One Stop Capital Flop 

You'd think the loss of six million dollars would teach Oakland to stop making ill-advised business loans. You'd think.

On a summer afternoon not long ago, Ralbert Brooks-Hamilton stood inside a silent warehouse in West Oakland, ready to pitch his beloved product, the U-Wheel-It. The 47-year-old hadn't made a sale in nearly two years, but he approached this day's performance as if it were his first. He'd shaved for the first time in a week, and wore a pressed white shirt, polyester slacks, and a cardinal-red necktie.

"You go to tha' beach, don'tcha?" he began, his voice touched with an affable West Caribbean accent. "You go to tha' beach, and you've got to bring your t'ings from the car to the ocean, right? Right. So you got your clothes, and you've got your towels" -- here the elder salesman began to act as if his hands were suddenly filled with tote bags -- "and what else? You want to bring your cooler too, right? Because you want to drink a nice cold beer when you get down to da beach, don'tcha?" Brooks-Hamilton stood at the trunk of his make-believe car now, in a make-believe parking lot, and swiveled his head around as if wondering what to do.

"Now let me ask you another question, real quick. When you go to da beach, how many times do you and your friends lift up the cooler and put it down? Lift up the cooler, and put it down?" Again, the salesman performed the imaginary task, and he wagged his tongue from mock exhaustion. "So let me ask you another question -- how are you suppose to carry all those t'ings wit' you, man? I'm asking you. How are you supposed to get all those t'ings from here, down there? Without breaking your back?"

Hardly waiting for an answer, the salesman pounced.

"You wheel it, that's how! Don't drag it, don't push it, don't carry it. Wheel it!" Brooks-Hamilton paused and pointed a finger at his visitor, like a wand that was about to transfer a sudden sense of self-empowerment. "You wheel it, my man. You. Wheel. It."

On cue, he loaded his invisible items into the aluminum cart at his feet, picked up the handle, and walked happily along the sand. "How you doing today, sir?" he said, waving to others on the beach. As he strode past his real visitor in the warehouse, the salesman was all smiles. "I'm a goin' to da beach, man, I'm a goin' to da beach!"

There was something sad, almost pathetic, about the performance. Pathetic, because Brooks-Hamilton's day in the sun is doomed to remain elusive.

In 1995, he was one of the first to receive a loan from Oakland's newly minted Municipal Lending Program, an ambitious, federally supported program that provided money to brave souls willing to open shop in Oakland's worst neighborhoods and create much-needed jobs for their residents.

Brooks-Hamilton and his U-Wheel-It fit the bill: He was a minority first-time business owner who didn't qualify for a regular bank loan; he was hawking a product the VC flyboys of the day easily passed over; and he was willing to hire West Oakland residents. That he was the epitome of a high-risk loan seemed of little matter to the Municipal Lending Program. Indeed, this was just the kind of entrepreneurial spirit the city was looking to finance.

Just days after the city council approved Brooks-Hamilton's first loan for $150,000, then-Mayor Elihu Harris arrived at the grand opening of the U-Wheel-It warehouse at the corner of 27th and Alicia streets. The mayor had a cameraman in tow and one of those oversized cardboard checks in hand. He praised Brooks-Hamilton and his partner, inventor Joseph Edmonds, for their enterprise and "commitment to the community." Brooks-Hamilton recalls the day with great pride. "You should've seen it, man. My wife set the whole day up. We had hundreds of people out here -- food, music, good times. We had the newspaper here -- we even had a Baptist minister, and a Muslim imam, and a Protestant minister bless the building. It was cool."

Seven years later, his business is bankrupt and his loans in default. All that's left is the dusty warehouse (with a thousand U-Wheel-Its in stacked cardboard boxes) and the entrepreneur's near-empty North Oakland home. As his business failed, so did his marriage, says Brooks-Hamilton. He's since found work as a laborer around town, knocking on doors offering his weed-pulling skills. "Look at my hands," he says now, pawing at the calluses on his leathery palms. "I used to be a businessman."

