Battle Between a Small-Business Advocate and the SBA Gets Personal
By Rob Kuznia
April 20, 2009
With regular appearances on Fox News and CNN, Lloyd Chapman is a small-business advocate whose star is on the rise.
And although he may not be a household name, if he has his way, everyone will know the name Chapman before too long.
The 59-year-old Texas native who founded the American Small Business League is on a one-man crusade against the federal government's U.S. Small Business Administration.
But more importantly, perhaps, Chapman is on a mission to clear his good name.
"I think it was Shakespeare who said, 'He who steals my purse steals nothing. He who steals my good name steals everything,'" Chapman said. The one doing the "stealing," according to Chapman, is Mike Stamler, head spokesman for the SBA.
"This has become personal between me and Mike Stamler, and I'm going to win, and he's going to lose."
While Chapman has a history of suing the SBA over federal procurement, his latest suit against the agency is indeed quite personal.
First, a bit of background. Ever since founding the league in 2004, Chapman has sued the SBA five times, and insists he's won every case -- except for the one that's ongoing. Most of the suits have sought to obtain public records from the SBA -- as well as a reimbursement of attorneys fees -- in a quest to show that the SBA has routinely awarded small-business contracts to huge corporations, some of them Fortune 500 companies.
But in mid-March, Chapman -- whose public profile is growing as a small-business analyst on Fox News -- filed a different kind of suit. This one alleges that Stamler has slandered and defamed him, mainly in emails and phone conversations with journalists.
On March 12, Chapman filed suit with the U.S. District Court of the Northern District of California for records of every single phone call made by Stamler from 2005 through 2007. In the coming weeks, he plans to do the same thing for Stamler's emails. The league actually began asking the SBA for the documents 15 months ago, but is now taking the matter to court because Chapman is dissatisfied with the SBA's response.
Chapman, whose organization is located in the San Francisco Bay Area, argues that Stamler has dismissed as "myth" anything the league puts forth, most notably the contention that corporate giants such as Halliburton, Boeing, Rolls Royce and Lockheed-Martin are receiving lucrative federal contracts meant for small businesses.
The charge that large companies are getting contracts they should not be eligible for has to some degree been echoed by the SBA's inspector general, and even acknowledged by President Barack Obama.
But what really seems to be irking Chapman is another, more personal, allegation. Stamler, Chapman says, has openly questioned his sanity in emails to journalists.
"Mike Stamler says I'm a lunatic," Chapman told HispanicBusiness.com. "Everything I say is a lie and that this is a myth."
Chapman said he has obtained copies of some of the emails Stamler has sent to journalists knocking him. He declined to share them, citing the ongoing litigation, but says "lunatic" is a word that Stamler has used to describe him.
Providing a glimpse of the gory details is an item in the blogosphere from 2007. It involves a post from a reporter of the Long Island Business News.
In a piece titled "Expletives the SBA's forte?", reporter Ambrose Clancy wrote on the blog that Stamler had responded furiously to an article in which Chapman was quoted criticizing the SBA.
The blog includes a quote from an email sent by Stamler to the reporter calling the original article "bulls**t." More telling, though, is a comment at the end of the blog from Stamler himself.
Seeking to explain his frustration, Stamler referred to Chapman as a "one-note Charlie critic whose outrageous half-truths have caused most reporters to ignore him for comment."
The timing and nature of Chapman's suit has hamstrung the SBA's ability to respond to his claims.
For one thing, it's happening during a time of transition for the agency. Last week saw the swear-in ceremony of the SBA's new leader, Karen Mills, an appointee of President Barack Obama.
Also, Stamler, the SBA's lead spokesman, has himself declined requests for an interview, since the lawsuit focuses on him personally. That leaves assistant administrator Jonathan Swain, who has been with the SBA for all of five weeks. Swain declined to confirm or deny Chapman's repeated claims that he has beat the SBA in five suits. Instead, he simply said the SBA's new administration will fight for small businesses.
