(a) All or any part of a payment otherwise due a person or legal entity on all farms in which the person or legal entity has an interest may be withheld or be required to be refunded if the person or legal entity fails to comply with the provisions of this part.
(b) All or any part of a payment otherwise due a person or legal entity on all farms in which the person or legal entity has an interest may be withheld or be required to be refunded if the person or legal entity fails to comply with the provisions of this part and adopts or participates in adopting a scheme or device designed to evade this part, or that has the effect of evading this part. Examples of acts may include, but are not limited to:
(1) Concealing information that affects the application of this part;
(2) Submitting false or erroneous information; or
(3) Creating a business arrangement using rental agreements and other arrangements to conceal the interest of a person or legal entity in a farm or farming operation for the purpose of obtaining program payments the person or legal entity would otherwise not be eligible to receive. Examples of business arrangements or acts include, but are not limited to the following:
(i) No crops are grown or agricultural commodities produced by the represented operation;
(ii) The represented operation has no appreciable assets;
(iii) The only source of capital for the operation is the program payments; or
(iv) The represented operation exists only for the receipt of program payments.
(c) If the Deputy Administrator determines that a person or legal entity has adopted a scheme or device to evade, or that has the purpose of evading, the provisions of 7 U.S.C. 1308, 1308-1, or 1308-3, as amended, the person or legal entity will be ineligible to receive payments under the programs specified in § 1400.1 in the year the scheme or device was perpetrated or adopted and the succeeding year.
(d) A person or legal entity that lies or perpetuates fraud, commits fraud, or participates in equally serious actions for the benefit of the person or legal entity, or the benefit of any other person or legal entity, to exceed the applicable limit on payments or the requirements of this part will be subject to a 5-year denial of all program benefits. Examples of equally serious actions include, but are not limited to:
(1) Knowingly engaged in, or aided in the creation of a fraudulent document;
(2) Failed to disclose material information relevant to the administration of the provisions of this part, or
(3) Any other actions of a person or legal entity determined by the Deputy Administrator as designed or intended to circumvent the provisions of this subpart.
(e) Program payments and benefits will be denied on pro-rata basis:
(1) In accordance to the interest held by the person or legal entity in any other legal entity or joint operations and
(2) To any person or legal entity that is a cash rent tenant on land owned or under control of a person or legal entity for which a determination of this section has been made.
[73 FR 79273, Dec. 29, 2008, as amended at 85 FR 52038, Aug. 24, 2020]