This businessman-turned-laborer is hardly the only one who's taken a flop on the city's dime since the program began. Since 1995, bad commercial loans have cost Oakland nearly $6 million -- roughly a quarter of its total loan disbursements. That's a failure rate at which no bank could survive. If those lenders remain in default, the bad debt will grow to nearly $10 million -- a phenomenal waste of money for a city that barely averted a $28 million budget deficit this year.

The city lending program has also fallen well short of its goal of creating nearly 1,500 jobs for residents of the city's poorest neighborhoods. Of the 454 jobs credited to the lending program, barely half are filled by Oakland residents, a city survey found, and only 66 went to people living within one of the targeted "Enhanced Enterprise Communities."

City auditor Roland Smith shakes his head in disgust at all of these numbers. His office reviews most loan applications before they're sent off to the city council. He is asked to offer his expert opinion: Will the business fail or will it thrive? Will it deliver the number of jobs the city claims it will? It's sometimes a tough call for the independently elected auditor, who concedes that the city needs to pump money into its downtrodden neighborhoods to get things rolling. At the same time, Smith is mindful that Oakland can't afford to fund unrealistic business plans.

All too often, he says, the sales projections prepared by analysts for the city lending program -- now called the "One Stop Capital Shop" -- are guided by wide-eyed enthusiasm rather than pragmatism. At council meetings Smith comes off as a curmudgeonly uncle who focuses on the numbers, politics be damned. But politics play big downtown, and Smith's advice is often ignored. "They've become advocates for the borrowers, not the lender," he complains of the analysts. "And that's a problem."

Oakland's failure to exercise due diligence in issuing loans has created a problem not just for the taxpayers whose money is being squandered, but for loan recipients as well. Brooks-Hamilton's experience, which ultimately led to a grand jury investigation of the One Stop Capital Shop's practices, has made him a dubious poster boy for what happens when good intentions outweigh common sense -- when the city advocates too strongly for a borrower and that borrower goes bust.

Between 1995 and 1998, the city council approved three loans to Brooks-Hamilton totaling more than $460,000. All of that money is gone. With interest, the figure now exceeds $650,000, and while the former businessman has managed to pay back a few grand, the city attorney's office has already moved in on his assets; foreclosure of his home could happen at any time.

This has been a tragic turn of events for Brooks-Hamilton, who still considers himself a business talent. The reason his product failed to catch on, he says, was that the city didn't give him enough money, and the money it did loan him came too little too late. He says he never got a solid chance to help himself, or, for that matter, the neighborhood. "I was set up for failure, man," he repeats, furrowing his brow. "I was set up for failure."


The U-Wheel-It was the brainchild of Joseph Edmonds, an inventor from Los Angeles who probably never imagined his product would be chosen to ignite Oakland's urban renewal. Edmonds met Brooks-Hamilton in Oakland in the summer of 1993, when the two belonged to a group that helped African-American inventors through the maze of paperwork required to secure patents and trademarks.

Edmonds had been unloading his car at a Southern California beach one day, the story goes, when he realized he couldn't carry all his equipment from the car to the beach without repeated trips. A light bulb flicked on somewhere: the U-Wheel-It.

Brooks-Hamilton fell in love with his new friend's idea. They discussed the invention, and at first it seemed like a great meeting of minds. Both were middle-aged men with a wife and kids. Both were looking to make the big score of their lives. And they both wanted to move fast.

Brooks-Hamilton was himself an inventor, responsible for some of the types of gadgets advertised on late night TV for $19.99. He's responsible for the Face Saver, a handheld plastic mask women can use to cover their faces while applying hairspray, or, as Brooks-Hamilton likes to demonstrate, for peeking into a hot oven: "She don't want her face to get hot," he says. He also created the Pill-Verizer, a device that crushes large pills for elderly folks, "so they can put it in their drink and drink it down without choking on it." Then there was the Fisherman Notifier, which clips onto a fishing pole and activates at a nibble: "You got one, you got one," a robot-voice says. "Fish on line. Fish on line."

