(c) Notice. Before making a referral SBA will mail a notice to the debtor's last known address stating that SBA intends to refer the debt to IRS for a tax refund deduction unless the debtor pays the past due amount or disputes the debt according to the procedures explained below within 60 days. The notice will include an address where dispates must be sent.

(d) Other preconditions. Prior to referring a debt. SBA will:

(1) Disclose the loan status to a consumer reporting agency as provided by 31 U.S.C. 3711. f) and implemented in 13 CFR 140.3 and

(2 Samsty any other conditions prescribed by the Secretary of the Treasury in 26 CFR 31.6432-6T or other regelations.

le Disputes. A debtor may request a review by SBA if the debtor believes that all or part of the debt is not past due or legally enforceable as follows:

(2) The debtor must send a written request for review to the address provided in the notice.

1 The request st state the amount disputed and the reasons why the debtor believes that the debt is not past due or is not legally enforceable.

3 The request must include any docsments which the debtor wishes to be considered or state that additional in formation will be submitted within the time permitted

4 The request, and any additional information submited pursuant to paragraph e13 of this scan = be receved by SBA at the address stated the notice, within 50 days of the notice provided for paragraph of this secto

f) Returus. The SBA feld obce sponsible for servicing & debt will re Tev sputes SBA shall consider an documentation and arguments submitsed by the dechce and agency records. A decision that any disputed portion of the debt is eligible to be referred shall be reviewed and concomed in by a s pervisory a SBA shall send & WILDNER DOGce of the decuson to the deboar

BAL NFR CCL Feb 2 386. The fOLOVNE PRENOS g vere sööst #1246

amount due within 10 business days of receipt of payments or notice of other reductions SBA will not report increases in the amount due after the original referral. However, any fee charged by IRS may be imposed and added to the balance at the time of offset.

g) Prior reviews. Any debt which has been reviewed pursuant to this section, or any other section of this part, or which has been reduced to a judgment, may not be disputed except on the grounds of payments made, or events occurring, subsequent to the previous

142.17 Rights of parties.

142.18 Authority of the ALJ. 142.19 Prehearing conferences. 142.20 Disclosure of documents.

142.21 Discovery.

142.22 Exchange of witness lists, statements, and exhibits.

142.23 Subpoenas for attendance at hearing. 142.24 Protective order.

142.25 Fees.

142.26 Form, filing and service of papers. 142.27 Computation of time.

142.28 Motions.

142.29 Sanctions.

142.30 The hearing and burden of proof.

142.31 Determining the amount of penalties and assessments.

142.32 Location of hearing.

142.33 Witnesses.

142.34 Evidence.

142.35 The record.

142.36 Post-hearing briefs.

142.37 Initial decision.

142.38 Reconsideration of initial decision. 142.39 Appeal to the Administrator.

142.40 Stays ordered by the Department of Justice.

142.41 Stay pending appeal.

142.42 Judicial review.

142.43 Collection of civil penalties and assessments.

142.44 Right to administrative offset.

142.45 Deposit in Treasury of United States. 142.46 Compromise or settlement. 142.47 Limitations.

AUTHORITY: 31 U.S.C. 3803(g)(2), 15 U.S.C. 634(b)(6).

SOURCE: 54 FR 6272, Feb. 9, 1989, unless otherwise noted.

$142.1 Basis and purpose.

(a) Basis. This part implements the Program Fraud Civil Remedies Act of 1986, Pub. L. 99-509, sections 6101-6104, 100 Stat. 1874 (October 21, 1986), codified at 31 U.S.C. 3801-3812. 31 U.S.C. 3809 of the statute requires each authority head to promulgate regulations necessary to implement the provisions of the statute.

(b) 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 authorities or to their agents, and (2) specifies the hearing and appeal rights of persons subject to allegations of liability for such penalties and assess1st

ments.

$142.2 Definitions.

Administration means the Small Business Administration.

Administrator means the Administrator of the Small Business Administration.

ALJ means an Administrative Law Judge in the Administration appointed pursuant to 5 U.S.C. 3105 or detailed to the Administration pursuant to 5 U.S.C. 3344.

Benefit means, in the context of "statement," anything of value, including but not limited to any advantage, preference, privilege, license, permit, favorable decision, ruling, status, or loan guarantee.

Claim means any request, demand, or submission

(a) Made to the Administration for property, services, or money (including money representing grants, loans, insurance, or benefits);

(b) Made to a recipient of property, services, or money from the Administration or to a party to a contract with the Administration

(1) For property or services if the United States

(i) Provided such property or services;

(ii) Provided any portion of the funds for the purchase of such property or services; or

(iii) Will reimburse such recipient or party for the purchase of such property or services; or

(2) For the payment of money (including money representing grants, loans, insurance, or benefits) if the United States

(i) Provided any portion of the money requested or demanded; or

(ii) Will or is potentially liable to reimburse such recipient or party for any portion of the money paid on such request or demand; or

(c) Made to the Administration which has the effect of decreasing an obligation to pay or account for property, services, or money.

