* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not

be published and is not precedent except under the limited circumstances set forth in 5TH CIR.

R. 47.5.4.

REVISED NOVEMBER 23, 2009

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 08-60510

Summary Calendar

OLA PROPERTIES INC; AFISU OLABIMTAN,

Petitioners

v.

UNITED STATES DEPARTMENT OF HOUSING AND URBAN

DEVELOPMENT,

Respondent

On Petition for Review of an Order of the 

Department of Housing & Urban Development

HUD No. 05-040-CMP

Before JOLLY, BENAVIDES, and HAYNES, Circuit Judges.

PER CURIAM:*

Ola Properties, Inc. (“Ola”), and its President, Afisu Olabimtan, petition

for review of an administrative decision of the United States Department of

Housing and Urban Development (“HUD”) imposing civil monetary penalties

against them under 12 U.S.C. § 1735f-15(c). We deny the petition.

United States Court of Appeals

Fifth Circuit

F I L E D

June 22, 2009

Charles R. Fulbruge III

Clerk
08-60510

1 Prior to 2002, the civil money penalty statute “applied only to mortgagors.” Yetiv v.

HUD, 503 F.3d 1087, 1089 n.1 (9th Cir. 2007). Therefore, Olabimtan was not penalized for

pre-2002 violations.

2

I

Ola purchased Wynnewood Gardens Apartments, a multifamily property

in Dallas, Texas, with the proceeds from a HUD loan. In January 1997,

Olabimtan, as President of Ola, signed a regulatory agreement which imposed,

inter alia, a duty to file annual financial statements in accordance with HUD’s

requirements. One of these requirements is that the financial statements be

audited. Ola and Olabimtan were also subject to the civil money penalty statute,

12 U.S.C. § 1735f-15. Under that statute, HUD may impose civil penalties

against mortgagors who “knowingly and materially” commit certain violations,

including the failure to provide HUD with timely annual audited financial

statements. See § 1735f-15(c)(1)(B)(x) (2000) (amended 2004). In November

2005, HUD issued an administrative complaint against Ola and Olabimtan for

failure to timely file the required, audited statements for the fiscal years

1999–2003.1In March 2006, the HUD Administrative Law Judge (“ALJ”)

granted HUD’s motion for summary judgment as to liability, but denied it as to

the amount of the penalty. In June 2007, the ALJ granted HUD’s supplemental

motion for summary judgment, assessing penalties of $70,000 against Ola and

$40,000 against Olabimtan. Petitioners requested a review by the Secretary of

HUD, and the Secretary Designee adopted the ALJ’s orders without change. Ola

and Olabimtan now petition for review.

II

This Court has jurisdiction under 12 U.S.C. § 1735f-15(e), which provides

for judicial review pursuant to 5 U.S.C. § 706 after the exhaustion of all
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3

administrative remedies. Under § 706, agency action must be set aside if it is

not supported by “substantial evidence,” § 706(2)(E), or if it is “‘arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance with law’, or

if the action failed to meet statutory, procedural, or constitutional

requirements.” Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402,

414 (1971) (quoting 5 U.S.C. § 706(2)(A), (B), (C), and (D)), overruled on other

grounds by Califano v. Sanders, 430 U.S. 99, 105 (1977).

III

A

Ola and Olabimtan present separate arguments on appeal. Olabimtan

argues first that the ALJ erred in finding that he knowingly and materially

failed to timely file audited financial statements for the years in question.

According to Olabimtan, (1) his reports,though not audited, nonetheless metthe

requirements of the version of 12 U.S.C. § 1735f-15(c)(1)(B)(x) in effect at the

time, and (2) his failure was not knowing. Prior to the 2004 amendment,

§ 1735f-15(c)(1)(B)(x) required “a complete annual financial report based upon

an examination ofthe books and records ofthe mortgagor prepared and certified

to by an independent public accountant or a certified public accountant and

certified to by an officer of the mortgagor . . . .” Olabimtan contends that his

reports, albeit unaudited, met these requirements because they were prepared

by a certified public accountant and certified to by the owner. HUD has

interpreted former § 1735f-15(c)(1)(B)(x) to require audited statements, however.

See HUD Handbook 4370.2. Rev-1. Because “‘the statute is silent or ambiguous’”

with respect to whether the statements must be audited, “‘the question for the

court is whether the agency’s answer is based on a permissible construction of

the statute.’” De Hoyos v. Mukasey, 551 F.3d 339, 341 (5th Cir. 2008) (quoting
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4

Chevron U.S.A., Inc. v. Natural Resources Def. Council, 467 U.S. 837, 842–43

(1984)). In our view, HUD’s interpretation is consistent with a common-sense

reading of former § 1735f-15(c)(1)(B)(x) and is entirely permissible. See Yetiv v.

