Potential Criminal & Civil Liability under Federal Law for

False, Fictitious Statements, Entries & Misrepresentations

Made in a DBE Application

Knowingly making a false statement on this form is a violation of Federal law and could result in
criminal prosecution, significant civil penalties, and a denial of your loan or surety bond application.
A false statement is punishable under 18 U.S.C. §§ 1001 and 3571 by imprisonment of not more than
five years and/or a fine of up to $250,000; under 15 U.S.C. § 645 by imprisonment of not more than
two years and/or a fine of not more than $5,000; and, if submitted to a Federally insured institution, a
false statement is punishable under 18 U.S.C. § 1014 by imprisonment of not more than thirty years
and/or a fine of not more than $1,000,000. Additionally, false statements can lead to treble damages
and civil penalties under the False Claims Act, 31 U.S.C. § 3729, and other administrative remedies
including suspension and debarment.

15 U.S.C. § 645

(a) False statements; overvaluation of securities - whoever makes any statement knowing it to be
false, or whoever willfully overvalues any security, for the purpose of obtaining for himself or for
any applicant any loan, or extension thereof by renewal, deferment of action, or otherwise, or the
acceptance, release, or substitution of security therefor, or for the purpose of influencing in any
way the action of the Administration, or for the purpose of obtaining money, property, or
anything of value, under this chapter, shall be punished by a fine of not more than $5,000 or by
imprisonment for not more than two years, or both.

(b) Embezzlement, etc. Whoever, being connected in any capacity with the Administration,

(1) Embezzles, abstracts, purloins, or willfully misapplies any moneys, funds, securities, or other
things of value, whether belonging to it or pledged or otherwise entrusted to it, or

(2) With intent to defraud the Administration or any other body politic or corporate, or any
individual, or to deceive any officer, auditor, or examiner of the Administration, makes any
false entry in any book, report, or statement of or to the Administration, or, without being
duly authorized, draws any order or issues, puts forth, or assigns any note, debenture, bond,
or other obligation, or draft, bill of exchange, mortgage, judgment, or decree thereof, or

(3) With intent to defraud participates or shares in or receives directly or indirectly any money,
profit, property, or benefit through any transaction, loan, commission, contract, or any other
act of the Administration, or

(4) Gives any unauthorized information concerning any future action or plan of the
Administration which might affect the value of securities, or, having such knowledge, invests
or speculates, directly or indirectly, in the securities or property of any company or
corporation receiving loans or other assistance from the Administration, shall be punished by
a fine of not more than $10,000 or by imprisonment for not more than five years, or both.

(c) Concealment, etc. Whoever, with intent to defraud, knowingly conceals, removes, disposes of, or
converts to his own use or to that of another, any property mortgaged or pledged to, or held by,
the Administration, shall be fined not more than $5,000 or imprisoned not more than five years,
or both; but if the value of such property does not exceed $100, he shall be fined not more than
$1,000 or imprisoned not more than one year, or both.

(d) Misrepresentation, etc.

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 Potential Criminal & Civil Liability under Federal Law for
False, Fictitious Statements, Entries & Misrepresentations
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(1) Whoever misrepresents the status of any concern or person as a "small business concern", a
"qualified HUBZone small business concern", a "small business concern owned and
controlled by socially and economically disadvantaged individuals", or a "small business
concern owned and controlled by women", in order to obtain for oneself or another any –

(A) Prime contract to be awarded pursuant to section 638, 644, or 657a of this title; (B)
subcontract to be awarded pursuant to section 637(a) of this title;

(C) Subcontract that is to be included as part or all of a goal contained in a subcontracting

plan required pursuant to section 637(d) of this title; or

(D) Prime or subcontract to be awarded as a result, or in furtherance, of any other provision

of Federal law that specifically references section 637(d) of this title for a definition of
program eligibility,

(1) Shall be subject to the penalties and remedies described in paragraph (2).

(2) Any person who violates paragraph (1) shall –

i. Be punished by a fine of not more than $500,000 or by imprisonment for

not more than 10 years, or both;

ii. Be subject to the administrative remedies prescribed by the Program Fraud

Civil Remedies Act of 1986 (31 U.S.C. 3801-3812);

iii. Be subject to suspension and debarment as specified in subpart 9.4 of title

48, Code of Federal Regulations (or any successor regulation) on the basis
that such misrepresentation indicates a lack of business integrity that
seriously and directly affects the present responsibility to perform any
contract awarded by the Federal Government or a subcontract under such a
contract; and

iv. Be ineligible for participation in any program or activity conducted under

the authority of this chapter or the Small Business Investment Act of 1958
(15 U.S.C. 661 et seq.) for a period not to exceed 3 years.