But none of his inventions brought in much dough, certainly not enough to retire on. And none, in Brooks-Hamilton's mind, were such a surefire seller as the U-Wheel-It. As the two men talked, Brooks-Hamilton imagined even greater possibilities: The U-Wheel-It Office Cart for moving computers and delivering mail in offices. The U-Wheel-It Post Office Cart, for mail carriers -- and just think of the size of that contract if every carrier in the nation used one! There was the U-Wheel-It Senior Grocery Cart, for lugging groceries from the market, and the U-Wheel-It Laundry Cart for students, bachelors, mothers -- everyone. The grandest model would be the U-Wheel-It Beach Cart, complete with an attachable barbecue grill and patio umbrella. All of the carts, the men decided, would be lightweight and collapsible. "We wanted to create something that would make people's lives easier," Brooks-Hamilton says.

Of the duo, it was Brooks-Hamilton who had the know-how and the silver tongue to get a business rolling. He received his bachelor's degree from Berkeley, he says, and a master's from Cal State Hayward. Over the years, he made a living in various ways, including buying fixer-upper homes and selling them, but now he aimed to own his own company, live out his destiny, and set up his family for life. He and his wife, Verna, owned four houses in the East Bay in the early '90s, when local real estate was still affordable. By 1994, they'd sold all but the one they lived in, and dumped the resulting $500,000 into the U-Wheel-It dream. The men were so sure of the spoils to come, says Brooks-Hamilton, that after starting Three J's & B.H. Enterprises they spent many evenings driving through the hills of Oakland, scouting for their future homes.

By late 1994, Brooks-Hamilton had his prototype, but getting a bank loan was proving difficult. He only had the North Oakland residence for collateral now, and Edmonds' family lived in an apartment in Florence, California. But the rejections didn't dampen the pair's determination, and when Brooks-Hamilton learned of the city's new lending program, he was among the first to apply.


His timing was just right. The Clinton administration had recently approved the federal government's most ambitious attempt to revitalize America's urban wastelands. In all, the administration approved $3.5 billion in grants and loans, and sent checks straight to the cities in need. Through the US Department of Housing and Urban Development, Oakland picked up a check for $50 million, of which $22 million was slated for what is now called the One Stop Capital Shop. Oakland's poor neighborhoods were in dire need of such a loan program. After more than a decade of trickle-down economics that failed to trickle down west of the I-580 corridor, many areas were commercial ghost towns where the bulk of the commerce consisted of check-cashing, liquor-store transactions, and corner drug deals.

The money came with high expectations. According to a HUD memo, it was to be dispersed within three Economic Enhancement Communities -- West Oakland, East Oakland, and Fruitvale/San Antonio -- by early 1996, and "show tangible results by fall 1996." The administration had a good reason to see this money move: For every $35,000 dispersed, the administration required the creation of one new job. The formula allowed Bill Clinton to make stump speeches that included the number of jobs he'd "created." In Oakland, $50 million was expected to buy 1,429 new jobs.

The mood for renewal was optimistic. "There was a lot of excitement in the community," says Elihu Harris. "When they announced this money was coming, a lot of people started thinking of all the ways they could spend it. But there was also a lot of confusion, too." For one, the city wasn't set up to handle loan requests, perform project analyses, or collect payments, much less within the time frame the feds wanted.

Brooks-Hamilton was nonetheless willing to try his luck with the bureaucracy. He began his quest in August 1995, following the few rules then in place: He prepared a business plan, filled out a loan application, and met with Art Scott, a senior analyst at the city's Community and Economic Development Agency (CEDA). Brooks-Hamilton says he started out asking for $1 million (a city audit conducted later claims he asked for $500,000). But a few weeks later, staffers told the businessman he'd have a better chance at $150,000. It was far less than the applicant felt he needed, but still, he figured, it was something.

Within two weeks, his application had made it past the city's Loan Review Committee and the Economic Enhancement Communities Policy Board. The business also gained the support of the Black Chamber of Commerce and then-CEDA boss Jim Reinhardt.

At the time, citizens hadn't yet passed Measure H, which would have called for the city auditor to review such a loan, so when Brooks-Hamilton's case reached the city council in October 1995, there was little to stop it. The loan committee had shown no hesitation in approving his loan, a fact Brooks-Hamilton still offers as evidence that his product was a can't-miss. In fact, the city analysts who helped create the U-Wheel-It business plan estimated that Brooks-Hamilton and Edmonds would gross $6 million over the course of three years, selling thousands of carts per year.

