[Federal Register Volume 80, Number 246 (Wednesday, December 23, 2015)]
[Proposed Rules]
[Pages 79719-79724]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-32182]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 80, No. 246 / Wednesday, December 23, 2015 /
Proposed Rules
[[Page 79719]]
FEDERAL HOUSING FINANCE AGENCY
12 CFR Part 1217
RIN 2590-AA76
Implementation of the Program Fraud Civil Remedies Act of 1986
AGENCY: Federal Housing Finance Agency.
ACTION: Proposed rule; request for comment.
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SUMMARY: The Federal Housing Finance Agency (FHFA) proposes this rule
to implement the Program Fraud Civil Remedies Act of 1986 (31 U.S.C.
3801 et seq.), by establishing administrative procedures for imposing
civil penalties and assessments against persons who make false,
fictitious, or fraudulent claims or written statements to FHFA in the
context of its contracting or employment activities, where the amount
of money or the value of property or services involved or requested
from FHFA is $150,000 or less.
DATES: Comments must be received on or before February 22, 2016.
ADDRESSES: You may submit your comments, identified by regulatory
information number (RIN) 2590-AA76, by any of the following methods:
Agency Web site: www.fhfa.gov/open-for-comment-or-input.
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments. If you submit your
comments to the Federal eRulemaking Portal, please also send it by
email to FHFA at [email protected] to ensure timely receipt by the
agency. Please include ``RIN 2590-AA76'' in the subject line of the
message.
Hand Delivery/Courier: The hand delivery address is:
Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA76,
Federal Housing Finance Agency, Constitution Center, (OGC) Eighth
Floor, 400 Seventh Street SW., Washington, DC 20219. The package should
be delivered to the Seventh Street entrance Guard Desk, First Floor, on
business days between 9 a.m. and 5 p.m.
U.S. Mail, United Parcel Service, Federal Express, or
Other Mail Service: The mailing address for comments is: Alfred M.
Pollard, General Counsel, Attention: Comments/RIN 2590-AA76, Federal
Housing Finance Agency, Constitution Center, (OGC) Eighth Floor, 400
Seventh Street SW., Washington, DC 20219.
FOR FURTHER INFORMATION CONTACT: Laura Ayoud, Assistant General
Counsel, Office of the General Counsel, (202) 649-3069,
[email protected], or Ellen Bailey, Managing Associate General
Counsel, (202) 649-3056, [email protected], 400 Seventh Street SW.,
Eighth Floor, Washington, DC 20219 (not toll free numbers). The
telephone number for the Telecommunications Device for the Hearing
Impaired is (800) 877-8339.
SUPPLEMENTARY INFORMATION:
I. General Information
A. Comments
FHFA invites comments on all aspects of the proposed rule and will
revise the language of the proposed rule as appropriate after taking
all comments into consideration. Copies of all comments will be posted
without change, including any personal information you provide, such as
your name, address, or phone number, on the FHFA Internet Web site at
http://www.fhfa.gov. In addition, copies of all comments received will
be available for examination by the public on business days between the
hours of 10 a.m. and 3 p.m., at the Federal Housing Finance Agency,
Eighth Floor, 400 Seventh Street, SW., Washington, DC 20219. To make an
appointment to inspect comments, please call the Office of General
Counsel at (202) 649-3804.
B. Background
The Program Fraud Civil Remedies Act of 1986 (31 U.S.C. 3801 et
seq.) (PFCRA) requires FHFA, as an ``authority,'' to establish by rule
procedures for imposing civil penalties and assessments on any person
who makes a false claim for property, services, or money from FHFA, or
makes a false material statement to FHFA in connection with a claim,
where the amount involved does not exceed $150,000.\1\ A ``claim'' as
defined in the Act includes a request, demand, or submission for
property, services, or money from FHFA or a party to a contract with
FHFA, including money representing benefits.\2\ A ``statement'' is any
representation, certification, affirmation, document, record, or
accounting or bookkeeping entry with respect to a claim, a contract or
a bid or proposal for a contract with FHFA, or a benefit from FHFA.\3\
For covered claims and statements, PFCRA provides an administrative
remedy as an alternative to judicial action, where the Department of
Justice (DOJ) has declined to prosecute under the civil False Claims
Act, 31 U.S.C. 3729.\4\
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\1\ See 31 U.S.C. 3801(a)(1)(C) and 3803(g); see also 5 U.S.C.,
App. 3, 11(2).
