§2007e. Compliance and enforcement
(a) Revocation or cancellation of line of credit and refund
(1) Grounds for revocation
The Board shall revoke or suspend a line of credit, and shall request a full or partial refund of the Federal investment, with an appropriate amount of interest-
(A) for false statements knowingly made in any written statement required under sections 2007a to 2007e of this title, or under any regulation or Federal Register notice issued under sections 2007a to 2007e of this title;
(B) if any written statement required under sections 2007a to 2007e of this title, or under any regulation or Federal Register notice issued under sections 2007a to 2007e of this title, fails to state a material fact necessary in order to make the statement not misleading in the light of the circumstances under which the statement was made;
(C) for willful or repeated violation of, or willful or repeated failure to observe, any provision of sections 2007a to 2007e of this title;
(D) for willful or repeated violation of, or willful or repeated failure to observe, any rule or regulation authorized under sections 2007a to 2007e of this title; or
(E) for violation of, or failure to observe, any cease and desist order issued by the Board under this subsection.
(2) Cancellation of line of credit
Notwithstanding any action taken under paragraph (1), the Board may cancel any prospective payments to be made from any approved line of credit under sections 2007a to 2007e of this title if the Board determines that the eligible entity participating in the program established under sections 2007a to 2007e of this title made an investment, or acted in a manner, that was inconsistent with any provision of sections 2007a to 2007e of this title.
(3) Cease and desist orders
If an eligible entity has not complied with any provision of sections 2007a to 2007e of this title, or of any regulation issued pursuant thereto, or is engaging or is about to engage in conduct that constitutes or will constitute a violation of sections 2007a to 2007e of this title or such regulation, the Board may order such entity to cease and desist from such conduct. The Board may further order such entity to take such action or to refrain from such action as the Board determines necessary to ensure compliance with sections 2007a to 2007e of this title and the regulations issued thereunder.
(4) Order to show cause, contents, and hearing
(A) Order
Prior to revoking or suspending a line of credit under paragraph (1) or (2), or issuing a cease and desist order under paragraph (3), the Board shall serve on the eligible entity an order to show cause why an order revoking or suspending the line of credit or a cease and desist order should not be issued.
(B) Contents
An order to show cause under subparagraph (A) shall contain a statement of the matters of fact and law asserted by the Board and the legal authority and jurisdiction under which a hearing is to be held, and shall state that a hearing will be held before the Board at a time and place stated in the order.
(C) Hearing
If, after a hearing under subparagraph (B) or a waiver thereof, the Board determines on the record that an order revoking or suspending the line of credit, or a cease and desist order should be issued, or an order requiring a refund of the Federal investment in addition to reasonable interest thereon should issue, the Board shall promptly issue such order, which shall include a statement of the findings of the Administration and the reasons for such findings and specify the effective date of the order, and shall cause the order to be served on the entity.
(5) Subpoena of persons, books, papers, and documents; fees and mileage; enforcement
(A) Subpoena
The Board may require by subpoena the attendance and testimony of witnesses and the production of all books, papers, and documents relating to the hearing from any place in the United States.
(B) Fees and mileage
Witnesses summoned before the Board shall be paid by the party at whose instance such witnesses were called the same fees and mileage that are paid witnesses in the courts of the United States.
(C) Enforcement
In the case of disobedience to a subpoena under this paragraph, the Board, or any party to a proceeding before the Board, may invoke the aid of any court of the United States in requiring the attendance and testimony of witnesses and the production of books, papers, and documents.
(6) Petition to modify or set aside order; filing, time and place, administration to submit record; action of court; review
(A) In general
An order issued by the Board under this subsection shall be final and conclusive unless not later than 30 days after the service thereof the eligible entity appeals to the United States Court of Appeals for the circuit in which such corporation has its principal place of business by filing with the clerk of such court a petition praying that the order of the Board be set aside or modified in the manner stated in the petition.
(B) Filing
(i) Leave of court
After the expiration of the 30-day period referred to in subparagraph (A), a petition may be filed only by leave of court on a showing of reasonable grounds for failure to file the petition prior to the expiration of such period.
(ii) Certification
The clerk of the court shall, on filing, cause a copy of the petition to be delivered to the Board and the Board shall certify and file in the court a transcript of the record on which the order was entered. If prior to the filing of such record the Board amends or sets aside its order, in whole or in part, the petitioner may amend the petition within such time as the court may determine, after providing notice to the Board.
(C) Stay or suspension of order
The filing of a petition for review under this paragraph shall not of itself stay or suspend the operation of the order of the Board, but the court of appeals in its discretion may restrain or suspend, in whole or in part, the operation of the order pending the final hearing and determination of the petition.