But on the day Mayor Harris showed up with his fake check, it was just that: fake. Brooks-Hamilton didn't receive the real cash until three months later. And when the check finally came, it was made out to him, not the company. The bank, he claims, wouldn't let him sign the check over to his fledgling company's account. Weary that it'd take even more time to get things straightened out, Brooks-Hamilton dumped the money into his personal account. It was a move that later raised some eyebrows.

Brooks-Hamilton ignored a city consultant's suggestion that he lease a space and rent machines on the cheap. Instead, he says, he used the $150,000 loan to purchase the warehouse on 27th Street, and invested $100,000 in heavy equipment, including a $50,000 state-of-the-art tube-bender. He would again raise eyebrows by writing the deed to the building in his own name, not the company's, although nobody from the city noticed the detail immediately.

For a short time, it seemed the U-Wheel-It manufacturers were on a roll. Brooks-Hamilton sold five hundred units to a local Home Depot, his biggest contract. Not long afterward he flew to Florida and appeared on QVC at 3 a.m., he says, selling three hundred units in thirty minutes at $39.99 a pop. But that was the apex of fame for the U-Wheel-It. The company was already late in paying its bills and had fallen behind on payroll for the five employees who manufactured the carts full-time. (While his loan agreement called for creation of fourteen jobs, the company never hired even half that many.) The relationship between the founding partners, furthermore, was starting to grow tense.

In July 1996, after returning from Florida, Brooks-Hamilton successfully lobbied the city for another $250,000. SCORE, a nonprofit consulting group hired by the city, had recently audited the business and given it decent marks. "Pros include Brooks-Hamilton's enthusiasm," said the group's report. Cons included the company's cash crisis and lack of a marketing plan. The council granted Brooks-Hamilton his money, and this time the check was deposited to the proper account.

But money couldn't save the U-Wheel-It. By late 1997, Edmonds was homesick and worn out from commuting. He fought with Brooks-Hamilton so often that he stopped staying at his partner's home while in town and instead slept in the warehouse. Meanwhile, Brooks-Hamilton's stress and time commitment to the company were trashing his relationship with his wife and kids. After two years of selling, the company had moved only a thousand units. He needed more help.

The following spring, the businessman again approached the city, this time asking for $500,000 to market his product. By now, CEDA's loan committee knew that Three J's & B.H. Enterprises was sinking in debt, and that U-Wheel-Its weren't exactly rolling across California's beaches. The company had reported operating losses of $151,000, and hadn't created the jobs called for by federal guidelines.

To right the course, the city hired a marketing consultant to analyze the company's prospects. The resulting verdict was discouraging: U-Wheel-It appeared to be a tough sell. "There [are] still questions regarding whether there [is] an actual demand for the product," the report concluded.

Still, the consultant suggested a loan of $200,000 to get the U-Wheel-It on late-night infomercials from Oakland to Orlando and hopefully move some units. Skeptical of Brooks-Hamilton's pitch, the loan committee recommended a compromise: $100,000. In July 1998, after a lengthy debate, the city council approved the compromise loan.

It was like throwing good money after bad money. Only $60,000 would ever arrive, and that went straight into a stack of past-due bills and payroll expenses.

The U-Wheel-It was done for.


Issuing high-risk loans is a tough business, especially when a city is playing banker. Heck, going into business is tough business: the federal Small Business Administration estimates that only roughly one in five succeed. But when a business plan is well-conceived, it often works. Success stories from Oakland's lending program include Niman Ranch Properties, which paid back $1.2 million and created thirty local jobs; Eastmont Town Center paid back $4 million. Small businesses like Sunrise Specialty, Miramontes Bakery, and Wanda's Coffee Barista at the Coliseum have all paid back their loans on time, and are still operating.

Gregory Hunter, CEDA's assistant director, says these are just the kinds of businesses that need an advocate at City Hall. "Just because you come from a low or medium income, doesn't mean you shouldn't have the right of being a business owner," he says. "And just because you come from low or medium income, doesn't mean you don't have the ideas to start a business. They have just as good ideas as someone who's living in the hills." Hunter balks at calling such loans "high risk" -- he prefers "higher risk." Hunter's boss, CEDA director William Claggett, says his department's goal is to keep the default rate on city loans below ten percent. If you take out two of the city's biggest blunders, approved when the program was still getting underway and pushed through by a previous regime, he says, then they city has a 7.7 percent default rate. "We are never satisfied," Claggett says. "We can always do better."

