808 KAR 12:026. Procedures for distributing and using funds from the Mortgage Fraud Prosecution Fund

Link to law: http://www.lrc.ky.gov/kar/808/012/026.htm
Published: 2015

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      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),



286.8-140(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"


      (a) The office of the Kentucky Attorney


      (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



      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;


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



A detailed description of the cases, persons, and crimes being considered for

prosecution, if applicable; and


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


      (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.)