(D) Action by court
The court may affirm, modify, or set aside the order of the Board.
(E) Additional evidence
(i) Determination
If the court determines that the just and proper disposition of the case requires the taking of additional evidence, the court shall order the Board to reopen the hearing for the taking of such evidence, in such manner and on such terms and conditions as the court may consider appropriate.
(ii) Findings
The Board may modify its findings as to the facts, or make new findings, by reason of the additional evidence taken under this subparagraph, and it shall file its modified or new findings and the amendments, if any, of its order, with the records of such additional evidence.
(F) Consideration of objections
The court shall not consider an objection to an order of the Board unless the objection was argued before the Board or, if it were not so argued, unless there were reasonable grounds for failure to do so.
(G) Review
The judgment and decree of the court affirming, modifying, or setting aside any such order of the Board shall be subject only to review by the Supreme Court of the United States on certification or certiorari as provided in section 1254 of title 28.
(7) Enforcement of order
If the entity against which or against whom an order is issued under this subsection fails to obey the order, the Board may apply to the United States Court of Appeals for the circuit where the entity has its principal place of business, for the enforcement of the order, and shall file a transcript of the record on which the order complained of was entered. On the filing of the application, the court shall cause notice thereof to be served on the entity. The evidence to be considered, the procedure to be followed, and the jurisdiction of the court shall be the same as is provided in paragraph (6) for applications to set aside or modify orders.
(b) Investigations and examinations
(1) Authority
(A) In general
The Board may conduct such investigations as the Board considers necessary to determine whether an eligible entity has engaged in any conduct that constitutes or will constitute a violation of any provision of sections 2007a to 2007e of this title, of any regulation issued under sections 2007a to 2007e of this title, or of any order issued under this section.
(B) Filing of statements
The Board shall permit any individual to file a statement with the Board in writing, under oath, or otherwise as the Board shall determine, as to all the facts and circumstances concerning the matter to be investigated.
(C) Subpoena
For the purpose of any investigation under this subsection, the Board may administer oaths and affirmations, subpoena witnesses, compel their attendance, take evidence, and require the production of any books, papers, and documents that are relevant to the inquiry. Such attendance of witnesses and the production of any such records may be required from any place in the United States.
(D) Refusal to obey
In case of contumacy by, or refusal to obey a subpoena issued to, any individual, including an entity or corporation, the Board may invoke the aid of any court of the United States within the jurisdiction of which such investigation or proceeding is carried on, or where such individual resides or carries on business activity, in requiring the attendance and testimony of witnesses and the production of books, papers, and documents, and such court may issue an order requiring such individual to appear before the Board, to produce records, if so ordered, or to give testimony touching the matter under investigation.
(E) Contempt
A failure to obey an order of the court under this subsection shall be punishable by such court as a contempt thereof. All process in any such case may be served in the judicial district where such individual is an inhabitant or wherever such individual may be found.
(2) Examinations and reports
(A) Examinations
An eligible entity under sections 2007a to 2007e of this title shall be subject to examinations made by the Board through examiners selected or approved by the Board, and the cost of such examinations, including the compensation of the examiners, may in the discretion of the Board be assessed against the entity examined and when so assessed shall be paid by such entity.
(B) Reports
Such entities shall prepare and submit reports to the Board at such times and in such form as the Board may require.
(3) Examinations
Each eligible entity shall be examined and audited at least once every 2 years, under procedures established by the Board, to determine whether or not such entity has been operated in a manner consistent with sections 2007a to 2007e of this title and in an otherwise lawful manner, except that the Board may defer the examination for not more than 1 year if, in its discretion, the Board determines that such a deferral would be appropriate based on the prior operating experience of the entity, the contents and results of the last examination of the entity, and the management expertise of the entity.
(c) Injunctions or other orders
(1) Grounds and jurisdiction of court
If, in the judgment of the Board, an eligible entity has engaged or is about to engage in conduct that constitutes or will constitute a violation of any provision of sections 2007a to 2007e of this title, of any regulation under sections 2007a to 2007e of this title, or of any order issued under this section, the Board may apply to the proper district court of the United States or a United States court located in any jurisdiction subject to the laws of the United States, for an order enjoining such conduct or enforcing compliance with such provision, rule, regulation, or order. Such court shall have jurisdiction over such conduct and, on a showing by the Board that such entity has engaged in or is about to engage in such conduct, may issue a permanent or temporary injunction, restraining order, or other order without bond.
(2) Equity jurisdiction of corporation and assets
In any proceeding under this section, the court as a court of equity may, to such extent as it considers necessary, declare that such court has exclusive jurisdiction over the entity and the assets thereof, wherever located. Such court shall have jurisdiction in any such proceeding to appoint a trustee or receiver to hold or administer under the direction of the court the assets so possessed.
