808 KAR 12:026. Procedures for
distributing and using funds from the Mortgage Fraud Prosecution Fund.
RELATES TO: KRS 286.8-150, 286.8-225, 286.8-227
STATUTORY AUTHORITY: KRS 286.8-140(1),
286.8-227
NECESSITY, FUNCTION, AND CONFORMITY: KRS
286.8-140(1) authorizes the commissioner to promulgate administrative
regulations necessary to accomplish the basic purposes of KRS Chapter 286.8. KRS
286.8-227 requires the Commissioner to promulgate administrative regulations,
in consultation with the Attorney General and local prosecutors, establishing
requirements for the distribution of funds in the Mortgage Fraud Prosecution
Fund. This administrative regulation establishes the procedures for
distributing and using funds from the Mortgage Fraud Prosecution Fund.
Section 1. Definitions. (1) "Commissioner"
means the commissioner of the department.
(2) "Department" means the
Department of Financial Institutions. (3) "Mortgage Fraud Prosecution Fund"
or "Fund" means the account established under KRS 286.8-225 and 286.8-227.
(4) "Prosecutorial agency"
means:
(a) The office of the Kentucky Attorney
General;
(b) The office of the United States Attorney;
(c) The office of any county or
commonwealth attorney in the Commonwealth of Kentucky; or
(d) Any other state or federal regulatory
agency.
Section 2. Authorization for Use of Funds.
(1) The commissioner is authorized to disburse funds held in the mortgage fraud
prosecution fund to cover the expenses of the department or any prosecutorial agency
for the purposes of prosecuting or aiding the prosecution of fraudulent
activities in the mortgage lending process, whether the prosecution arises from
an investigation initiated or conducted by the department or from the
independent investigation of any law enforcement agency. In addition, the funds
may be used to cover the expenses for training related to the prevention,
detection, or investigation of mortgage-related fraud, and consumer education
related to mortgage fraud.
(2) Prosecution and other authorized expenses
may relate to the following:
(a) Training;
(b) Investigation;
(c) Trial preparation and trial,
including discovery;
(d) Witness expenses;
(e) Travel expenses;
(f) Sentencing;
(g) Appeal; or
(h) Consumer education initiatives.
Section 3. Application and Approval for Disbursement
of Funds. (1) The department may utilize any of the following for application,
approval, and disbursement of funds to prosecutorial agencies:
(a) A written agreement or memorandum of
understanding with a prosecutorial agency covering actual expenses for a set
period of time or the actual expenses for a particular prosecution,
investigation, training, or initiative. Each agreement or memorandum of
understanding shall be signed by the commissioner and an authorized
representative of the prosecutorial agency and shall identify:
1. The effective period;
2. The expenses to be covered;
3. The dollar limit, if any; and
4. The manner and form of billing
expenses and the process for disbursement of funds.
(b) A written application submitted to
the department for payment of prosecution-related or other authorized expenses shall
include the following information:
1. The prosecutorial agency applicant
name, address, and contact information;
2.
A detailed description and estimated amount of the expenses sought to be
covered, or if expenses have already been incurred, proof of incurrence of such
expenses;
3.
A detailed description of the cases, persons, and crimes being considered for
prosecution, if applicable; and
4.
A detailed description of the expenses, training, or initiative being proposed
or sought for reimbursement.
(c) For funds sought to be utilized by
the department for the purposes set forth in Section 2 of this administrative regulation,
the commissioner shall maintain an accounting and memorandum of all these expenditures
which shall include the information required under paragraph (b) of this subsection.
(2) The commissioner shall approve or
deny the application for funds in writing. The approval shall contain the terms
of disbursement including the maximum amount to be reimbursed, the billing
process to be implemented, and reporting requirements for the disbursement of
funds.
(3) A completed invoice or voucher in a
form acceptable to the commissioner shall be submitted for all prosecution
expenses for which payment or reimbursement from the account is sought.
Section 4. Funding Criteria. Allocation
of funds by the commissioner to prosecutorial agencies shall be based on funds
available in the mortgage fraud prosecution fund and the following:
(1) The likelihood that any investigation
or inquiry will lead to criminal prosecution;
(2) Whether criminal prosecution is
imminent; or
(3) A demonstration of need for funds to
accomplish the purposes set forth in Section 2 of this administrative regulation.
Section 5. Disbursement Limitation. The commissioner
is not required to disburse any funds unless the mortgage lending fraud prosecution
account contains sufficient funds to cover the agreed disbursements. The
commissioner and the department shall not be required to make disbursements
from the department’s own operating funds.
Section 6. Confidentiality of Information
Provided in Funding Applications. The commissioner shall deem confidential and
withhold from public inspection for the time as he considers necessary all information
provided by prosecutorial agencies that:
(1) Is furnished to the department on the
express condition that the information remain confidential; or
(2) That the commissioner deems necessary
to protect the public welfare by avoiding the premature or unwarranted
disclosure of information concerning any criminal investigation, prosecution,
or litigation. (37 Ky.R. 889; Am. 1201; eff. 12-3-2010.)