"In her confirmation hearing two weeks ago, (Mills) expressed her commitment to be sure small businesses aren't pushed out or shut out of opportunities for government contracts," he said.
Meanwhile, although Chapman campaigned vigorously for Obama -- and was a dogged critic of the Bush administration -- his welcome of Mills last week was anything but warm.
"I know all you need to know about her," he told HispanicBusiness.com. "She sits on the board of directors of a handful of Fortune 1,000 companies. She is about the furthest thing from a small-business person you're going to be able to find."
Chapman started raising a stink with the federal government and the SBA long before founding the league.
Now retired, he spent his career in sales, most recently as a sales manager for a small IT company in Navato, California, which left in 2003. While a salesman, he also took an interest in federal contracting disputes.
Chapman says that in 1993, he spearheaded a lawsuit in which the U.S. Court of Appeals for the 9th Circuit forced the Defense Logistics Agency to release documents on small-business contracting awards.
After retiring in 2003, Chapman founded a niche advocacy organization called the Micro Computer Industry Suppliers Association, which would eventually become the league.
While at the Suppliers Association, Chapman says he noticed that large companies like T-Mobile and Office Max were competing against small businesses for federal contracts, and winning. In 2002, he brought the matter up to the federal General Accounting Office, the investigative arm of Congress. In the resulting investigation, 600 companies were removed from the federal government's database of small businesses. One of them was ASAP Software, a subsidiary of Holland-based Buhrmann NV, which had 26,000 employees in 28 countries. (Chapman says many of the companies have since changed their names and are back on the list.)
The case inspired Chapman to expand the scope of his activism, and so in 2004 he changed the name to the American Small Business League.
But while the tenacious Chapman expects 100 percent transparency from the officials he interacts with, he falls short of meeting those same expectations for himself.
The structure of the league is rather mysterious, which is how Chapman prefers it.
"I'm in a war with the federal government, and I don't want them to know my troop strength," he explained.
Chapman does say that although he initially wanted to create the league as a non-profit organization, he changed his mind when he learned that such companies cannot lobby lawmakers.
"That's the main thing I do, is lobby," he said.
Chapman has donated tens-of-thousands of dollars to elected officials. He gave Obama $2,300 in the last election, and in 2007 contributed $10,000 to U.S. Senator Barbara Boxer, D-California.
The league has six employees, though the retired Chapman said he works for free.
Chapman said the company gets money from its member businesses. But he declines to reveal the names of any members -- or even how many there are -- for fear of tipping his hand.
The American Small Business Association is not the only small-business advocacy group in the nation. For instance, the National Small Business Association bills itself as the oldest group of its kind in the United States.
A non-profit organization with 150,000 members, the NSBA seems to want to distance itself from Chapman's confrontational style.
NSBA spokeswoman Molly Brogan said the vast majority of small businesses -- perhaps 85 to 90 percent -- are not concerned with federal contracting issues. As a result, the NSBA seldom pays much mind to the battles raging over at the league.
"Very rarely do I follow what they are doing," she said. "Their lawsuits are so targeted in such a specific arena -- procurement. Not anywhere close to the majority (of small businesses) would be impacted by that."
She added: "They certainly get a good amount of press out of it."
It isn't difficult to understand how some might find Chapman eccentric. For one thing, the front page of the league's Web site exudes frenetic alarm.
The most prominent feature of the busy Web site is a number in bold-red letters that is ever-increasing. This is meant to convey how much money small businesses have lost this year. (As of this posting, the figure was nearing $29 billion.)
What's more, Chapman seems to be building a brand for himself in the hyperbolic universe of cable-TV news.
With increasing frequency, he is appearing on shows such as CNBC's business updates, Fox News's Glenn Beck and Lou Dobbs and CNN's American Morning. He also writes a regular blog for the Huffington Post.