\2\ Id., section 3801(a)(3).
\3\ Id., section 3801(a)(9).
\4\ See S.Rep. No. 99-212, 99th Cong., 1st Sess. 6 (1985)
(``[E]xisting remedies are not adequate to cope with the problem of
fraud in Federal programs. The Committee [of Governmental Affairs of
the Senate], therefore, believes that an alternative administrative
remedy is needed to adjudicate small-dollar false claim and
statement cases that otherwise would not be initiated civilly.'').
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PFCRA establishes a process of (a) investigation by the
``investigating official,'' who, by statute, is the Inspector General
(IG) of the agency or a designee of the IG; (b) review by the agency's
``reviewing official,'' designated by the agency head,\5\ to determine
if adequate evidence of liability exists; and (c) review by DOJ. If the
Attorney General approves use of the PFCRA process, PFCRA authorizes
the reviewing official to initiate an action by providing notice to the
person alleged to be liable; if a hearing on the record is requested,
it is before a ``presiding official,'' which by statute is an
Administrative Law Judge (ALJ) appointed or detailed for such
purpose.\6\ PFCRA also establishes appeal rights to the agency head by
any person determined by an ALJ to be liable; further review is
available by the U.S. District Court.\7\
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\5\ 31 U.S.C. 3801(a)(8)(A) and 3803. With publication of this
proposed rule, the Director of FHFA designates the General Counsel
of FHFA as FHFA's reviewing official.
\6\ Id. section 3803.
\7\ Id., see also section 3805.
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A civil penalty may be imposed for making a false claim or
statement to an agency even if the agency did not provide any money,
property, services or benefits to any person as a result.
[[Page 79720]]
Where money, property, services or benefits were provided as a result
of the person's false claim or statement, an assessment may also be
imposed as the administrative equivalent of ``damages.'' The maximum
amount of any civil penalty is established by PFCRA, subject to
periodic adjustments for inflation, and PFCRA also caps any assessment
at an amount equal to twice the value of the money, property, services
or benefits provided.\8\
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\8\ Id. section 3802(a)(1) and (3).
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Following PFCRA's enactment in 1986, an interagency task force was
established under the leadership of the Department of Health and Human
Services to develop model implementing regulations by all affected
agencies and departments. This action was consistent with the
expectation that ``regulations would be substantively uniform
throughout the government, except as necessary to meet the specific
needs of a particular agency or program.'' \9\ For that reason, FHFA
reviewed the PFCRA rules of other departments and agencies and has
modeled its proposed rule on final rules of the Federal Deposit
Insurance Corporation (FDIC) and Department of Housing and Urban
Development (HUD).\10\ The FDIC rule was employed because, like FHFA,
FDIC is a federal financial safety and soundness regulator. FHFA's
supervisory, regulatory, enforcement and resolution powers are similar
to FDIC's, and both FDIC and FHFA have express independent litigating
authority and authority to bring administrative actions for civil money
penalties for false claims or statements made to them by their
regulated institutions or entities and affiliated parties apart from
authority provided by PFCRA. The HUD rule provided a structural model
and an established operational approach.
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\9\ See S. Rep. No. 99-212 at 12; see also 52 FR 27423 (July 21,
1987).
\10\ See 12 CFR part 308, subpart T (FDIC) and 24 CFR part 28
(HUD) (2015).
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II. Analysis of Proposed Rule
Scope. As does the FDIC's PFCRA rule, FHFA's proposed rule states
that it applies to FHFA's employment and contracting activities and
does not apply to FHFA's supervisory, regulatory, enforcement,
conservatorship, or receivership activities because other civil and
administrative remedies available to FHFA are adequate to redress fraud
in the areas not covered. FHFA intends that the PFCRA administrative
process not be confused with ordinary Agency procedures available in
regulatory or conservatorship situations. There FHFA exercises its
broad and comprehensive supervisory, regulatory, enforcement,
conservatorship, or receivership authorities, as appropriate, with
regard to its regulated entities (Fannie Mae, Freddie Mac
(collectively, the ``Enterprises''), any affiliate of an Enterprise and
the Federal Home Loan Bank System and the Office of Finance of the
Federal Home Loan Bank System (OF), or any other entity-affiliated
party. This statement of scope is almost identical to limitations
imposed by the FDIC in its PFCRA rule, at 12 CFR 308.500(c), and
reflects the broad enforcement authorities provided to FHFA in the
Federal Housing Enterprise Financial Safety and Soundness Act, 12
U.S.C. 4501 et seq. (Safety and Soundness Act).