(e) Representations under subsection (d) of this section to be in writing Any representation of the
status of any concern or person as a "small business concern", a "HUBZone small business
concern", a "small business concern owned and controlled by socially and economically
disadvantaged individuals", or a "small business concern owned and controlled by women" in
order to obtain any prime contract or subcontract enumerated in subsection (d) of this section
shall be in writing.

(f) Misrepresentation of compliance with section 636(j)(10)(I) Whoever falsely certifies past
compliance with the requirements of section 636(j)(10)(I) of this title shall be subject to the
penalties prescribed in subsection (d) of this section. –

13 CFR 121.108 - What are the requirements for representing small business size status, and
what are the penalties for misrepresentation?

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 Potential Criminal & Civil Liability under Federal Law for
False, Fictitious Statements, Entries & Misrepresentations
Made in a DBE Application

(a) Presumption of Loss Based on the Total Amount Expended. In every contract, subcontract,
cooperative agreement, cooperative research and development agreement, or grant which is set
aside, reserved, or otherwise classified as intended for award to small business concerns, there
shall be a presumption of loss to the United States based on the total amount expended on the
contract, subcontract, cooperative agreement, cooperative research and development agreement,
or grant whenever it is established that a business concern other than a small business concern
willfully sought and received the award by misrepresentation.

(b) Deemed Certifications. The following actions shall be deemed affirmative, willful and
intentional certifications of small business size and status:

(1) Submission of a bid, proposal, application or offer for a Federal grant, contract, subcontract,
cooperative agreement, or cooperative research and development agreement reserved, set
aside, or otherwise classified as intended for award to small business concerns.

(2) Submission of a bid, proposal, application or offer for a Federal grant, contract, subcontract,
cooperative agreement or cooperative research and development agreement which in any way
encourages a Federal agency to classify the bid or proposal, if awarded, as an award to a small
business concern.

(3) Registration on any Federal electronic database for the purpose of being considered for award
of a Federal grant, contract, subcontract, cooperative agreement, or cooperative research and
development agreement, as a small business concern.

(c) Signature Requirement. Each offer, proposal, bid, or application for a Federal contract,
subcontract, or grant shall contain a certification concerning the small business size and status of
a business concern seeking the Federal contract, subcontract or grant. An authorized official must
sign the certification on the same page containing the size status claimed by the concern.

(d) Limitation of Liability. Paragraphs (a) through (c) of this section may be determined not to apply
in the case of unintentional errors, technical malfunctions, and other similar situations that
demonstrate that a misrepresentation of size was not affirmative, intentional, willful or actionable
under the False Claims Act, 31 U.S.C. §§ 3729, et seq. A prime contractor acting in good faith
should not be held liable for misrepresentations made by its subcontractors regarding the
subcontractors' size. Relevant factors to consider in making this determination may include the
firm's internal management procedures governing size representation or certification, the clarity
or ambiguity of the representation or certification requirement, and the efforts made to correct an
incorrect or invalid representation or certification in a timely manner. An individual or firm may
not be held liable where government personnel have erroneously identified a concern as small
without any representation or certification having been made by the concern and where such
identification is made without the knowledge of the individual or firm.

(e) Penalties for Misrepresentation.

(1) Suspension or debarment. The SBA suspension and debarment official or the agency
suspension and debarment official may suspend or debar a person or concern for
misrepresenting a firm's size status pursuant to the procedures set forth in 48 CFR subpart 9.4.

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 Potential Criminal & Civil Liability under Federal Law for
False, Fictitious Statements, Entries & Misrepresentations
Made in a DBE Application

(2) Civil Penalties. Persons or concerns are subject to severe penalties under the False Claims
Act, 31 U.S.C. 3729-3733, and under the Program Fraud Civil Remedies Act, 331 U.S.C.
3801-3812, and any other applicable laws.

(3) Criminal Penalties. Persons or concerns are subject to severe criminal penalties for knowingly
misrepresenting the small business size status of a concern in connection with procurement
programs pursuant to section 16(d) of the Small Business Act, 15 U.S.C. 645(d), as amended,
18 U.S.C. 1001, 18 U.S.C. 287, and any other applicable laws. Persons or concerns are subject
to criminal penalties for knowingly making false statements or misrepresentations to SBA for
the purpose of influencing any actions of SBA pursuant to section 16(a) of the Small Business
Act, 15 U.S.C. 645(a), as amended, including failure to correct “continuing representations”
that are no longer true.