Complaint means the administrative complaint served by the reviewing official on the defendant under § 142.7.

Defendant means any person alleged in a complaint under §142.7 to be liable for a civil penalty or assessment under $142.3

Government means the United States Government.

Individual means a natural person.

Initial decision means the written decision of the ALJ required by §142.10 or §142.37, and includes a revised initial decision issued following a remand or a motion for reconsideration.

Investigating official means the Inspector General of the Small Business Administration or an officer or employee of the Office of Inspector General as designated by the Inspector General and serving in a position for which the rate of basic pay is not less than the minimum rate of basic pay for grade GS-16 under the General Schedule.

Knows or has reason to know means that a person, with respect to a claim or statement

(a) Has actual knowledge that the claim or statement is false, fictitious, or fraudulent;

(b) Acts in deliberate ignorance of the truth or falsity of the claim or statement; or

(c) Acts in reckless disregard of the truth or falsity of the claim or statement.

Makes, wherever it appears, shall include the terms presents, submits, and causes to be made, presented, or submitted. As the context requires, making or made, shall likewise include the corresponding forms of such terms.

Person means any individual, sole proprietorship, partnership, corporation, association, or private organization, and includes the plural of that term.

Presiding officer means an administrative law judge appointed pursuant to section 3105 of title 5, United States Code and serving in the Office of Hearings and Appeals of the Small Business Administration or detailed to such office pursuant to section 3344 of title 5, United States Code.

Representative means an attorney who is a member in good standing of the bar of any State, Territory, or possession of the United States or of the District of Columbia or the Commonwealth of Puerto Rico.

Reviewing official means the General Counsel of the Administration or his designee who is—

(a) Serving in a position for which the rate of basic pay is not less than the minimum rate of basic pay for a grade GS-16 under the general schedule;

(b) Not subject to supervision by, or required to report to, the investigating official; and

(c) Not employed in the organizational unit of the Administration in which the investigating official is employed.

Statement means any representation, certification, affirmation, document, record, or accounting or bookkeeping entry made

(a) With respect to a claim or to obtain the approval or payment of a claim (including relating to eligibility to make a claim); or

(b) With respect to (including relating to eligibility for)—–

(1) A contract with, or a bid or proposal for a contract with; or

(2) A grant, loan, or benefit from, the Administration, or any State, political subdivision of a State, or other party, if the United States Government provides any portion of the money or property under such contract or for such grant, loan, or benefit, or if the Government will be or is potentially liable to reimburse such State, political subdivision, or party for any portion of the money or property under such contract or for such grant, loan, or benefit.

142.3 Basis for civil penalties and assessments.

(a) Claims

(1) Any person who makes a claim that the person knows or has reason to know

(i) Is false, fictitious, or fraudulent;

(ii) Includes or is supported by any written statement which asserts a material fact which is false, fictitious, or fraudulent;

(iii) Includes or is supported by any written statement that—

(A) Omits a material fact;

(B) Is false, fictitious, or fraudulent as a result of such omission; and

(C) Is a statement in which the person making such statement has a duty to include such material fact; or

(iv) Is for payment for the provision of property or services which the person has not provided as claimed, shall

be subject, in addition to any other remedy that may be prescribed by law, to a civil penalty of not more than $5,000 for each such claim.

(2) Each voucher, invoice, claim form, or other individual request or demand for property, services, or money constitutes a separate claim.

(3) A claim shall be considered made to the Administration, recipient, or party to a contract with the Administration when such claim is actually made to an agent, fiscal intermediary, or other entity, including any State or political subdivision thereof, acting for or on behalf of the Administration, recipient, or party.

(4) Each claim for property, services, or money is subject to a civil penalty regardless of whether such property, services, or money is actually delivered or paid.

(5) If the Government has made any payment (including transferred property or provided services) on a claim, a person subject to a civil penalty under paragraph (a)(1) of this section shall also be subject to an assessment of not more than twice the amount of such claim or that portion thereof that is determined to be in violation of paragraph (a)(1). Such assessment shall be in lieu of damages sustained by the Government because of such claim. (b) Statements

(1) Any person who makes a written statement that

(1) The person knows or has reason to know

(A) Asserts a material fact which is false, fictitious, or fraudulent; or

(B) Is false, fictitious, or fraudulent because it omits a material fact that the person making the statement has a duty to include in such statement; and (ii) Contains or is accompanied by an express certification or affirmation of the truthfulness and accuracy of the contents of the statement, shall be subject, in addition to any other remedy that may be prescribed by law, to a civil penalty of not more than $5,000 for each such statement.

