Despite His Shady Record, USDA Backed Borrower
Tuesday, December 4, 2007; 9:11 PM
Erwin David Rabhan always looked good on paper. His résumé boasted that he ran dozens of businesses, owned a 2,330-acre cattle farm, and was an artist, an author and a major in the Special Forces. In 1970, he ferried Jimmy Carter around in a private plane during Carter's campaign for governor of Georgia.
Tall and well-built, with a shaved head, Rabhan cut a commanding and colorful figure, often showing up for meetings in a jumpsuit and sneakers.
Officials at the U.S. Department of Agriculture were impressed enough to back nearly $15 million in private loans for Rabhan to build a catfish-processing plant in Georgia and purchase a catfish farm in Mississippi.
But Rabhan was not all that he seemed. Woven into his rollicking career path were business failures, sharp questions from federal regulators and mysterious overseas dealings.
Today, the Georgia factory is abandoned. The catfish farm in Mississippi has no catfish. In August, Rabhan was released from federal prison after serving 4 1/2 years for conspiracy to commit bank fraud involving the Georgia loan. He is now awaiting trial on separate fraud charges on the Mississippi loan. Taxpayers stand to lose millions.
Rabhan's shaky business deals offer a rare window into the USDA's Business and Industry Guaranteed Loan Program. Since 1974, the USDA has backed $13.8 billion in private loans in the hope of creating businesses and jobs in rural America. But like Rabhan's, thousands of the loans have gone bad, leading to nearly $1.5 billion in taxpayer losses, a Post analysis shows.
In most cases, the bad loans are secret. USDA officials refuse to disclose the names of the businesses or the lenders, or how much the government has lost guaranteeing specific loans. The Rabhan loans are an exception because the criminal cases generated extensive court records. Those documents and details from administrative hearings show how the USDA awards millions to private businesses annually with little oversight of its spending.
As far back as 1995, a USDA employee in Georgia questioned Rabhan's business claims, internal memos show. But shortly afterward, the agency stopped doing its own due diligence and began relying exclusively on banks to check out applicants. USDA officials did not pass along their concerns about Rabhan to the lenders, allowing him to obtain millions in federally backed loans in 1999 and 2000.
"I don't know how this all got missed," said Lamar C. Walter, a former assistant U.S. attorney who prosecuted Rabhan in Georgia. "But someone at USDA wasn't paying attention."
Rabhan, 81, is now broke and living with his daughter in Massachusetts. He pleaded guilty in the Georgia case but maintains he is innocent of the Mississippi charges. "We have been accused of fraud in Mississippi," said Rabhan's court-appointed attorney, Ken Coghlan. "We absolutely deny that."
Erwin David Rabhan grew up in southern Georgia and attended schools in Savannah. He enlisted in the Army after high school and served in World War II. After the war, he enrolled at the University of Georgia, graduating with a degree in poultry science. According to his r¿sum¿, he went into construction and later operated a discount store in Florida.
In the 1960s, Rabhan shifted his attention to nursing homes, operating facilities in four states, including a 660-bed home in St. Louis that he called "the largest proprietary nursing home in the world." Later, he started a fish-protein company on the West Coast, operated day-care centers in Georgia and bought a small movie studio.