[Code of Federal Regulations]
[Title 7, Volume 4]
[Revised as of January 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR248.20]

[Page 430]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER II--FOOD AND NUTRITION SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 248_WIC FARMERS' MARKET NUTRITION PROGRAM (FMNP)--Table of Contents
 
                   Subpart G_Miscellaneous Provisions
 
Sec.  248.20  Claims and penalties.


    (a) Claims against State agencies. (1) If FNS determines through a 
review of the State agency's reports, program or financial analysis, 
monitoring, audit, or otherwise, that any FMNP funds provided to a State 
agency for food or administrative purposes were, through State agency 
negligence or fraud, misused or otherwise diverted from FMNP purposes, a 
formal claim will be assessed by FNS against the State agency. The State 
agency shall pay promptly to FNS a sum equal to the amount of the 
administrative funds or the value of coupons so misused or diverted.
    (2) If FNS determines that any part of the FMNP funds received by a 
State agency; or coupons, were lost as a result of theft, embezzlement, 
or unexplained causes, the State agency shall, on demand by FNS, pay to 
FNS a sum equal to the amount of the money or the value of the FMNP 
coupons so lost.
    (3) The State agency shall have full opportunity to submit evidence, 
explanation or information concerning alleged instances of noncompliance 
or diversion before a final determination is made in such cases.
    (4) FNS is authorized to establish claims against a State agency for 
unreconciled FMNP coupons. When a State agency can demonstrate that all 
reasonable management efforts have been devoted to reconciliation and 99 
percent or more of the FMNP coupons issued have been accounted for by 
the reconciliation process, FNS may determine that the reconciliation 
process has been completed to satisfaction.
    (b) Interest charge on claims against State agencies. If an 
agreement cannot be reached with the State agency for payment of its 
debts or for offset of debts on its current Letter of Credit within 30 
days from the date of the first demand letter from FNS, FNS will assess 
an interest (late) charge against the State agency. Interest accrual 
shall begin on the 31st day after the date of the first demand letter, 
bill or claim, and shall be computed monthly on any unpaid balance as 
long as the debt exists. From a source other than the FMNP, the State 
agency shall provide the funds necessary to maintain FMNP operations at 
the grant level authorized by FNS.
    (c) Penalties. In accordance with section 12(g) of the National 
School Lunch Act, whoever embezzles, willfully misapplies, steals or 
obtains by fraud any funds, assets or property provided under section 17 
of the Child Nutrition Act of 1966, as amended, whether received 
directly or indirectly from USDA, or whoever receives, conceals or 
retains such funds, assets or property for his or her own interest, 
knowing such funds, assets or property have been embezzled, willfully 
misapplied, stolen, or obtained by fraud shall, if such funds, assets or 
property are of the value of $100 or more, be fined not more than 
$10,000 or imprisoned not more than five years, or both, or if such 
funds, assets or property are of a value of less than $100, shall be 
fined not more than $1,000 or imprisoned for not more than one year, or 
both.