Better shouldn't be too hard, since the program got off to an indisputably poor start. In 1996, shortly after Brooks-Hamilton received his first installment, the lending program was delivering on what one councilmember's aide calls a "come-and-get-it basis." One $2.4 million loan, pushed through by the Oakland Redevelopment Agency, went to directors of the Women's Economic Agenda Project, a nonprofit group dedicated to education and job training for poor women. The group used the money to purchase a posh downtown warehouse, but ultimately fell behind on payments and defaulted on the loan. Only recently, the city found a potential buyer to assume the debt and take over payments on the building, despite the nonprofit's protests. (The deal is currently in escrow.)

Another "flagship loan" approved by an anxious city council in 1996 gave $1.1 million to Elijah Muhammad Health Services, an inner-city health agency proposed by Nedir Bey, whose adoptive family operates Your Black Muslim Bakeries. The council debated the loan heavily, and Bey did his part politically, arriving at council meetings with a hundred-plus supporters. While high on the prospect of creating 21 jobs, some councilmembers were skeptical about the applicant's minuscule collateral and the facts that he owed $60,000 in back taxes and had no background in health services.

The council nonetheless approved the loan, but Bey failed to ever open the agency and, according to loan reports, hasn't paid back a cent. City auditors still aren't sure where the money went, and the city is now tangled in litigation trying to collect from Bey, who did not return phone calls from the Express. One councilmember's aide who remembers the debate clearly says the episode imparted a simple lesson on city loans that still applies: "The more they argue, the less likely the loan will work out."


List off the city's past flops to Roland Smith and just listen to him sigh: Elijah Muhammad Health Services? "The city really got fleeced on that one," says the auditor, nodding. Gregory Truck Body, $350,000. "Yep." And what about Brooks-Hamilton? "You could see that was a flimflam deal from the word go," he says.

The city's costly gaffes also drew the attention of HUD auditors, who slammed the city's lending program. Oakland's loan-payback setup was so inadequate, they found, that borrowers never even received invoices for payments due. They were just supposed to send in checks. At HUD's request, then-City Manager Kofi Bonner halted all loans for one year.

Desperate for assistance, the city enlisted the help of the federal Small Business Administration, which brought in its One Stop Capital Shop. Under the combined program, federal and city employees worked side by side, mucking through city loan applications. The new office inherited the bunk loans of the past and took on managing future loans.

The One Stop Capital Shop was meant to be a speedy, streamlined process, as the name implies. Analysts sort through handfuls of applicants each week, approving loans of less than $10,000 on the spot, while anything over $100,000 requires a review by the city auditor. The program now hews to federal guidelines, setting up workshops for new business owners, and following the rule that all business plans must include a marketing strategy -- something that was lacking in Brooks-Hamilton's ill-fated plan.

But the makeover hasn't made up for the city's lack of business savvy. The local One Stop program itself has been fraught with problems, including high employee turnover: Analysts come and go, two executive directors have passed through its doors, and Claggett, whose agency oversees the program, is CEDA's third director since One Stop began.

In addition, several loans approved by the current watch have raised red flags in the auditor's office. Consider Just Desserts, a San Francisco bakery that wanted $1.4 million to move to Oakland and purchase real estate. "That was a loan based on a lot of assumptions," Smith says. His office reported that the company was weaker than it appeared on paper -- certainly weaker than One Stop analysts projected -- and posed a likely default risk. The council approved the loan anyway, and the bakery ultimately defaulted.

And there are more. Blackboard Entertainment -- a company that made educational videos for children -- borrowed $250,000 from the city, which, in a highly unusual arrangement, even took a five percent stake just in case the company went public. In May, it went bankrupt. Allan's Ham and Bacon defaulted on a $147,000 loan. All About Hair, a salon, cost the city $77,000. Brew's Vision Unlimited, whose owner had a prior embezzlement conviction and a history of bad debts, finagled $95,000 to open what was supposed to be an upscale downtown sports bar and billiards joint. The owner never made his payments.

