§ 3560.461 Enforcement provisions. ( a ) *Equity skimming* — ( 1 ) *Criminal penalty.* Whoever, as an owner, agent, employee, or manager, or is otherwise in custody, control, or possession of property that is security for a loan made under this title, willfully uses, or authorizes the use, of any part of the rents, assets, proceeds, income, or other funds derived from such property, for any purpose other than to meet actual, reasonable, and necessary expenses of the property, or for any other purpose not authorized by this title or the regulations adopted pursuant to this title, must be fined under title 18, United States Code, or imprisoned not more than five years, or both.
( 2 ) *Civil sanctions.* An entity or individual who as an owner, operator, employee, or manager, or who acts as an agency for a property that is security for a loan made under this title where any part of the rents, assets, proceeds, income, or other funds derived from such property are used for any purpose other than to meet actual, reasonable, and necessary expenses of the property, or for any other purpose not authorized by this title of the regulations adopted pursuant to this title, must be subject to a fine of not more than $25,000 per violation. The sanctions provided in this paragraph may be imposed in addition to any other civil sanctions or civil monetary penalties authorized by law.
( b ) *Civil monetary penalties* — ( 1 ) *When civil monetary penalties may be imposed.* The Agency may, after notice and opportunity for a hearing, impose a civil monetary penalty in accordance with this section against any individual or entity, including its owners, officers, general partners, limited partners, or employees, who knowingly and materially violate, or participate in the violation of, the provisions of this title, the regulation issued by the Agency pursuant to this title, or agreements made in accordance to this title by: ( i ) Submitting information to the Agency that is false.
( ii ) Providing the Agency with false certifications.
( iii ) Failing to submit information requested by the Agency in a timely manner.
( iv ) Failing to maintain the property subject to loans made under this title in good repair and condition, as determined by the Agency.
( v ) Failing to provide management for a project that received a loan made under this title that is acceptable to the Agency.
( vi ) Failing to comply with the provisions of applicable civil rights statutes and regulations.
( 2 ) *Amount.* Civil penalties shall be assessed in accordance with 7 CFR part 3, subpart I. In determining the amount of a civil monetary penalty under this section, the Agency must take into consideration: ( i ) The gravity of the offense;
( ii ) Any history of prior offenses by the violator (including offenses occurring prior to the enactment of this section);
( iii ) Any injury to tenants;
( iv ) Any injury to the public;
( v ) Any benefits received by the violator as a result of the violation;
( vi ) Deterrence of future violations; and
( vii ) Such other factors as the Agency may establish by regulation.
( 3 ) *Payment of penalties.* No payment of a penalty assessed under this section may be made from funds provided under this title or from funds of a project which serve as security for a loan made under this title.
( 4 ) Hearings under this part shall be conducted in accordance with the procedures applicable to hearings in accordance with 7 CFR part 1, subpart H.
( c ) *Conditions for renewal extension.* The Agency may require that expiring loan or assistance agreements entered into under this title must not be renewed or extended unless the owner executes an agreement to comply with additional conditions prescribed by the Agency, or executes a new loan or assistance agreement in the form prescribed by the Agency.
[69 FR 69106, Nov. 26, 2004, as amended at 81 FR 57442, Aug. 23, 2016]