II

103D CONGRESS

2D SESSION S. 2462

To amend section 1956 of title 18, United States Code to include equity

skimming as a predicate offense, to amend section 1516 of title 18,

United States Code to curtail delays in the performance of audits, and

for other purposes.

IN THE SENATE OF THE UNITED STATES

SEPTEMBER 26 (legislative day, SEPTEMBER 12), 1994

Mr. COHEN introduced the following bill; which was read twice and referred

to the Committee on Banking, Housing, and Urban Affairs

A BILL

To amend section 1956 of title 18, United States Code

to include equity skimming as a predicate offense, to

amend section 1516 of title 18, United States Code

to curtail delays in the performance of audits, and for

other purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. FINDINGS.

4 The Congress finds that—

5 (1) the Federal Government makes available

6 mortgage insurance and other assistance to encour-
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1 age investors and lending institutions to provide

2 housing to low-income individuals and families;

3 (2) in general, this current system functions

4 well;

5 (3) some unscrupulous owners of federally as6 sisted housing, however, have diverted Federal hous7 ing subsidies and other funds to personal and other

8 improper uses, while failing to make payments on

9 their insured mortgages or maintain the assisted

10 housing;

11 (4) this practice of diverting funds, known as

12 equity skimming, has cost the Nation’s taxpayers an

13 estimated $6,000,000,000; and

14 (5) current law is inadequate to deter or pre15 vent the practice of equity skimming.

16 SEC. 2. INCLUSION OF EQUITY SKIMMING AS A LAUNDER17 ING OFFENSE.

18 Section 1956(c)(7)(D) of title 18, United States

19 Code, is amended by inserting ‘‘section 254 of the Na20 tional Housing Act (relating to equity skimming),’’ before

21 ‘‘or any felony violation of the Foreign Corrupt Practices

22 Act’’.

23 SEC. 3. OBSTRUCTION OF FEDERAL AUDIT.

24 Section 1516(a) of title 18, United States Code, is

25 amended by inserting ‘‘or relating to any property that
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1 is security for a mortgage note that is insured, guaran2 teed, acquired, or held by the Secretary of the Department

3 of Housing and Urban Development pursuant to section

4 203, 207, 213, 220, 221, 223, 231, 232, 236, 238, 241,

5 242, 244, 608, or 810 of the National Housing Act,’’ after

6 ‘‘under a contract or subcontract,’’.

7 SEC. 4. EFFECT OF EQUITY SKIMMING ON MORTGAGE IN8 SURANCE.

9 Section 254 of the National Housing Act (12 U.S.C.

10 1715z–19) is amended—

11 (1) by inserting ‘‘(a)’’ before ‘‘Whoever’’; and

12 (2) by adding at the end the following new sub13 section:

14 ‘‘(b) EFFECT OF VIOLATION.—Each contract for in15 surance under any provision of law listed in subsection (a)

16 shall provide that if an owner, agent, manager, or other

17 person who is otherwise in custody, control, or possession

18 of any property described in subsection (a) is convicted

19 of a violation of this subsection (a), the Secretary may

20 recover from such owner, agent, manager, or other person

21 an amount equal to the sum of—

22 ‘‘(1) any benefit of insurance conferred on the

23 mortgagee by the Secretary with respect to such

24 property; and
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1 ‘‘(2) any other losses incurred by the Secretary

2 in connection with such property;

3 to the extent that such benefit was conferred or loss was

4 incurred as a result of the violation.’’.

Æ