A smattering of other leftovers still blights One Stop's portfolio: There was $55,000 to T.P. School Supplies, $47,500 to print-design shop Android Designs, and $25,000 to the salon Black-N-Style. Steel City Gym got $25,000, R&D Barbecue received $10,000, and entrepreneur Kenneth Mitchell accepted $160,000. All of it gone.

Claggett blames the embattled program's woes on its failure to devise a strict screening process for loan approval, something he claims is in place today. He emphasizes that potential borrowers now need to have a clear marketing proposal. "Many of the loans that were approved back then, we wouldn't approve now," he says.

While he insists the program's problems are a thing of the past, Claggett has ordered the program's employees not to speak to the press, and he refused to let the Express interview current One Stop Capital Shop director Gregory Garrett.

Roland Smith, for his part, is still concerned about some of the loans being pushed today.

Case in point: Vida's Fish Market. Last year, the One Stop analysts put together a $400,000 loan package to Vida Bottom, the elderly owner of a small fried-fish stand on East 18th Street. Bottom does a straggler business, serving only takeout orders and employing one or two family members. Now she wants to expand to a sit-down restaurant with forty seats. One Stop projections have her sales increasing 59 percent in 2002 and 27 percent in 2003 -- a pipe dream, according to Smith.

The auditor's own review notes that Vida's has been growing only about eight percent per year, on average. Even with her expansion plan, Smith says, the One Stop view is far too optimistic. According to his calculations, Bottom would have to serve one customer every twenty minutes, in every one of her proposed forty seats, all day long in order to match One Stop's optimism -- and that doesn't include her cost of taking on new employees.

A divided council heeded some of Smith's suggestions and asked Bottom to provide a portion of the money up front and make other adjustments in her loans. City leaders nonetheless approved the money in March. Assured that a check was on the way, Bottom began working on the restaurant's facade on her own dime.

She's still waiting for her check, and says she was recently told it could take a few months longer. The delay has soured her experience. "Some days I wish I never heard of them," she says. The sides are now in litigation, hoping to expedite the process.

Smith would rather that loan had never been made. He fears Bottom will lose the home she put up as collateral. This, he says, is a prime example of where One Stop Capital Shop needs to distance itself from the borrower's perspective. The city is lending Vida money she won't be able to pay back, he says. Even if it goes like gangbusters, her volume won't be enough to keep up with the payment schedule. "And what will we have done then?" asks Smith. "Her business will fail, and we'll have created a 74-year-old homeless woman."


So far, Ralbert Brooks-Hamilton has been spared from homelessness, but things aren't looking good. After his final attempt at a marketing scheme failed, Edmonds headed home and the factory closed down for good in the winter of 1998. The partners by this time had come to near fisticuffs, and Brooks-Hamilton had filed for a restraining order against his business partner, he says. (Edmonds could not be located for comment.) The following year, Brooks-Hamilton's wife left him.

In 2000, Roland Smith investigated the company's books. He found that Brooks-Hamilton had lied on his initial loan application, claiming he'd never filed for bankruptcy when he had in fact done so in 1990. (The applicant claims he misinterpreted the question as pertaining only to past business bankruptcies.) Nor could Smith's office determine whether the initial $150,000 check was indeed used to purchase the warehouse. "The disbursement of these funds from the personal account could not be traced from the documentation available and have not been accounted for to this date," the office reported.

Following up on the auditor's report, the Alameda County Grand Jury looked into the circumstances of the loan. Its final report, issued in June, offered no evidence for bias or corruption -- only ineptitude and political pressures. "Enthusiasm for the One Stop Capital Shop program and the idea of funding entrepreneurs and increasing employment with the city of Oakland overwhelmed good judgement in the awarding of loans," the report states. In the future, "the emphasis must focus on a realistic loan repayment program. The borrower should have specific knowledge of the type of business for which the loan is made. Good ideas do not necessarily translate into profitable business."