FHFA has determined this approach is appropriate for several
reasons. Through the Safety and Soundness Act, FHFA has other available
administrative remedies and independent litigating authority that it
could use in the event a regulated entity, any affiliate of an
Enterprise, the OF, or any other entity-affiliated party made a false
claim on or provided false information to FHFA in its supervisory,
regulatory, enforcement, conservatorship, or receivership activities.
See generally 12 U.S.C. 4513, 4514, 4585, and 4636. As a result, even
without PFCRA, FHFA could pursue administrative or judicial remedies
for these false claims or statements on its own behalf with similar or
greater effect. The statement of scope also recognizes that PFCRA
provides the reviewing official discretion to pursue a false claim or
statement through the PFCRA process and acknowledges that where FHFA
has determined that another available action or remedy would be more
appropriate, an administrative action will not be brought under PFCRA.
Finally, the statement of scope serves congressional intent that the
FHFA Office of the Inspector General be independent and objective in
its oversight of FHFA, which could be compromised if the IG were able
to initiate administrative actions against a regulated entity,
including any affiliate of an Enterprise, or the OF or any other
entity-affiliated party based on false claims or statements to FHFA
made when FHFA was engaged in supervisory, regulatory, enforcement,
conservatorship, or receivership activities.\11\
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\11\ FHFA's statement of scope in the proposed rule is nearly
identical to the scope provision adopted by the FDIC in its PFCRA
rule, which applies to FDIC's employment and contracting activities
but does not apply to false claims or statements made in connection
with FDIC's regulatory, supervision, enforcement, insurance,
receivership, or liquidation responsibilities. See 12 CFR
308.500(c). FDIC explained that, as so limited, its rule was
consistent with PFCRA's underlying purpose ``to provide federal
agencies with an administrative remedy for `small dollar fraud'
cases for which there is no other remedy because the cases are too
small for the [DOJ] to prosecute,'' and distinguished FDIC's
circumstances from those of other agencies based on its other
available administrative remedies and on its independent litigating
authority. 65 FR 52352 (Aug. 29, 2000) (proposed rule); see also 66
FR 9187, 9188 (Feb. 7, 2001) (final rule).
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Finally, FHFA also notes that its PFCRA rule would not apply to
false claims or statements made by any person to any regulated entity,
an affiliate of an Enterprise, or the OF. PFCRA generally does not
apply to false claims or statements made to private companies
conducting private business activities, but instead creates an
administrative remedy for false claims or statements for money,
property, services, or benefits provided by the United States
government through an agency. Thus, PFCRA would apply to a private
company only where that company is acting on behalf of an agency and
allocating money, property, services, or benefits for which the actual
provider is the United States government. The regulated entities,
including any affiliate of an Enterprise, and the OF do not provide
United States government money, property, services, or benefits on
FHFA's behalf to any person. Therefore, FHFA's proposed rule does not
apply to any false claim or statement by any person to any regulated
entity, including any affiliate of an Enterprise, or the OF.\12\
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\12\ If a regulated entity, an affiliate of an Enterprise, or
the OF were to act on behalf of another agency in providing United
States government money, property, services, or benefits to any
person, then any PFCRA rule of that other agency may be applicable.
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Process. Pursuant to PFCRA and the proposed rule, FHFA's
``investigating official'' (under PFCRA, the FHFA IG or the IG's
designee) would initiate an investigation of any claim or statement
believed to be false.\13\ The investigating official would submit a
report containing information about the case (including exculpatory
information), the potential violation, and other relevant information
relating to liability to FHFA's ``reviewing official'' (the General
Counsel of FHFA, as designated by the Director of FHFA).\14\ The
reviewing official, or the designee thereof, would then be required to
make a determination of whether there is adequate evidence of
liability. If so, the reviewing official would provide written notice
to the Attorney General of
[[Page 79721]]
the intent to refer the allegations to an ALJ as presiding officer.
Under the terms of PFCRA and the authority of the Attorney General, DOJ
could elect to bring an action for civil relief under other applicable
law, or the FHFA action may be deferred or postponed to avoid
interference with a criminal investigation or prosecution by the
Attorney General.
