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United States v. Van Oosterhout

United States Court of Appeals for the District of Columbia Circuit

September 10, 1996, Argued ; October 8, 1996, Decided

No. 95-5413


 [*1492]  SILBERMAN, Circuit Judge: The government filed this action under the False Claims Act to recover monies paid out under Small Business Administration (SBA) loan guaranties when River Capital Corporation, a small business investment company financed by SBA-guaranteed debentures, defaulted on its obligations. Van Oosterhout, who was President and Director of River Capital, is alleged to have been personally responsible for the submission to the SBA of financial statements that falsely stated River Capital's financial position in order to obtain SBA-guaranteed financing.  [**2]  The district court granted summary judgment in favor of Van Oosterhout on the ground that the False Claims Act counts are barred by the Act's six-year statute of limitations, United States v. Vanoosterhout, 898 F. Supp. 25, 27-29 (D.D.C. 1995), and the government appealed. 1 We affirm.

 [*1493]  I.

River Capital was established under the Small Business Investment Act of 1958, 15 U.S.C. §§ 681-687m (1988), as a Small Business Investment Corporation (SBIC). From 1983 to 1987, the SBA provided financing to River Capital by guaranteeing forty-three subordinated debentures issued by River Capital. As part of the guarantee program, River Capital [**3]  was under an ongoing obligation to file annual reports with the SBA disclosing its financial condition, see 13 C.F.R. § 107.1002(e) (1988), and to file new applications any time additional financing was desired, see 13 C.F.R. § 107.201 (1988). The counts at issue on appeal are premised on River Capital's August 3, 1987 application to the SBA for additional financing. On River Capital's behalf, Van Oosterhout allegedly made false statements certifying the continuing correctness of an earlier annual report and its full compliance with program requirements. The SBA subsequently guaranteed $ 2.5 million of River Capital debentures on September 29, 1987.

On July 1 and August 1, 1988, River Capital defaulted on interest payments due on outstanding debentures. Under SBA regulations, the SBA had discretion to either accelerate River Capital's indebtedness or forebear acceleration and seek to work out a cure for the default. If the SBA decided to accelerate, its procedures called for it to transfer River Capital from "operating status into liquidation status in order to protect the creditor position of SBA." The SBA ultimately decided to accelerate, and on August 24, 1988, transferred [**4]  River Capital to "liquidation status."

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96 F.3d 1491 *; 1996 U.S. App. LEXIS 26366 **; 321 U.S. App. D.C. 43; 41 Cont. Cas. Fed. (CCH) P76,995


Prior History:  [**1]  Appeal from the United States District Court for the District of Columbia.

Disposition: Affirmed.


Acceleration, liquidation, false claim, defaulted, lender, financing, ripened, debentures, circular, offering

Governments, Legislation, Statute of Limitations, General Overview, Banking Law, Public Enforcement, Criminal Offenses, False Statements in Credit Applications, Federal Acts