Page:United States Statutes at Large Volume 106 Part 1.djvu/681

 PUBLIC LAW 102-325—JULY 23, 1992 106 STAT. 649 "(2) to establish such other reasonable procedures as the Secretary determines will contribute to ensuring that the institution of higher education will comply with administrative capabihly required by this title. "(e) FINANCIAL GUARANTEES FROM OWNERS.— (1) Notwithstanding any other provision of law, the Secretary may, to the extent necessary to protect the financicd interest of the United States, require— "(A) financial guarantees from an institution participating, or seeking to participate, in a program under this title, or from one or more individuals who the Secretary determines, in accordance with paragraph (2), exercise substantial control over such institution, or both, in an amount determined by the Secretary to be sufficient to satisfy the institution's potenticd Uability to the Federal Government, student assistance recipients, and other program participants for funds under this title; and "(B) the assumption of personal Uability, by one or more individuals who exercise substantial control over such institution, as determined by the Secretary in accordance with paragraph (2), for financial losses to the Federal Government, student assistance recipients, and other program participants for funds under this title, and civil and criminal monetary penalties authorized under this title. "(2)(A) The Secretary may determine that an individual exercises substantial control over one or more institutions participating in a program under this title if the Secretary determines that-— " (i) the individual directly or indirectly controls a substantial ownership interest in the institution; "(ii) the individual, either alone or together with other individuals, represents, under a voting trust, power of attorney, proxy, or similar agreement, one or more persons who have, individually or in combination with the other persons represented or the individual representing them, a substantial ownership interest in the institution; or "(iii) the individual is a member of the board of directors, the chief executive officer, or other executive officer of the institution or of an entity that holds a substantial ownership interest in the institution. "(B) The Secretary may determine that an entity exercises substantial control over one or more institutions participating in a program under this title if the Secretary determines that the entity directly or indirectly holds a substantial ownership interest in the institution. "(3) For purposes of this subsection, an ownership interest is defined as a share of the legal or beneficial ownership or control of, or a right to share in the proceeds of the operation of, an institution or institution's parent corporation. An ownership interest may include, but is not limited to— "(A) a sole proprietorship; "(B) an interest as a tenant-in-common, joint tenant, or tenant by the entireties; "(C) a partnership; or "(D) an interest in a trust. "(4) The Secretary shall not impose the requirements described in subparagraphs (A) and (B) of paragraph (1) on an institution that—

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