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\13\ See 31 U.S.C. 3801(a)(4)(A).
\14\ See 31 U.S.C. 3801(a)(8)(A), requiring the agency head to
designate a reviewing official; see also footnote 5, supra.
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If the Attorney General approves the use of PFCRA, FHFA's reviewing
official may refer the case to an ALJ as presiding officer. To initiate
the action, the reviewing official must provide notice to any person
who is subject to the allegation of liability. That person may then
request a formal hearing on the record and is entitled to all
exculpatory information in the possession of the investigating official
or the reviewing official. If a hearing is requested, the ALJ would
determine liability based on the preponderance of the evidence and the
amount of any penalty (and, if appropriate, any assessment) to be
imposed. The proposed rule implements statutory provisions for an
appeal of the ALJ's decision to the Director of FHFA as the ``authority
head'' and then to the appropriate U.S. District Court.
The proposed rule provides for hearing and appeal rights of persons
subject to allegations of liability for any penalty or assessment under
PFCRA. FHFA currently has Rules of Practice and Procedure in place at
title 12 of the Code of Federal Regulations, Part 1209, which establish
evidentiary, hearing, and appeals procedures and processes for hearings
on the record at FHFA. Similar to the HUD rule, FHFA's proposed rule
cross-references its existing administrative enforcement procedures for
purposes of PFCRA actions. FHFA's existing rules of procedure were
issued subject to a notice and comment rulemaking process and, by
proposing to use them for purposes of any PFCRA action, FHFA seeks to
ensure due process and procedural consistency.
Maximum Penalty Amount. PFCRA establishes a maximum civil penalty
of $5,000 for each violation of the Act.\15\ That amount is required to
be adjusted for inflation by the Federal Civil Penalties Inflation
Adjustment Act of 1990, which limits the first such adjustment to not
more than 10% of the original statutory penalty.\16\ As a result, the
proposed rule provides for the imposition of a civil penalty of not
more than $5,500 for each fraudulent claim or statement, a 10% increase
over the statutory amount. In the case of a false, fictitious, or
fraudulent claim on which payment was made by the United States
government, PFCRA also authorizes an assessment in lieu of damages of
up to twice the amount of the claim.\17\ PFCRA civil penalties and
assessments are in addition to any other remedy prescribed by law.\18\
Therefore, commenters should be aware that any final rule adopted by
FHFA would not preclude imposition of other authorized actions or
sanctions currently employed by FHFA, including debarment and
suspension of contractors.
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\15\ See 31 U.S.C. 3802(a).
\16\ See 28 U.S.C. 2461 note.
\17\ 31 U.S.C. 3802(a)(1).
\18\ See 31 U.S.C. 3802(a).
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III. Paperwork Reduction Act
The proposed rule does not contain any collections of information
pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et
seq.). Therefore, FHFA has not submitted any information to the Office
of Management and Budget for review.
IV. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that
a regulation that has a significant economic impact on a substantial
number of small entities, including small businesses and or small
organizations, must include an initial regulatory flexibility analysis
describing the regulation's impact on small entities. Such an analysis
need not be undertaken if the agency has certified that the regulation
will not have a significant economic impact on a substantial number of
small entities.\19\ FHFA has considered the impact of the proposed rule
under the Regulatory Flexibility Act. The General Counsel of FHFA
certifies that the proposed rule, if adopted as a final rule, is not
likely to have a significant economic impact on a substantial number of
small entities, because the regulation would merely fulfill a statutory
requirement under PFCRA to establish procedures for imposing civil
penalties and assessments against those persons who have violated
existing prohibitions against making fraudulent claims or statements to
FHFA in its contracting and employment activities, and does not alter
any underlying requirements or prohibitions or impose any new
requirements or prohibitions on persons subject to regulation by FHFA.
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\19\ See 5 U.S.C. 605(b).
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List of Subjects in 12 CFR Part 1217
Civil remedies, Program fraud.
Authority and Issuance
Accordingly, for the reasons stated in the preamble, and under the
authority of 12 U.S.C. 4511, 4513, 4514, 4526, 4585 and 4636 and 31
U.S.C. 3803, FHFA proposes to amend subchapter A of Chapter XII of
Title 12 of the Code of Federal Regulations by adding a new Part 1217
to read as follows:
CHAPTER XII--FEDERAL HOUSING FINANCE AGENCY
SUBCHAPTER A--ORGANIZATION AND OPERATIONS
0
1. Add part 1217 to subchapter A to read as follows:
PART 1217--PROGRAM FRAUD CIVIL REMEDIES ACT
Sec.