Claggett has little to say about the report. "The grand jury was going over old ground. We've fixed up the problems and are moving on." He also says the city recently hired an outside consulting group to increase the number of jobs actually going to Oakland residents and those living within the enterprise zones. "We haven't done a good job of tracking those jobs. Now we'll be able to do that," says the CEDA director.

Feeling he'd been left with no options, Brooks-Hamilton sued the city of Oakland in federal court earlier this year, demanding $6 million, the amount city consultants had predicted he would have collected in gross revenues to date. He has all his documents lined up, ready to demonstrate how the city was ultimately responsible for his failure, but the would-be CEO is uncomfortable talking about the lawsuit. "I love this city, man. I don't want to sue. But what other choice do I have? The city doesn't want to play fair. The city won't just leave me be. They want to come and take my house now. Why? If they want to call it even, fine. I'd be happy with that. Let me keep my house. But without that, I'd have nothing left; nothing left."

City Attorney John Russo says his office has already received a writ of execution to foreclose on Brooks-Hamilton's home, but Russo may be willing to negotiate a payment deal. "It would be a harsh result," he says of taking the home, "but a just result. It's kind of sad for everybody. Nobody wants to see anyone get stuck in the middle like this, but it's our duty to collect, and we've been instructed by the city council to be more aggressive in our collection efforts. The taxpayers of Oakland have a right to repayment."

Russo estimates the city attorney's office has spent about $300,000 to date on outside legal fees to pursue those who have defaulted on the city's loans.

Larry Bush, a spokesman for HUD, says there's no way to determine how Oakland compares with the other cities that have received similar grants to rebuild their inner cities. "Once we send them out, it's up to the city to keep tabs." Each city created its own disbursement policy, dividing the money into programs with varying requirements. For instance, in Philadelphia, where the priority was to lure existing companies to poor neighborhoods, borrowers needed to be in business for at least five years and the minimum loan was set at $250,000. In Atlanta, loans came from the "Empowerment Zone" program, which lent as much as $4.5 million to one contractor. That particular loan, according to the Atlanta Journal-Constitution, was investigated in 2000 by the FBI to determine whether loan-committee members had solicited bribes.

Oakland, for its part, will soon be back to square one. The Small Business Administration is closing down all of its One Stop Capital Shop offices next fiscal year. Mired in its own cash crisis, Congress cut funding for the SBA, and One Stop was the first thing to go. Federal employees who worked in Oakland's office have already been reassigned, and city employees will continue to dole out the remaining funds. Since the money comes from a revolving fund, the lending program will last as long as loans get paid back. Despite its high rate of default, Oakland still has about $6.7 million in the bank.


A few weeks ago, Brooks-Hamilton was doing yard work outside his home in North Oakland. He didn't look anything like the proud salesman in his warehouse who so enthusiastically pitched the U-Wheel-It. He wore soiled work pants that were ripped at the thigh and held up by a weathered belt. His flannel shirt was flecked in white paint. His beard was stubbly and unkempt, and a stroke of dried paint ran from his ear to his neck.

He took a seat on his front porch for a rest, and a minister from his church pulled into the driveway to deliver two milk crates filled with food: bananas, wheat bread, chocolate milk, pastries, and fruit juice. "You see this?" Brooks-Hamilton said. "This is what I've come to. People dropping by to leave me food." He shook his head and thanked the minister with a smile.

He spoke of his wife, Verna, and at the very mention of her name he broke into tears, which streamed down toward his boots. After a few minutes Brooks- Hamilton composed himself and conceded that he knows there's no such thing as a sure thing in the business world. When he borrowed the money from the city, that didn't ensure success; that only ensured a chance at success. But the city backed out when the going got rough, he insists, and that doesn't make for a true partner. True partners stick around. Look, he says, if the U-Wheel-It had gone big-time, the politicians would be crowding his porch right now, bragging about their good deeds.

Brooks-Hamilton walked inside his home, by now an empty cathedral of hardwood floors and white stucco walls, and he stood there all alone. The only furniture in the entire house was his queen-sized bed and two chairs stashed back in the bedroom. He'd lived there for twenty years, he said. Raised his two kids there. Now he looked around at the empty white walls. Apart from a thousand handcarts stacked in a warehouse across town from here, there was no evidence the man had ever owned anything at all.

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