WFAA-TV

WFAA-TV has discovered $243 million of bad loans approved by the U.S. Export-Import Bank made to Mexico since early 2003.

As he paged through the invoices, Clifton Bradshaw continued to shake his head.

“We didn't sell it because some of the serial numbers don't match, some of it wasn't even manufactured,” said Bradshaw, owner of Nueces Power Equipment in Corpus Christi.

Bradshaw’s company was listed as the heavy machinery supplier on nearly $20 million of loans approved by the U.S. Export-Import Bank, a federal agency in Washington, D.C. But he says many of the sales did not occur.

"This is not any of our documentation," Bradshaw said. “It's all falsified.”

He is among a growing list of business owners who question how such misrepresentation or outright fraud could have occurred on medium-term U.S. Export-Import-sponsored loans to Mexican companies.

WFAA-TV has discovered $243 million of bad loans approved by the U.S. Export-Import Bank made to Mexico since early 2003. The nearly 190 loans went into default because the Export-Import Bank may not have done the necessary checks and verification that private businesses routinely conduct.

In fact, WFAA-TV has found that even simple Google checks of company websites or MapQuest checks might have stopped the continued rip-offs. Now taxpayers may end up footing the bill for a number of the government-sponsored loans.

"Evidently, there's no due diligence, period,” Bradshaw said. “That's the whole problem. You've got a bureaucratic organization that's not doing the due diligence."

Bradshaw says a phone call or search of his company website would have verified that his company didn't even sell some of the listed equipment.

"There were no checks and balances,” Bradshaw said. “There was no verification whatsoever that this equipment ever existed."

The Export-Import Bank is supposed to help small- and medium-sized U.S. businesses in Dallas and elsewhere sell their products by guaranteeing low-interest loans to companies in places like Mexico.

The Mexican companies are required to often use the low-interest loans to buy U.S. products. The Export-Import Bank, as part of the loan process, is supposed to verify the legitimacy of companies receiving loans, accuracy of loan applications, and ensure loans are used to buy U.S. products.

However, many of the medium-term loans to Mexican companies went into default with little repaid. According to statistics calculated by WFAA-TV, nearly 20 per cent of such loans went into default in 2003 and nearly 19 per cent in 2004.

"Any bank's portfolio that has a 20 per cent default rate says the bank has not done what it's supposed to do,” said Tom Schatz, president of Citizens Against Taxpayer Waste.

"Smaller loans appear to have been thrown out there without much oversight,” said Schatz, when shown loan documents.

In its review, WFAA-TV found a number of inaccuracies in the loan documents that may have raised red flags.

For example, CTR Forwarding in Brownsville is named in Ex-Im paperwork. But WFAA-TV checked the address and building operators and discovered no such company may have existed now or in the past.

Another company, Texas Crushing and Screening, is connected to a nearly $2 million loan for heavy construction equipment. The invoice from the Export-Import Bank said Texas Crushing was located on Highway 10 in Dallas. No specific address and telephone number is listed. The zip code, if a Dallas address, is incorrect.

A simple MapQuest search would show there is no Highway 10 in Dallas. The loan is now in default.

Red flags might have been raised on a $4.5 million Ex-Im loan for 14 luxury buses. A phone call might have determined that the manufacturer's model numbers don't match the invoices.

Invoices claim the buses were shipped by EP Logistics - at a Laredo address - bound for a Mexican company.

But there is no EP Logistics at the Laredo address. And there's no room for 14 buses on the premises.

Another $8 million Ex-Im transaction for 39 Passenger Coach Freightliner XB buses: The loan lists Thomas Bus of Houston as the supplier to a Mexican company.

But Thomas Bus officials said they do not sell such a “XB model” bus.

"That transaction never occurred,” said Gregg Peterson, Thomas Bus general manager. “The buses don't cost that much ... and we don't export to Mexico."

Burton Equipment in Pharr, paperwork says, exported air compressors to Mexico.

But it didn't happen, Burton officials said, when reached for comment.

A couple of miles away, Cherokee Tools is named as the forwarding point for equipment bound for Mexico. This time more than $6 million worth of refuse system equipment.

But Cherokee Trucks is at the listed address, not Cherokee Tools.

“That is not my signature and that is not my business name. I don't know what is going on with this,” said Cherokee Trucks owner Carlos Garza, when shown loan documents allegedly signed by him.

Loan documents show a company owned by Andrew Parker as the middle-man exporter for much of the equipment sent to Mexico. His company, the San Antonio Trade Group, is operated from a historic mansion in San Antonio.

WFAA-TV has learned Parker is now under a federal investigation in connection to up to $145 million in defaulted loans, most of them made to Mexico.

The government, in a federal civil suit, has alleged Parker may have pocketed money through fraudulent invoices and fabricated financial statements.

The government wants to seize some of his luxury cars and is suing him for them.

He declined to talk us.

And despite the fact that it's funded with taxpayer money, neither would the Export-Import Bank. A day before the scheduled interview, bank officials cancelled the on-camera interview.

“It's not easy to get detailed answers as far as their operations go,” said Ian Vasquez, with the Cato Institute. “You just have to take their word for it when they say: "Things are going well."”

Vasquez said the Ex-Im Bank has a history of secrecy and questionable loans.

“In the public sector that kind of thing can go on for a long time, especially if it's not known to the public,” Vasquez said. “And Washington bureaucracies are pretty good at keep that hid under the table."

Across the border in Mexico, many companies that supposedly got loans were impossible to find.

One loan was supposed to go to a firm called "Deep Clean".

No such place could be found.

A more than $2 million was loaned to a car rental company near a border airport. But it also could not be located.

WFAA-TV contacted other businesses listed as suppliers from Oregon, to California and Georgia. Company officials said they had not sold many – if not all – the goods listed on the invoices.

Back in Texas, Clifton Bradshaw is chapped that no one was watching it all.

“I was surprised that it could be done,” Bradshaw said. “I wasn't surprised that it was tried. I was surprised that it went through the system.”

For the first time in its 73 year history, the Export Import bank has appointed an Inspector General to review possible loan fraud and abuse.

The bank is involved with $12 billion loans each year. And reports that it plans to expand loans to small business.

E-mail bharris@wfaa.com.