1217.1 Purpose and scope.
1217.2 Definitions.
1217.3 Basis for civil penalties and assessments.
1217.4 Investigation.
1217.5 Request for approval by the Department of Justice.
1217.6 Notice.
1217.7 Response.
1217.8 Statute of Limitations.
1217.9 Hearings.
1217.10 Settlements.
Authority: 12 U.S.C. 4501; 12 U.S.C. 4526, 28 U.S.C. 2461 note;
31 U.S.C. 3801-3812.
Sec. 1217.1 Purpose and scope.
(a) Purpose. This part:
(1) Establishes administrative procedures for imposing civil
penalties and assessments against persons who make, submit, or present,
or cause to be made, submitted, or presented, false, fictitious, or
fraudulent claims or written statements to FHFA or to its agents; and
(2) Specifies the hearing and appeal rights of persons subject to
allegations of liability for such penalties and assessments. Hearings
under this part shall be conducted in accordance with the
Administrative Procedure Act pursuant to part 1209, subpart C, of this
chapter.
(b) Scope. This part applies only to persons who make, submit, or
present or cause to be made, submitted, or presented false, fictitious,
or fraudulent claims or written statements to FHFA or to those acting
on its behalf in connection with FHFA employment matters and FHFA
contracting activities. It does not apply to false claims or statements
made in connection with matters or activities related to FHFA's
supervisory, regulatory, enforcement, conservatorship, or receivership
responsibilities, as other civil and administrative actions available
to FHFA to redress fraud in such areas
[[Page 79722]]
provide for remedies that are equal to or exceed those available
through this part.
Sec. 1217.2 Definitions.
Ability to pay is determined based on a review of the respondent's
resources available both currently and prospectively, from which FHFA
could ultimately recover the total penalty, and as appropriate,
assessment, which may be predicted based on historical evidence.
Assessment means a monetary penalty that is in addition to a civil
penalty and may be imposed if FHFA has made any payment, transferred
property, or provided services for a claim that is determined to be in
violation of paragraph (a)(1) of Sec. 1217.3. An assessment may not
exceed an amount that is twice the amount of the claim or portion of
the claim determined to be in violation of paragraph (a)(1) of Sec.
1217.3. A civil penalty other than an assessment may be imposed whether
or not FHFA has made a payment, transferred property, or provided
services in response to the false claim or statement.
Benefit means anything of value, including, but not limited to, any
advantage, preference, privilege, license, permit, favorable decision,
ruling, or status.
Claim means any request, demand, or submission:
(1) Made to FHFA for property, services, or money (including money
representing benefits);
(2) Made to a recipient of property, services, or money from FHFA
or to a party to a contract with FHFA:
(i) For property or services, if FHFA:
(A) Provided such property or services;
(B) Provided any portion of the funds for the purchase of such
property or services; or
(C) Will reimburse such recipient or party for the purchase of such
property or services; or
(ii) For the payment of money (including money representing
benefits) if the United States:
(A) Provided any portion of the money requested or demanded; or
(B) Will reimburse such recipient or party for any portion of the
money paid on such request or demand; or
(3) Made to FHFA, which has the effect of decreasing an obligation
to pay or account for property, services, or money.
Investigating official means the FHFA Inspector General, or an
officer or employee of the FHFA Office of Inspector General designated
by the FHFA Inspector General.
Knows or has reason to know. (1) For purposes of establishing
liability under 31 U.S.C. 3802 and this part, means that a person, with
respect to a claim or statement:
(i) Has actual knowledge that the claim or statement is false,
fictitious, or fraudulent;
(ii) Acts in deliberate ignorance of the truth or falsity of the
claim or statement; or
(iii) Acts in reckless disregard of the truth or falsity of the
claim or statement.
(2) No proof of specific intent to defraud is required for purposes
of establishing liability under 31 U.S.C. 3802 or this part.
Makes a claim or statement includes making, presenting, or
submitting the claim or statement and causing the claim or statement to
be made, presented, or submitted.
