Code of Federal Regulations Title 20. Employees' Benefits § 20.641.440 Are there responsibility conditions that alone will disqualify an applicant?

(a) Yes, an applicant may be disqualified if

(b) The second responsibility test addresses “fraud or criminal activity of a significant nature.” The Department will determine the existence of significant fraud or criminal activity which typically will include willful or grossly negligent disregard for the use or handling of, or other fiduciary duties concerning, Federal funding, where the grantee has no effective systems, checks, or safeguards to detect or prevent fraud or criminal activity. Additionally, significant fraud or criminal activity will typically include coordinated patterns or behaviors that pervade a grantee's administration or are committed by the higher levels of a grantee's management or authority. The Department will determine whether “fraud or criminal activity of a significant nature” has occurred on a case-by-case basis, regardless of what party identifies the alleged fraud or criminal activity.