(2) Each written representation, certification, or affirmation constitutes a separate statement.

(3) A statement shall be considered made to the Administration when such statement is actually made to an

agent, fiscal intermediary, or other entity, including any State or political subdivision thereof, acting for or on behalf of the Administration.

(c) No proof of specific intent to defraud is required to establish liability under this section.

(d) In any case in which it is determined that more than one person is liable for making a claim or statement under this section, each such person may be held liable for a civil penalty.

(e) In any case in which it is determined that more than one person is liable for making a claim under this section on which the Government has made payment (including transferred property or provided services), an assessment may be imposed against any such person or jointly and severally against any combination of such per

sons.

§ 142.4 Investigation.

(a) If an investigating official concludes that a subpoena pursuant to the authority conferred by 31 U.S.C. 3804(a) is warranted

(1) The subpoena so issued shall notify the person to whom it is addressed of the authority under which the subpoena is issued and shall identify the records or documents sought;

(2) The investigating official may designate a person to act on his or her behalf to receive the documents sought; and

(3) The person receiving such subpoena shall be required to tender to the investigating official or the person designated to receive the documents a certification that

(i) The documents sought have been produced;

(ii) Such documents are not available and the reasons therefor; or

(iii) Such documents, suitably identified, have been withheld based upon the assertion of an identified privilege.

(b) If the investigating official conIcludes that an action under the Program Fraud Civil Remedies Act may be warranted, the investigating official shall submit a report containing the findings and conclusions of such investigation to the reviewing official.

(c) Nothing in this section shall preclude or limit an investigating official's discretion to refer allegations di

rectly to the Department of Justice for suit under the False Claims Act or other civil relief, to defer or postpone a report or referral to the reviewing official to avoid interference with a criminal investigation or prosecution or to issue a subpoena under other statutory authority.

(d) Nothing in this section modifies any responsibility of an investigating official to report violations of criminal law to the Attorney General.

[54 FR 6273, Feb. 9, 1989; 54 FR 11937, Mar. 23, 1989]

§ 142.5 Review by the reviewing official.

(a) If, based on the report of the investigating official under §142.4(b), the reviewing official determines that there is adequate evidence to believe that a person is liable under $142.3 of this part, the reviewing official shall transmit to the Attorney General a written notice of the reviewing official's intention to issue a complaint under § 142.7.

(b) Such notice shall include

(1) A statement of the reviewing official's reasons for issuing a complaint;

(2) A statement specifying the evidence that supports the allegations of liability;

(3) A description of the claims or statements upon which the allegations of liability are based;

(4) An estimate of the amount of money or the value of property, services, or other benefits requested or demanded in violation of §142.3 of this part;

(5) A statement of any exculpatory or mitigating circumstances that may relate to the claims or statements known by the reviewing official or the investigating official; and

(6) A statement that there is a reasonable prospect of collecting an appropriate amount of penalties and assessments.

$142.6 Prerequisites for issuing a complaint.

(a) The reviewing official may issue a complaint under §142.7 only if—

(1) The Department of Justice approves the issuance of a complaint in a written statement described in 31 U.S.C. 3803 (1) and

(2) In the case of allegations of liability under §142.3(a) with respect to a claim, the reviewing official determines that, with respect to such claim or a group of related claims submitted at the same time such claim is submitted (as defined in paragraph (b) of this section), the amount of money or the value of property or services demanded or requested in violation of §142.3(a) does not exceed $150,000.

(b) For the purposes of this section, a related group of claims submitted at the same time shall include only those claims arising from the same transaction (e.g., grant, loan, application, or contract) that are submitted simultaneously as part of a single request, demand, or submission.

(c) Nothing in this section shall be construed to limit the reviewing official's authority to join in a single complaint against a person claims that are unrelated or were not submitted simultaneously, regardless of the amount of money or the value of property or services demanded or requested.

$142.7 Complaint.

(a) On or after the date the Department of Justice approves the issuance of a complaint in accordance with 31 U.S.C. 3803(b)(1), the reviewing official may serve a complaint on the defendant and provide a copy to the Office of Hearings and Appeals, as provided in $142.8.

(b) The complaint shall state

(1) The allegations of liability against the defendant, including the statutory basis for liability, an identification of the claims or statements that are the basis for the alleged liability, and the reasons why liability allegedly arises from such claims or statements;

(2) The maximum amount of penalties and assessments for which the defendant may be held liable;

(3) Instructions for filing an answer to request a hearing, including a specific statement of the defendant's right to request a hearing by filing an answer and to be represented by a representative; and

(4) That failure to file an answer within 30 days of service of the complaint will result in the imposition of the maximum amount of penalties and