Notice means the charging document served by FHFA to commence an
administrative proceeding to impose a civil penalty and, if
appropriate, an assessment under chapter 38 of subtitle III of title
31, U.S.C., and this part.
Person means any individual, partnership, corporation, association,
or private organization.
Presiding officer means an administrative law judge appointed under
5 U.S.C. 3105 or detailed to FHFA under 5 U.S.C. 3344.
Reasonable prospect of collecting an appropriate amount of
penalties and assessments is determined based on a generalized analysis
made by the reviewing official, based on the limited information
available in the report of investigation for purposes of determining
whether the allocation of FHFA's resources to any particular action is
appropriate.
Report of investigation means a report containing the findings and
conclusions of an investigation under chapter 38 of subtitle III of
title 31, U.S.C., by the investigating official, as described in Sec.
1217.4.
Respondent means any person alleged to be liable for a civil
penalty or assessment under Sec. 1217.3.
Reviewing official means the General Counsel of FHFA, as so
designated by the Director pursuant to 31 U.S.C. 3801(a)(8)(A).
Statement means, unless the context indicates otherwise, any
representation, certification, affirmation, document, record, or
accounting or bookkeeping entry made:
(1) With respect to a claim or to obtain the approval or payment of
a claim (including relating to eligibility to make a claim); or
(2) With respect to (including relating to eligibility for) a
contract with, or a bid or proposal for a contract with, or benefit
from, FHFA or any State, political subdivision of a State, or other
party, if FHFA provides any portion of the money or property under such
contract or benefit, or if FHFA will reimburse such State, political
subdivision, or party for any portion of the money or property under
such contract or for such benefit.
Sec. 1217.3 Basis for civil penalties and assessments.
(a) False, Fictitious or Fraudulent Claims. (1) A civil penalty of
not more than $5,500 may be imposed upon a person who makes a claim to
FHFA for property, services, or money where the person knows or has
reason to know that the claim:
(i) Is false, fictitious, or fraudulent;
(ii) Includes or is supported by a written statement that:
(A) Asserts a material fact which is false, fictitious, or
fraudulent; or
(B) Omits a material fact and, as a result of the omission, is
false, fictitious, or fraudulent, where the person making, presenting,
or submitting such statement has a duty to include such material fact;
or
(iii) Is for payment for the provision of property or services to
FHFA which the person has not provided as claimed.
(2) Each voucher, invoice, claim form, or other individual request
or demand for property, services, or money constitutes a separate claim
for purposes of this part.
(3) A claim shall be considered made to FHFA, a recipient, or party
when the claim is actually made to an agent, fiscal intermediary, or
other entity, acting for or on behalf of FHFA, the recipient, or the
party.
(4) Each claim for property, services, or money is subject to a
civil penalty, without regard to whether the property, services, or
money actually is delivered or paid.
(5) There is no liability under this part if the amount of money or
value of property or services claimed exceeds $150,000 as to each claim
that a person submits. For purposes of this paragraph (a), a group of
claims submitted simultaneously as part of a single transaction shall
be considered a single claim.
(6) If the FHFA has made any payment, transferred property, or
provided services for a claim, then FHFA may make an assessment against
a person found liable in an amount of up to twice the amount of the
claim or portion of the claim that is determined to be in violation of
paragraph (a)(1) of this section. This assessment is in addition to the
amount of any civil penalty imposed.
(b) False, Fictitious or Fraudulent Statements. (1) A civil penalty
of up to
[[Page 79723]]
$5,500 may be imposed upon a person who makes a written statement to
FHFA with respect to a claim, contract, bid or proposal for a contract,
or benefit from FHFA that:
(i) The person knows or has reason to know:
(A) Asserts a material fact which is false, fictitious, or
fraudulent; or
(B) Omits a material fact and is false, fictitious, or fraudulent
as a result of such omission, where the person making, presenting, or
submitting such statement has a duty to include such material fact; and
(ii) Contains or is accompanied by an express certification or
affirmation of the truthfulness and accuracy of the contents of the
statement.
(2) Each written representation, certification, or affirmation
constitutes a separate statement.
(3) A statement shall be considered made to FHFA when the statement
is actually made to an agent, fiscal intermediary, or other entity
acting for or on behalf of FHFA.
(c) Joint and several liability. A civil penalty or assessment may
be imposed jointly and severally if more than one person is determined
to be liable.
