAT ALL BIDS WERE REJECTED, AND WERE QUERIED WHETHER THEY WERE INTERESTED IN SUBMITTING ADDITIONAL CASH BIDS IN EXCESS OF $16,100.

"MR. GULIA WAS NOT INTERESTED IN INCREASING HIS BID FROM $9,000.

"MR. CAPALBO WHEN CONTACTED BY PHONE ON AUGUST 30, 1971, EXPRESSED INTEREST IN INCREASING HIS BID TO $16,500 CASH FROM $16,100 TEN YEAR FINANCING. HE WAS REQUESTED TO SUBMIT HIS OFFER IN WRITING.

"MR. FREDERICKS, A LOCAL OAK RIDGE, NEW JERSEY BROKER, WHEN CONTACTED ON AUGUST 30, 1971, WISHED TO INCREASE HIS ALL CASH BID OF $15,025 TO $16,555.

"ON AUGUST 31, 1971 SECRETARY TO CHIEF LAD, RECEIVED A TELEPHONED TELEGRAM FROM MR. CAPALBO AS FOLLOWS:

'KINDLY DISREGARD AND RETURN MY AMENDED SPECIAL DELIVERY LETTER UNOPENED AS I HAVE BEEN UNABLE TO RAISE THE REQUIRED CASH OFFER.'

"ALL DEPOSITS FOR SEALED BIDS WERE RETURNED BY REGISTERED MAIL BY LETTERS OF SEPTEMBER 2, 1971.

"A WRITTEN OFFER OF $16,555 BY MR. FREDERICKS WAS RECEIVED ON SEPTEMBER 10, 1971, ACCOMPANIED BY CERTIFIED CHECK AS DEPOSIT."

YOU STATE THAT YOU WERE NOT INFORMED AS TO A DEADLINE DATE FOR SUBMITTING YOUR FINAL OFFER; THAT YOU WERE NOT INFORMED THAT CASH WAS AN ABSOLUTE CONSIDERATION IN DETERMINING THE AWARD; THAT YOU WERE NOT INFORMED THAT YOU WERE THE HIGHEST BIDDER AT THE OPENING; THAT YOU WERE CONFUSED AS TO "PROPER PROCEDURE FOR FINAL DETERMINATION"; AND THAT THERE WAS "POSSIBLE COLLUSION IN WHAT THE HIGHEST OFFER BY PHONE WAS", SINCE THE HIGHEST OFFER WAS $55 ABOVE YOUR FINAL CASH OFFER OF $16,500.00.

FROM OUR REVIEW OF THE RECORD, IT IS APPARENT THAT SBA MAINTAINS THAT THE OTHER BIDDERS CONCERNED WERE FURNISHED THE SAME INFORMATION WHICH YOU WERE FURNISHED DURING THE PROCEDURES UTILIZED IN EFFECTING THE SALE, AND THAT THERE IS NO EVIDENCE OF COLLUSION BETWEEN THE SBA PERSONNEL CONCERNED AND THE PARTY TO WHOM THE SALE WAS MADE.

IN ANY EVENT, SINCE THE GOVERNMENT DID NOT OWN THE PROPERTY IN QUESTION AND IT IS REPORTED THAT THE SALE OF THE LAND BY SBA WAS MADE IN ITS CAPACITY AS THE COURT-APPOINTED RECEIVER, IT APPEARS THAT ANY COMPLAINT WHICH YOU MAY HAVE CONCERNING THE ACTIONS OF THE RECEIVER IN SELLING THE PROPERTY SHOULD BE ADDRESSED TO THE ABOVE-MENTIONED UNITED STATES DISTRICT COURT, WHICH APPOINTED THE RECEIVER, RATHER THAN TO THIS OFFICE.

IN VIEW OF THE FOREGOING, WE MUST CONCLUDE THAT WE CANNOT FURTHER ASSIST YOU IN THIS MATTER.