18 U.S.C. § 1014

Whoever knowingly makes any false statement or report, or willfully overvalues any land, property or
security, for the purpose of influencing in any way the action of the Federal Housing Administration,
the Farm Credit Administration, Federal Crop Insurance Corporation or a company the Corporation
reinsures, the Secretary of Agriculture acting through the Farmers Home Administration or successor
agency, the Rural Development Administration or successor agency, any Farm Credit Bank,
production credit association, agricultural credit association, bank for cooperatives, or any division,
officer, or employee thereof, or of any regional agricultural credit corporation established pursuant to
law, or a Federal land bank, a Federal land bank association, a Federal Reserve bank, a small business
investment company, as defined in section 103 of the Small Business Investment Act of 1958 (15
U.S.C. 662), or the Small Business Administration in connection with any provision of that Act, a
Federal credit union, an insured State-chartered credit union, any institution the accounts of which are
insured by the Federal Deposit Insurance Corporation,,[1] any Federal home loan bank, the Federal
Housing Finance Agency, the Federal Deposit Insurance Corporation, the Farm Credit System
Insurance Corporation, or the National Credit Union Administration Board, a branch or agency of a
foreign bank (as such terms are defined in paragraphs (1) and (3) of section 1(b) of the International
Banking Act of 1978), an organization operating under section 25 or section 25(a) [2] of the Federal
Reserve Act, or a mortgage lending business, or any person or entity that makes in whole or in part a
federally related mortgage loan as defined in section 3 of the Real Estate Settlement Procedures Act of
1974, upon any application, advance, discount, purchase, purchase agreement, repurchase agreement,
commitment, loan, or insurance agreement or application for insurance or a guarantee, or any change
or extension of any of the same, by renewal, deferment of action or otherwise, or the acceptance,
release, or substitution of security therefor, shall be fined not more than $1,000,000 or imprisoned not
more than 30 years, or both. The term “State-chartered credit union” includes a credit union chartered
under the laws of a State of the United States, the District of Columbia, or any commonwealth, territory,
or possession of the United States

18 U.S. Code § 1001 -False, Fictitious Fraudulent Statements, Entries and Misrepresentations

(a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the
executive, legislative, or judicial branch of the Government of the United States, knowingly and
willfully—

(1) Falsifies, conceals, or covers up by any trick, scheme, or device a material fact;

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 Potential Criminal & Civil Liability under Federal Law for
False, Fictitious Statements, Entries & Misrepresentations
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(2) Makes any materially false, fictitious, or fraudulent statement or representation; or

(3) Makes or uses any false writing or document knowing the same to contain any materially
false, fictitious, or fraudulent statement or entry; shall be fined under this title, imprisoned
not more than 5 years or, if the offense involves international or domestic terrorism (as
defined in section 2331), imprisoned not more than 8 years, or both. If the matter relates to
an offense under chapter 109A, 109B, 110, or 117, or section 1591, then the term of
imprisonment imposed under this section shall be not more than 8 years.

18 U.S. Code § 3571 - Fines

(a) In General — a defendant who has been found guilty of an offense may be sentenced to pay a
fine.

(b) Fines for Individuals — except as provided in subsection (e) of this section, an individual who
has been found guilty of an offense may be fined not more than the greatest of—

(1) The amount specified in the law setting forth the offense;

(2) The applicable amount under subsection (d) of this section;

(3) For a felony, not more than $250,000;

(4) For a misdemeanor resulting in death, not more than $250,000;

(5) For a Class A misdemeanor that does not result in death, not more than $100,000;

(6) For a Class B or C misdemeanor that does not result in death, not more than $5,000; or

(7) For an infraction, not more than $5,000.

(c) Fines for Organizations — except as provided in subsection (e) of this section, an organization
that has been found guilty of an offense may be fined not more than the greatest of—

(1) The amount specified in the law setting forth the offense;

(2) The applicable amount under subsection (d) of this section;

(3) For a felony, not more than $500,000;

(4) For a misdemeanor resulting in death, not more than $500,000;

(5) For a Class A misdemeanor that does not result in death, not more than $200,000;

(6) For a Class B or C misdemeanor that does not result in death, not more than $10,000; and

(7) For an infraction, not more than $10,000.

(d) Alternative Fine Based on Gain or Loss.—If any person derives pecuniary gain from the
offense, or if the offense results in pecuniary loss to a person other than the defendant, the

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False, Fictitious Statements, Entries & Misrepresentations
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defendant may be fined not more than the greater of twice the gross gain or twice the gross loss,
unless imposition of a fine under this subsection would unduly complicate or prolong the
sentencing process.