Sec. 1217.4 Investigation.
(a) General. FHFA may initiate an action under chapter 38 of
subtitle III of title 31, U.S.C., and this part against a respondent
only upon an investigation by the investigating official.
(b) Subpoena. Pursuant to 31 U.S.C. 3804(a), the investigating
official may require by subpoena the production of records and other
documents. The subpoena shall state the authority under which it is
issued, identify the records sought, and name the person designated to
receive the records. The recipient of the subpoena shall provide a
certification that the documents sought have been produced, that the
documents are not available and the reasons they are not available, or
that the documents, suitably identified, have been withheld based upon
the assertion of an identified privilege.
(c) Investigation report. If the investigating official concludes
that an action under chapter 38 of subtitle III of title 31, U.S.C.,
and this part may be warranted, the investigating official shall
prepare a report containing the findings and conclusions of the
investigation, including:
(1) A description of the claim or statement at issue;
(2) The evidence supporting the allegations;
(3) An estimate of the amount of money or the value of property,
services, or other benefits requested or demanded in violation of Sec.
1217.3; and
(4) Any exculpatory or mitigating circumstances that may relate to
the claim or statement.
(d) Referrals to the Attorney General. The investigating official
may refer allegations directly to the Department of Justice for civil
relief under other applicable law, as appropriate, or may defer or
postpone submitting a report to the reviewing official to avoid
interference with a criminal investigation or prosecution.
Sec. 1217.5 Request for approval by the Department of Justice.
(a) General. If the reviewing official determines that the report
of investigation supports an action under this part, the reviewing
official must submit a written request to the Department of Justice for
approval to issue a notice under Sec. 1217.6.
(b) Content of request. A request under this section shall include:
(1) A description of the claim or statement at issue;
(2) The evidence supporting the allegations;
(3) An estimate of the amount of money or the value of property,
services, or other benefits requested or demanded in violation of Sec.
1217.3;
(4) Any exculpatory or mitigating circumstances that may relate to
the claim or statement; and
(5) A statement that there is a reasonable prospect of collecting
an appropriate amount of penalties and assessments. Determining there
is a reasonable prospect of collecting an appropriate amount of
penalties and assessments is separate from determining ability to pay,
and may not be considered in determining the amount of any penalty or
assessment in any particular case.
Sec. 1217.6 Notice.
(a) Commencement of action; notice. Upon obtaining approval from
the Department of Justice, the reviewing official may commence an
action to establish liability of the respondent under the Program Fraud
Civil Remedies Act of 1986 (31 U.S.C. 3801 et seq.) and this part. To
commence an action, the reviewing official must issue a notice to the
respondent of the allegations of liability against the respondent. The
notice shall be mailed, by registered or certified mail, or shall be
delivered through such other means by which delivery may be confirmed.
(b) Notice contents. The notice required under this section shall
include:
(1) The allegations of liability against the respondent, including
the statutory basis for liability, the claim or statement at issue, and
the reasons why liability arises from that claim or statement;
(2) A statement that the required approval to issue the notice was
received from the Department of Justice;
(3) The amount of the penalty and, if applicable, any assessment
for which the respondent may be held liable;
(4) A statement that the respondent may request a hearing by
submitting a written response to the notice;
(5) The addresses to which a response must be sent in accordance
with Sec. 1209.15 of this chapter;
(6) A statement that failure to submit an answer within 30 days of
receipt of the notice may result in the imposition of the maximum
amount of penalties and assessments sought, without right of appeal;
(7) A statement that the respondent must preserve and maintain all
documents and data, including electronically stored data, within the
possession or control of the respondent that may relate to the
allegations; and
(8) A copy of this part 1217 and part 1209, subpart C of this
chapter.
(c) Obligation to preserve documents. Upon the issuance of a notice
under this section, FHFA and the respondent shall each preserve and
maintain all documents and data, including electronically stored data,
within their respective possession or control that may relate to the
allegations in the complaint.
Sec. 1217.7 Response.
(a) General. (1) To obtain a hearing, the respondent must file a
written response to a notice under Sec. 1217.6:
(i) In accordance with Sec. 1209.24 of this chapter; and
(ii) Not later than 30 days after the date of service of the
notice.
(2) A timely filed response to a notice under Sec. 1217.6 shall be
deemed to be a request for a hearing.
