was residing in a State (as defined in 38 U.S.C. 101(20)) at the time the act or acts occurred on account of which benefits would be forfeited for fraud or treason except for this law, unless such individual ceases to be a resident of, or domiciled in, a State before the expiration of the period during which criminal prosecution could be instituted. Forfeitures which occurred before September 1, 1959, are not affected. Also excepted are past and future actions based on an act or acts which occurred in the Philippine Islands prior to July 4, 1946.

(2) To provide that where forfeiture was invoked prior to September 1, 1959, the effective date of Public Law 86-222, an original apportionment award may be made to dependents, if otherwise entitled, as provided in 38 U.S.C. 3503(b) and 38 U.S.C. 3504(b). The law does not require discontinuance of apportionment awards on the rolls on that date. Such awards and apportionment awards previously made may be increased, reduced, discontinued or reinstated. Where forfeiture was declared after September 1, 1959, under Public Law 86-222, no apportionment award will be approved in any case.

(3) To provide in 38 U.S.C. 3505 for the automatic forfeiture of gratuitous benefits payable to any person when he is convicted of subversive activities.

NOTE: The term "foreign case" means one In which the individual who performed the act in question did not live in a State at the time the act occurred. It also includes one in which the individual ceased to be a resident of, or domiciled in, a State before the expiration of the period during which criminal prosecution could be instituted. Philippine cases are also "foreign cases".

(b) Board on Waivers and Forfeitures; jurisdiction and procedures. (1) The Board on Waivers and Forfeitures has exclusive jurisdiction to declare a forfeiture for fraud (38 U.S.C. 3503) and treasonable acts (38 U.S.C. 3504) in foreign cases. Cases submitted under 38 U.S.C. 3504 in which a forfeiture is declared will no longer require review and concurrence by the Director, Compensation and Pension Service or the General Counsel.

(2) Automatic forfeitures provided by 38 U.S.C. 3505 will be administratively effectuated by the Board on Waivers and Forfeitures. When first notice of an indictment, conviction, or acquittal under this section is received in Central Office the Board on Waivers and Forfeitures

will inform the Chief Attorney of the apropriate field office in order that payment of any gratuitous benefits may be discontinued or resumed, as appropriate.

(3) All future decisions requiring action by an operating activity will be referred to the field office through the Chief Attorney.

(c) Effective dates-(1) Public Law 86-222. The provisions relative to forfeiture are effective September 1, 1959, date of enactment of the law.

(2) Discontinuances. (1) Upon receipt of notice that the Chief Attorney is submitting a foreign case to the Board of Waivers and Forfeitures for fraud or treasonable acts, or upon notice from the Chief Attorney of an indictment for subversive activities, payments will be discontinued date of last payment pending further disposition.

(ii) Upon receipt of notice from the Chief Attorney that the Board on Waivers and Forfeitures has declared or effectuated a forfeiture, payments will be discontinued the date of award or date preceding the commission of the act resulting in the forfeiture, whichever is later.

(3) Resumptions. (1) Upon return of a case from the Board on Waivers and Forfeitures and information from the Chief Attorney that no forfeiture was declared, or upon receipt of notice from him of acquittal (subversive activities), payments will be resumed promptly effective date of discontinuance if otherwise in order.

(ii) Where an individual who has forfeited benefits is pardoned by the President, the rights to benefits will be restored as of the date of pardon, if claim is filed within 1 year from that date; otherwise benefits will be restored from the date of filing claim. The award will note prior action and any overpayment in the case will be liquidated before payments are resumed by the finance activity.

(iii) The effective date of an original claim and a reopened claim, not falling within the purview of subdivision (iv) of this subparagraph, will be the date of claim or October 27, 1961, the date of paragraph (a)(2), whichever is the later date.

(iv) Section 3.400 (p) of this chapter governs the effective date of award action taken in pending claims under paragraph (a) (2) of this section. A pending claim is defined as: (a) A claim not previously adjudicated; (b) a previously

disallowed claim pending on appeal; (c) a previously disallowed claim reopened by the receipt of any claim, evidence or inquiry on which action was pending on October 27, 1961; (d) a previously disallowed claim reopened by the receipt of any claim, evidence or inquiry after October 27, 1961, but within the appeal period.

(v) Apportionment awards may be increased from date of claim if entitlement is otherwise established provided such date is subsequent to October 27, 1961, the date of paragraph (a) (2) of this section.

(d) Prior decisions and old cases(1) Prior decisions. All decisions invoking forfeiture of benefits made by the Board on Waivers and Forfeitures prior to September 1, 1959, remain in full force and effect, unless reversed on appeal.

(2) Apportionment awards-(1) No running award. The law provides that no apportionment award shall be made in any case after September 1, 1959. No new award, therefore, will be approved in any case after that date.

(ii) Running award. Apportionment awards on which payments were being made on September 1, 1959, may be continued. None will be increased above the amount being paid on September 1, 1959. Such awards may be reduced, discontinued and reinstated; Examples: an award may be resumed following discontinuance for failure of a fiduciary to render prompt accounting, or following failure of a payee to return an income questionnaire. If an award is reduced or discontinued because a child became 18 years of age, it may be reinstated subsequently if the child begins an approved course of instruction. Where a wife receiving an apportionment award for herself and a child or children dies, an apportionment award may be made for the child or children even though the wife died on or after September 1, 1959. (Instruction 1, 38 U.S.C. 3503, 3504, and 3505, Public Law 86-222.)

(72 Stat. 1114; 38 U.S.C. 210) (25 F.R. 5285, June 14, 1960, as amended at 26 F.R. 10098, Oct. 27, 1961]