(e) Special Rule for Lower Fine Specified in Substantive Provision.— If a law setting forth an
offense specifies no fine or a fine that is lower than the fine otherwise applicable under this
section and such law, by specific reference, exempts the offense from the applicability of the
fine otherwise applicable under this section, the defendant may not be fined more than the
amount specified in the law setting forth the offense.

18 U.S. Code § 287 - False, fictitious or Fraudulent claims

Whoever makes or presents to any person or officer in the civil, military, or naval service of the
United States, or to any department or agency thereof, any claim upon or against the United States, or
any department or agency thereof, knowing such claim to be false, fictitious, or fraudulent, shall be
imprisoned not more than five years and shall be subject to a fine in the amount provided in this title.

18 U.S. Code § 3581 - Sentence of Imprisonment

(a) In General — a defendant who has been found guilty of an offense may be sentenced to a term
of imprisonment.

(b) Authorized Terms — the authorized terms of imprisonment are—

(1) For a Class A felony, the duration of the defendant’s life or any period of time;

(2) For a Class B felony, not more than twenty-five years;

(3) For a Class C felony, not more than twelve years;

(4) For a Class D felony, not more than six years;

(5) For a Class E felony, not more than three years;

(6) For a Class A misdemeanor, not more than one year;

(7) For a Class B misdemeanor, not more than six months;

(8) For a Class C misdemeanor, not more than thirty days; and

(9) For an infraction, not more than five days.

13 CFR 121.108 - What are the requirements for representing small business size status, and
what are the penalties for misrepresentation?

(a) Presumption of Loss Based on the Total Amount Expended. In every contract, subcontract,
cooperative agreement, cooperative research and development agreement, or grant which is set
aside, reserved, or otherwise classified as intended for award to small business concerns, there
shall be a presumption of loss to the United States based on the total amount expended on the

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 Potential Criminal & Civil Liability under Federal Law for
False, Fictitious Statements, Entries & Misrepresentations
Made in a DBE Application

contract, subcontract, cooperative agreement, cooperative research and development agreement,

or grant whenever it is established that a business concern other than a small business concern
willfully sought and received the award by misrepresentation.

(b) Deemed Certifications. The following actions shall be deemed affirmative, willful and
intentional certifications of small business size and status:

(1) Submission of a bid, proposal, application or offer for a Federal grant, contract, subcontract,
cooperative agreement, or cooperative research and development agreement reserved, set
aside, or otherwise classified as intended for award to small business concerns.

(2) Submission of a bid, proposal, application or offer for a Federal grant, contract, subcontract,
cooperative agreement or cooperative research and development agreement which in any
way encourages a Federal agency to classify the bid or proposal, if awarded, as an award to
a small business concern.

(3) Registration on any Federal electronic database for the purpose of being considered for
award of a Federal grant, contract, subcontract, cooperative agreement, or cooperative
research and development agreement, as a small business concern.

(c) Signature Requirement. Each offer, proposal, bid, or application for a Federal contract,
subcontract, or grant shall contain a certification concerning the small business size and status of
a business concern seeking the Federal contract, subcontract or grant. An authorized official must
sign the certification on the same page containing the size status claimed by the concern.

(d) Limitation of Liability. Paragraphs (a) through (c) of this section may be determined not to apply
in the case of unintentional errors, technical malfunctions, and other similar situations that
demonstrate that a misrepresentation of size was not affirmative, intentional, willful or actionable
under the False Claims Act, 31 U.S.C. §§ 3729, et seq. A prime contractor acting in good faith
should not be held liable for misrepresentations made by its subcontractors regarding the
subcontractors' size. Relevant factors to consider in making this determination may include the
firm's internal management procedures governing size representation or certification, the clarity
or ambiguity of the representation or certification requirement, and the efforts made to correct an
incorrect or invalid representation or certification in a timely manner. An individual or firm may
not be held liable where government personnel have erroneously identified a concern as small
without any representation or certification having been made by the concern and where such
identification is made without the knowledge of the individual or firm.

(e) Penalties for Misrepresentation.

(1) Suspension or debarment. The SBA suspension and debarment official or the agency
suspension and debarment official may suspend or debar a person or concern for
misrepresenting a firm's size status pursuant to the procedures set forth in 48 CFR subpart 9.4.

(2) Civil Penalties. Persons or concerns are subject to severe penalties under the False Claims
Act, 31 U.S.C. 3729-3733, and under the Program Fraud Civil Remedies Act, 331 U.S.C.
3801-3812, and any other applicable laws.

