(a) Administrative food stamp fraud hearings are defined in section 399.1(b) of this Part and are separate and distinct from administrative disqualification hearings which are defined in section 399.1(d).

(b) Such hearings are scheduled by the department at the request of the local social services district with the department providing at least 30 days' advance notice of the hearing to the recipient or former recipient against whom the hearing is requested. The district shall request the hearing by forwarding to the department an evidentiary packet which conforms to the standards as set forth in section 399.3(i) of this Part, along with its request for a hearing.

(c) Upon receipt of a local social services district's request for hearing and accompanying evidentiary packet, the department will review the packet to determine if it contains sufficient documentary evidence to substantiate that an individual has committed one or more acts of fraud as defined in section 399.1(a) of this Part. The department will make a further and concurrent determination as to whether the evidentiary packet satisfies the provisions of section 399.3(i) of this Part. Should the department's review of the evidentiary packet indicate that there is either insufficient documentary evidence to establish fraud as committed or that the packet does not comply with the provisions of section 399.3(i), the department will return the packet to the local social services district as insufficient for scheduling.

(d) Following a determination that the evidentiary packet is sufficient, the department shall schedule an administrative food stamp fraud hearing in accordance with subdivision (b) of this section. The notice of hearing shall be mailed certified mail, return receipt requested, to the recipient charged and shall contain a warning that a determination of fraud will result in a three- month disqualification for the individual and a reduction in benefits for the remainder of the household and:

The notice of hearing sent to recipients in New York City shall be in Spanish and English.

(e) The department shall mail the local social services district which requested the hearing notification of the time, date and place of the hearing by regular mail at the same time it mails notice of the hearing to the household member.

(f) The department shall base a determination of fraud on a showing by the local social services district by clear and convincing evidence that the household member knowingly, willingly and with deceitful intent committed fraud as defined in section 399.1(a) of this Part. The burden of proof shall be on the local district.

(g) If the department issues a decision confirming the local social services district's determination of fraud, no further administrative appeal exists. The household member is entitled to seek relief in a court having appropriate jurisdiction. The period of disqualification may be subject to stay or other injunctive remedy by such a court.

(h) If the department's decision confirms the local social services district's determination of fraud, the local social services district shall mail the household member found to have committed fraud a written notice accompanied by a demand letter prior to disqualification which shall:

(i) The department shall schedule hearings requested under the provisions of paragraph (h)(5) of this section in the same manner as any other fair hearing.

(j) A pending administrative food stamp fraud hearing shall not affect the individual or the household's right to be certified and participate in the Food Stamp Program.

(k) The local social services district shall offset any lost benefits to be restored to the household against the outstanding amount of the claim from the time it receives the department's decision until the claim is liquidated. The district shall send the household a written indication of each such offset transaction which shall indicate the claim balance before offset, the amount of lost benefits offset and the remaining claim balance.

(l) The time and place of the hearing shall be arranged so that the hearing is accessible to the household member. If the household member or its representative cannot be located or fails to appear at the hearing initiated by the State agency, the hearing shall be conducted without the household member being present. Even though the household member is not present, the hearing official is required to carefully consider the evidence and determine if fraud was committed based on clear and convincing evidence. If the household member is found to have committed fraud, but a hearing official later determines that the household member or representative had good cause for not appearing, the previous decision shall no longer remain valid and the State agency shall conduct a new hearing. The hearing official who originally rules on the case may conduct the hearing. The household member has 10 days from the date of the scheduled hearing to present reasons indicating a good cause for failure to appear. A hearing officer must enter the good cause decision into the record.

The decision after hearing shall be based upon clear and convincing evidence which demonstrates that the household member(s) knowingly, willingly and with deceitful intent committed fraud.