(3) A response to a notice under Sec. 1217.6 must include:
(i) The admission or denial of each allegation of liability made in
the notice;
(ii) Any defense on which the respondent intends to rely;
(iii) Any reasons why the penalty and, if appropriate, any
assessment should be less than the amount set forth in the notice; and
(iv) The name, address, and telephone number of the person who will
act as the respondent's representative, if any.
(b) Failure to respond. If no response to a notice under this part
is timely submitted, FHFA may file a motion for default judgment in
accordance with Sec. 1209.24(c) of this chapter.
[[Page 79724]]
Sec. 1217.8 Statute of Limitations.
The statute of limitations for commencing a hearing under this part
shall be tolled:
(a) If the hearing is commenced in accordance with 31 U.S.C.
3803(d)(2)(B) within 6 years after the date on which the claim or
statement is made; or
(b) If the parties agree to such tolling.
Sec. 1217.9 Hearings.
(a) General. Hearings under this part shall be conducted in
accordance with the procedures in subpart B of part 1209 of this
chapter, governing actions in accordance with subchapter II of chapter
5, U.S.C. (commonly known as the Administrative Procedure Act).
(b) Factors to consider in determining amount of penalties and
assessments. In determining an appropriate amount of any civil penalty
and, if appropriate, any assessment, the presiding officer and, upon
appeal, the Director or designee thereof, shall consider and state in
his or her opinion any mitigating or aggravating circumstances. The
amount of penalties and assessments imposed shall be based on the
presiding officer's and the Director's or designee's consideration of
evidence in support of one or more of the following factors:
(1) The number of false, fictitious, or fraudulent claims or
statements;
(2) The time period over which such claims or statements were made;
(3) The degree of the respondent's culpability with respect to the
misconduct;
(4) The amount of money or the value of the property, services, or
benefit falsely claimed;
(5) The value of the actual loss to FHFA as a result of the
misconduct, including foreseeable consequential damages and the cost of
investigation;
(6) The relationship of the civil penalties to the amount of the
loss to FHFA;
(7) The potential or actual impact of the misconduct upon public
health or safety or public confidence in the management of FHFA
programs and operations, including particularly the impact on the
intended beneficiaries of such programs;
(8) Whether the respondent has engaged in a pattern of the same or
similar misconduct;
(9) Whether the respondent attempted to conceal the misconduct;
(10) The degree to which the respondent has involved others in the
misconduct or in concealing it;
(11) If the misconduct of employees or agents is imputed to the
respondent, the extent to which the respondent's practices fostered or
attempted to preclude the misconduct;
(12) Whether the respondent cooperated in or obstructed an
investigation of the misconduct;
(13) Whether the respondent assisted in identifying and prosecuting
other wrongdoers;
(14) The complexity of the program or transaction, and the degree
of the respondent's sophistication with respect to it, including the
extent of the respondent's prior participation in the program or in
similar transactions;
(15) Whether the respondent has been found, in any criminal, civil,
or administrative proceeding, to have engaged in similar misconduct or
to have dealt dishonestly with the Government of the United States or
of a State, directly or indirectly;
(16) The need to deter the respondent and others from engaging in
the same or similar misconduct;
(17) The respondent's ability to pay; and
(18) Any other factors that in any given case may mitigate or
aggravate the seriousness of the false claim or statement.
(c) Stays ordered by the Department of Justice. If at any time the
Attorney General or an Assistant Attorney General designated by the
Attorney General notifies the Director in writing that continuation of
FHFA's action may adversely affect any pending or potential criminal or
civil action related to the claim or statement at issue, the presiding
officer or the Director shall stay the FHFA action immediately. The
FHFA action may be resumed only upon receipt of the written
authorization of the Attorney General.
Sec. 1217.10 Settlements.
(a) General. The reviewing official, on behalf of FHFA, and the
respondent may enter into a settlement agreement under Sec. 1209.20 of
this chapter at any time prior to the issuing of a notice of final
decision under Sec. 1209.55 of this chapter.
(b) Failure to comply. Failure of the respondent to comply with a
settlement agreement shall be sufficient cause for resuming an action
under this part, or for any other judicial or administrative action.
Dated: December 16, 2015.
Melvin L. Watt,
Director, Federal Housing Finance Agency.
[FR Doc. 2015-32182 Filed 12-22-15; 8:45 am]
BILLING CODE 8070-01-P