Title 12—Banks and Banking--Volume 1
PART 1217—PROGRAM FRAUD CIVIL REMEDIES ACT
§ 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 provide for remedies that are equal to or exceed those available through this part.
§ 1217.2   Definitions.
As used in this part:
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 § 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 § 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 § 1217.4.
Respondent means any person alleged to be liable for a civil penalty or assessment under § 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.
§ 1217.3   Basis for civil penalties and assessments.
(a) False, fictitious or fraudulent claims.
(1) A civil penalty of not more than $14,308 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 $14,308 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.
§ 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 § 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.
§ 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 § 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 § 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.
§ 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 § 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.
§ 1217.7   Response.
(a) General. (1) To obtain a hearing, the respondent must file a written response to a notice under § 1217.6:
(i) In accordance with § 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 § 1217.6 shall be deemed to be a request for a hearing.
(3) A response to a notice under § 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 § 1209.24(c) of this part.
§ 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.
§ 1217.9   Hearings.
(a) General. Hearings under this part shall be conducted in accordance with the procedures in subpart C 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.
§ 1217.10   Settlements.
(a) General. The reviewing official, on behalf of FHFA, and the respondent may enter into a settlement agreement under § 1209.20 of this chapter at any time prior to the issuing of a notice of final decision under § 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.