Republican National Committee Chairman Richard Richards, who owed the government some $60,000 in delinquent loans for his health spa in Utah, has received interest-free loans from nine Republican friends to help bail him out.
Robert B. Evans Sr., chairman of the Michigan Republican State Finance Committee, confirmed this week that he sent a letter to 12 Republican friends in February asking each to lend Richards $5,000 interest free so that the GOP leader can pay off the delinquent debts to the Small Business Administration. Evans said nine, including himself, have sent Richards money. He would not identify the other benefactors by name.
After talking with Richards, who is on vacation this week, RNC press secretary Jennifer Hillings said the solicitation of the loans was made without Richards' knowledge. She said Richards found out about it after Evans sent him a copy of the letter. "He then called him and expressed his appreciation," Hillings said.
Hillings said she does not know if Richards has already made good on the SBA loans. "It's the question of Richards' finances really none of the press' business," she said.
In the letter, Evans said: "We have a chance to help a very good and important friend of ours out of a little difficulty . . . . " Evans is chairman and principal owner of Evans Industries Inc., a diversified Detroit manufacturer with sales of $18 million a year.
Evans referred in the letter to a Jan. 13 Washington Post story citing repeatedly delinquent payments over the past four years by Richards and a partner on about $300,000 in loans for a health spa in Roy, Utah.
After Richards failed to make 12 monthly payments on one loan, the SBA last May had to pay $96,203 to a bank that declared the loan in default. "The main reason I don't pay it is I don't have the money to pay it," Richards said.
"This story was true," Evans wrote in the letter, "but investigation showed that everything was legal and aboveboard. I guess it was enough of a worry to the administration SBA to ask him to pay off his delinquent debt of $60,000. He doesn't have it. In these times and with his income, this is understandable.
"This is a time that we don't want anything to interfere with Dick's efforts or divert his attention from working to win control of the Senate and the House of Representatives," he added.
Evans asked each to lend Richards money interest free on a demand note, meaning no repayment date is specified. "He will then send you a promissory note, duly signed, for the amount you have loaned him," Evans wrote.
Evans said this week he took it upon himself to raise the money after "someone in Washington" told him of the story. "I said I'll get him off the hook," Evans said. He would not identify the person who called him about the story.
As to the identity of Richards' other patrons, Evans said: "It's a very personal thing. It's something that I cannot possibly believe the newspapers or the public would be interested in."
"I have no ax to grind," Evans said. "There are no conflicts of interest. There were no decisions for favors. It's just as if you came to me as a friend and said I have a loan and can't pay it."
Asked when Richards is expected to repay the loans, Evans said, "I presume it would be the logical assumption to repay it when he gets out of office."
Richards' spa, American Health & Sports, is about 40 miles north of Salt Lake City. Richards and a neighbor, Lew Wangsgard, assumed one SBA-guaranteed loan of $181,000 when they bought the spa in 1978. After assuming the loan, the partners were granted deferrals on at least 21 of the 44 monthly payments. Most recently, the SBA gave them until this month to resume making payments on the loan.
When they bought the spa, the partners obtained a second SBA-guaranteed loan of $110,000. The SBA had to make good on its guarantee of that loan when the Bank of Utah declared Richards and Wangsgard in default last year. By that time, Wangsgard had sold his half interest in the spa to Alex Hurtado, who is active in Republican Hispanic activities in Utah, but he remained obligated with Richards on the loan.
Richards and Wangsgard then became responsible to the SBA instead of the bank for making payments on the defaulted loan. Last November, Richards paid $20,454 to the SBA to bring the loan current. He then failed to make payments of more than $1,000 each last November, December, and January. When asked about the delinquencies in mid-January, Richards said he had mailed a check to cover two of those payments.
An SBA spokesman, citing provisions of the federal Privacy Act, said this week the agency could not say if Richards is now current.
Previously, SBA officials said thousands of businesses are delinquent in this economy. Saying the loan is well-secured by mortgages on the spa and the homes of Richards and his partner, the officials said they expect Richards to make good on his obligations.
In January, Richards referred to his involvement in the spa as a "bad business decision" that has cost him about $75,000. He said he has not received favored treatment from the SBA because of his position with the GOP. Nevertheless, he said, a story on his delinquency might embarrass him and the Reagan administration, which has made a point of cracking down on government loan delinquencies.
As a postscript to his letter asking Richards' Republican friends to help "relieve him of a tremendous burden," Evans wrote: "Although this has been in the papers, I think this part of it should be kept completely confidential."