On a recent Glenn Beck appearance, Chapman is smartly dressed in a black suit and gray tie, and his demeanor is calm, belying the urgency of his message and the red-alert feel of his Web site.
"When you look at the $2.3 trillion the government has spent to stimulate the economy, not one dime of that, Glenn, has gone to small businesses," he said on the show. "One hundred percent of that $2.3 trillion has gone to the top 1 percent of American companies."
When talking to reporters, Chapman is very interested to know what the SBA officials are saying about him. He provided this reporter with a list of questions to ask Stamler. (One of them: "Have you ever told journalist in writing that American Small Business League President Lloyd Chapman is a 'lunatic?'")
To at least some degree, though, Chapman's claims about procurement have been validated by federal investigators.
In 2005, Harold Damelin, then the SBA's inspector general -- a position charged with conducting internal investigations --
released a report whose opening paragraph included this statement:
"One of the most important challenges facing the Small Business Administration (SBA) and the entire Federal Government today is that large businesses are receiving small business procurement awards and agencies are receiving credit for these awards."
In July 2008, the Department of Interior's Office of Inspector General released a list of Fortune 500 companies that had received millions of dollars in federal contracts meant for small businesses. They included Home Depot, Dell, John Deere, Waste Management and Xerox. (This case was more of a criticism of the DOI than the SBA.)
What's more, the league's Web site prominently features this quote from President Obama: "It is time to end the diversion of federal small business contracts to corporate giants."
The quote comes from an Obama-campaign press release touting the league's endorsement in February 2008.
(Chapman has since accused Obama of breaking his campaign promise.)
Meanwhile, judges have repeatedly ordered the SBA to reimburse the league's attorneys' fees for various Freedom of Information Act (FOIA) requests.
Most recently, on Wednesday, United States District Judge Marilyn H. Patel ordered the SBA to pay the league about $14,000. The league had filed suit against the SBA to obtain documents showing all the firms that received federal small business contracts in 2005 and 2006.
For its part, the SBA in the past has taken proactive steps to refute the claim that large corporations are receiving contracts meant for small businesses.
In 2007, the SBA posted a memo on its Web site called "Myth vs. Fact," which appears to have since been removed. (The league has posted it on its own Web site.)
The first item listed on the memo as "myth" is this: "Large companies, including large, multinational corporations are taking away federal contracts specifically intended for small businesses."
The memo goes on to say:
"A very few contracts are awarded to firms whose size is challenged -- not household names but firms at the boundaries of small business status."
SBA officials declined to comment on the "Myth vs. Fact memo for this story.
Chapman's current battle with Stamler officially began over a year ago, in January 2008, when Chapman filed a FOIA request with the SBA for Stamler's emails. In July, he followed up with a request for Stamler's telephone records.
League spokesman Chris Gunn said the league wants the phone records so it can determine if Stamler had been calling journalists immediately after the publication of certain stories.
The SBA has responded by sending boxes and boxes of emails to the league. Chapman and Gunn complain that the boxes are loaded with press releases written by Stamler, saying they believe this was an attempt to bog down the league's efforts.
The SBA also has sent the league a floppy disc with the phone records, but Chapman was disappointed by the low number of records turned over.
On March 12 of this year, he filed suit with the U.S. District Court, demanding more.
"The phone records produced by the SBA ... indicate the director of the SBA's press office made only 31 calls in 2005, 187 calls in 2006 and 151 calls in 2007," said the complaint says, calling the contention "patently unbelievable."
In addition, despite the boxes of printed-out emails, the league believes some have been withheld, and plans to soon file another suit requesting more.
Ultimately, Chapman said, the intent is to sue Stamler personally for defamation of character.
"I'm going to stop him -- I'm prepared to do whatever it takes, spend as much money as necessary," Chapman said. "I will not stop until I stop Mike Stamler from libeling me, slandering me, (and) trying to impugn my credibility."