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 Potential Criminal & Civil Liability under Federal Law for
False, Fictitious Statements, Entries & Misrepresentations
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(3) Criminal Penalties. Persons or concerns are subject to severe criminal penalties for knowingly
misrepresenting the small business size status of a concern in connection with procurement
programs pursuant to section 16(d) of the Small Business Act, 15 U.S.C. 645(d), as amended,
18 U.S.C. 1001, 18 U.S.C. 287, and any other applicable laws. Persons or concerns are subject
to criminal penalties for knowingly making false statements or misrepresentations to SBA for
the purpose of influencing any actions of SBA pursuant to section 16(a) of the Small Business
Act, 15 U.S.C. 645(a), as amended, including failure to correct “continuing representations”
that are no longer true.

31 U.S. Code § 3729 - False claims

(a) Liability for Certain Acts.—

(1) In general — Subject to paragraph (2), any person who—

(A) Knowingly presents, or causes to be presented, a false or fraudulent claim for payment or
approval;

(B) Knowingly makes, uses, or causes to be made or used, a false record or statement
material to a false or fraudulent claim;

(C) Conspires to commit a violation of subparagraph (A), (B), (D), (E), (F), or (G);

(D) Has possession, custody, or control of property or money used, or to be used, by the
Government and knowingly delivers, or causes to be delivered, less than all of that
money or property;

(E) Is authorized to make or deliver a document certifying receipt of property used, or to be

used, by the Government and, intending to defraud the Government, makes or delivers
the receipt without completely knowing that the information on the receipt is true;

(F) Knowingly buys, or receives as a pledge of an obligation or debt, public property from an
officer or employee of the Government, or a member of the Armed Forces, who lawfully
may not sell or pledge property; or

(G) Knowingly makes, uses, or causes to be made or used, a false record or statement
material to an obligation to pay or transmit money or property to the Government, or
knowingly conceals or knowingly and improperly avoids or decreases an obligation to
pay or transmit money or property to the Government, is liable to the United States
Government for a civil penalty of not less than $5,000 and not more than $10,000, as
adjusted by the Federal Civil Penalties Inflation Adjustment Act of 1990 (28 U.S.C. 2461
note; Public Law 104–410), plus 3 times the amount of damages which the Government
sustains because of the act of that person.

(2) Reduced damages — if the court finds that—

(A) The person committing the violation of this subsection furnished officials of the United
States responsible for investigating false claims violations with all information known to

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such person about the violation within 30 days after the date on which the defendant first
obtained the information;

(B) Such person fully cooperated with any Government investigation of such violation; and

(C) At the time such person furnished the United States with the information about the
violation, no criminal prosecution, civil action, or administrative action had commenced
under this title with respect to such violation, and the person did not have actual
knowledge of the existence of an investigation into such violation, the court may assess
not less than 2 times the amount of damages which the Government sustains because of
the act of that person.

(3) Costs of civil actions— a person violating this subsection shall also be liable to the United
States Government for the costs of a civil action brought to recover any such penalty or
damages.

(b) Definitions — for purposes of this section—

(1) The terms “knowing” and “knowingly”—

(A) Means that a person, with respect to information—

(i) Has actual knowledge of the information;

(ii) Acts in deliberate ignorance of the truth or falsity of the information; or

(iii) Acts in reckless disregard of the truth or falsity of the information; and

(B) Require no proof of specific intent to defraud;

(2) The term “claim”—

(A) Means any request or demand, whether under a contract or otherwise, for money or
property and whether or not the United States has title to the money or property, that—

i. Is presented to an officer, employee, or agent of the United States; or

ii. Is made to a contractor, grantee, or other recipient, if the money or property is to

be spent or used on the Government’s behalf or to advance a Government
program or interest, and if the United States Government—

(I) Provides or has provided any portion of the money or property requested or
demanded; or

(II) Will reimburse such contractor, grantee, or other recipient for any portion
of the money or property which is requested or demanded; and

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(B) Does not include requests or demands for money or property that the Government has
paid to an individual as compensation for Federal employment or as an income subsidy
with no restrictions on that individual’s use of the money or property;

(3) The term “obligation” means an established duty, whether or not fixed, arising from an
express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-
based or similar relationship, from statute or regulation, or from the retention of any
overpayment; and

(4) The term “material” means having a natural tendency to influence, or be capable of
influencing, the payment or receipt of money or property.

(c) Exemption From Disclosure — any information furnished pursuant to subsection (a)(2) shall be
exempt from disclosure under section 552 of title 5.

(d) Exclusion — this section does not apply to claims, records, or statements made under the Internal
Revenue Code of 1986.

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