HUD, 503 F.3d 1087, 1089 (9th Cir. 2007) (“One of the violations for which civil

penalties may be imposed is the failure to provide HUD with annual audited

financial statements.” (citing 12 U.S.C. § 1735f-15(c)(1)(B)(x))). 

Olabimtan also argues, based on alleged deficiencies in HUD’s evidence

before the ALJ and HUD’s failure to notify him of the requirements that the

statements be audited and submitted electronically (which, he maintains, caused

some of his filings to be late), that HUD did not establish that his failure to

timely file audited reports was “knowing.” “Knowingly” is defined in 12 U.S.C.

§ 1735-15 as “having actual knowledge of or acting with deliberate ignorance of

or reckless disregard for the prohibitions under this section.” § 1735-15(h).

Olabimtan does not claim that he attempted to file audited reports, and we agree

with the ALJ that Olabimtan’s failure to familiarize himself with his obligations

does not excuse his failure to meet them. Because the regulatory agreement

signed by Olabimtan required that the annual financial report be prepared “in

accordance with the requirements of the Secretary,” the HUD Handbook clearly

states the reports must be audited, and the electronic filing requirementis found

in 24 C.F.R. § 5.801(b)(2), Olabimtan, at a minimum, acted with reckless

disregard for the time and audit requirements of former § 1735f-15(c)(1)(B)(x).

Finally, Olabimtan argues that the penalty assessed against him is

excessive under the factors listed in 24 C.F.R. § 30.80, particularly his ability to

pay. The ALJ concluded that Olabimtan could pay the maximum penalty in

light of his annual income over $100,000, his ability to obtain a $2,000,000 loan

to pay off the mortgage on the Wynnewood Gardens property, and his failure to
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5

prove otherwise, but expressly declined to apply the maximum penalty after

considering several pertinent factors under 24 C.F.R. § 30.80. Olabimtan has

presented no argumentto convince us that his income and ability to raise money

are not substantial evidence of his ability to pay the penalty imposed. 

B

Ola argues that it would have submitted compelling evidence of its

inability to pay the penalty assessed against it had it been represented by

counsel, and requests that we remand the matter to the Secretary. See 12 U.S.C.

§ 1735f-15(e)(2) (“If any party demonstrates to the satisfaction of the court that

additional evidence not presented at such hearing is material and that there

were reasonable grounds for the failure to present such evidence at the hearing,

the court shall remand the matter to the Secretary for consideration of such

additional evidence.”). According to Ola, it retained an attorney to represent it

in this matter, but this attorney ceased contact with Ola and the ALJ in

November 2005. After this time, Ola was represented by Olabimtan. Ola argues

that Olabimtan, who is not a licensed attorney, could not represent Ola in the

administrative process, and that the ALJ should have allowed Ola an

opportunity to cure this “procedural defect.” The ALJ’s failure to do so,

combined with the dereliction of Ola’s attorney, Ola maintains, constitutes

“reasonable grounds” for the failure to present its evidence of insolvency. Ola

cites only cases from the litigation context, however, to establish that a

corporation must be represented by a licensed attorney. The relevant regulation

states only that all parties “may . . . [b]e accompanied, represented, and advised

by a representative,” and Ola provides no authority for the proposition that

Olabimtan could not appear for his corporation. 24 C.F.R. 26.32(b)(1) (2008)

(amended by Revision of Hearing Procedures, 73 Fed. Reg. 76,832, 76,841 (Dec.
08-60510

2 Along the same lines, Ola has not presented “extraordinary circumstances” excusing

its failure to present this argument before HUD. See 12 U.S.C. § 1735-15(h)(2) (“The court

shall not consider any objection that was not raised in the hearing . . . unless a demonstration

is made of extraordinary circumstances causing the failure to raise the objection.”).

6

17, 2008) (to be codified at 24 C.F.R. 26.36)). Furthermore, Ola was clearly

aware of its rightto counsel, but chose to be represented by Olabimtan for nearly

two years after losing contact with its attorney. Although Ola (and its owner

Olabimtan) may now regret the decision not to retain a lawyer, under these

circumstances it has not established “reasonable grounds” for its failure to

present evidence of its alleged insolvency.2

IV

For the foregoing reasons, the petition for review is DENIED.