(3) Trusteeship or receivership
The Board shall have authority to act as trustee or receiver of an entity under this section. On request by the Board, the court may appoint the Board to act in such capacity unless the court determines such appointment to be inequitable or otherwise inappropriate because of the special circumstances involved.
(d) Unlawful acts and omissions by officers, directors, employees, or agents
(1) Violation of sections 2007a to 2007e of this title
It shall be unlawful for any eligible entity to violate any provision of sections 2007a to 2007e of this title or any regulation issued under sections 2007a to 2007e of this title, or for any individual, directly or indirectly, to authorize, order, or participate in, or cause, bring about, counsel, aid, or abet conduct that constitutes or will constitute, in whole or in part, such a violation.
(2) Breach of fiduciary duty
It shall be unlawful for any officer, director, employee, agent, or other participant in the management or conduct of the affairs of an eligible entity to breach the fiduciary duty of such individual or such officer, director, employee, agent, or participant, if, as a result thereof, the entity has suffered or is in imminent danger of suffering financial loss or other damage.
(3) Disqualification of officers and employees
Except on the written consent of the Board, it shall be unlawful for any individual to take or continue to hold office as an officer, director, or employee of an eligible entity, or become or continue to be an agent or participate in the conduct of the affairs or management of an eligible entity if such individual has been-
(A) convicted of a felony, or of any other criminal offense involving dishonesty or breach of trust; or
(B) found civilly liable in damages, or has been permanently or temporarily enjoined by an order, judgment, or decree of a court of competent jurisdiction, by reason of any conduct involving fraud or breach of trust.
(e) Penalties and forfeitures
(1) In general
Except as provided in paragraph (2), an eligible entity that violates any regulation or written directive issued by the Board requiring the filing of any regular or special report under sections 2007a to 2007e of this title, shall forfeit and pay to the United States a civil penalty of not more than $100 for each and every day of the continuance of the corporation's failure to file such report, unless the entity demonstrates that such failure is due to reasonable cause and not due to willful neglect. The civil penalties provided for in this subsection shall accrue to the United States and may be recovered in a civil action brought by the Board.
(2) Exemption
At any time before a failure under paragraph (1), and after notice and opportunity for hearing, the Board may through rules and regulations, or on application of an interested party, by order, exempt in whole or in part, any entity from the provisions of paragraph (1), on such terms and conditions and for such period of time as the Board determines necessary and appropriate, if the Board finds that such action is not inconsistent with the public interest or the protection of the Board. The Board may for purposes of this subsection impose any alternative requirements appropriate to the situation.
(f) Jurisdiction and service of process
Any suit or action brought under this section by the Board to enforce any liability or duty created by, or to enjoin any violation of, sections 2007a to 2007e of this title, or any rule, regulation, or order promulgated thereunder, shall be brought in the district in which the eligible entity maintains its principal office, and process in such cases may be served in any district in which the defendant maintains its principal office or transacts business, or wherever the defendant may be found.
(g) Substitution of Secretary
On the termination of the Board, the Secretary shall stand in place of the Board and shall possess all the powers, privileges, and rights regarding compliance and enforcement described in this section and in section 2007d of this title.
(h) Revocation, suspension, or termination
If the approval of any eligible entity to participate in this program is revoked, suspended, or terminated, or if the activities of the eligible entity otherwise end, the Board, or the Secretary, upon the termination of the Board, shall-
(1) possess all the rights and privileges of such eligible entity;
(2) succeed to the assets of such eligible entity to the extent necessary to obtain a refund of any amounts due to the Board or the Secretary;
(3) be entitled to receive any payments due to such eligible entity from any local businesses on any outstanding loans; and
(4) take over any equity investment held by such eligible entity.
(Pub. L. 101 624, title XXIII, §2315, Nov. 28, 1990,
Codification
Section was enacted as part of the Rural Economic Development Act of 1990, and also as part of the Food, Agriculture, Conservation, and Trade Act of 1990, and not as part of the Consolidated Farm and Rural Development Act which comprises this chapter.
Amendments
1991-Subsec. (d)(2). Pub. L. 102 237 struck out "engage in conduct, in" after "eligible entity to".
Effective Date of 1991 Amendment
Amendment by Pub. L. 102 237 effective as if included in the provision of the Food, Agriculture, Conservation, and Trade Act of 1990, Pub. L. 101 624, to which the amendment relates, see section 1101(b)(7) of Pub. L. 102 237, set out as a note under section 1421 of this title.
Effective Date
Section effective Oct. 1, 1991, see section 2007(d) of this title.
Section Referred to in Other Sections
This section is referred to in sections 2007, 2007a, 2007b, 2007c, 2007d of this title.