In the opinion of the Solicitor of the Veterans' Administration, enclosed with your letter, it is concluded that it is not essential that a conviction be secured in the Federal courts in order that the Veterans' Administration may find that a person has forfeited his rights as provided in section 504. You also state in your letter that the Veterans' Administration has consistently held, since the enactment of section 504, that the results of efforts to prosecute criminally have no bearing on a forfeiture previously made, except in so far as the Administrator, in a review of the case, might take into consideration such evidence as was produced in connection with the court proceedings. Considering the plain provisions of section 504 in the light of the consistent administrative construction, it is my opinion that the forfeiture imposed by section 504, when determined by the administrative officer charged with its enforcement, is not affected by the fact that a prosecution to enforce the other penalties imposed by section 504 is not instituted. Respectfully, WILLIAM D. MITCHELL. To the ADMINISTRATOR OF VETERANS' AFFAIRS. PUERTO RICO-VALIDITY OF BOND ISSUE The proposed issue for the Government of Puerto Rico of bonds of the face value of $500,000, the proceeds from the sale of which are to be devoted to the continuance of the construction of works for the development and use of the waters of the Tora Negro and Matrullas Rivers, being authorized by Congress and by Act No. 7 of the Legislature of Puerto Rico of April 6, 1931, as amended by Act No. 8 of July 12, 1932, and all the statutory requirements regarding the issue and sale of these bonds having been complied with, said bonds, when issued in the amount and form proposed, will constitute valid and binding obligations of the people of Puerto Rico. DEPARTMENT OF JUSTICE, SIR: I have the honor to refer to your letter of October 18, 1932, stating that your Department has been authorized to sell for the account of the Government of Puerto Rico bonds of the face value of $500,000, the proceeds from which are to be devoted to the continuance of the construction of works for development and use of the waters of the Toro Negro and Matrullas Rivers under the so-called Toro Negro Project. The proposed bonds are to be issued under authority contained in section 3 of the Act of Congress approved March 2, 1917, entitled "An Act to provide a civil government for Puerto Rico and for other purposes," as amended by the Act of March 4, 1927 (c. 145, 39 Stat. 951, 953; c. 503, 44 Stat. 1418; U. S. C., Title 48, secs. 741, 745), and Act No. 7 of the Twelfth Legislature of Puerto Rico, Third Regular Session, approved April 6, 1931 (Laws of Puerto Rico, 1931, p. 144), as amended by Act No. 8 of the same Legislature, Third Special Session, approved July 12, 1932. The Act of April 6, 1931, authorized bonds "up to the sum of one million dollars," to be "made and sold as the work progresses." The validity of the first instalment of the bonds, in the amount of $500,000, was sustained in an opinion dated August 19, 1931. The validity of a proposed second instalment, in the amount of $300,000, was sustained in an opinion of February 4, 1932 (36 Op. 516), but such bonds were not actually issued because of conditions then existing in the bond market, as pointed out by the Governor of Puerto Rico in his message to the Assembly of June 21, 1932. You state that the bonds are to be issued and sold by you at the request of the Treasurer of Puerto Rico (which request has been approved by the Governor), in coupon form, in the denomination of $1,000 each to be dated January 1, 1932, and to bear interest at a rate not exceeding six per centum per annum, payable semi-annually on January 1 and July 1 of each year, the principal thereof to be payable at the Treasury of the United States on January 1, 1932, and the bonds to be redeemable at par, with accrued interest, on January 1, 1942, or at any time thereafter upon sixty days' notice. It has further been determined that the bonds shall be offered at par subject to bids on the rate of interest and that the interest rate, not exceeding six per centum, shall be finally determined upon a consideration of the bids sub mitted. A copy of the form of the proposed bond, revised as indicated in your letter, is submitted and you request my opinion upon the legality of the issue. Section 3 of the Act of March 2, 1917, as amended provides: 66* * * * and when necessary to anticipate taxes and revenues, bonds and other obligations may be issued by Puerto Rico or any municipal government therein as may be provided by law, and to protect the public credit: Provided, however, That no public indebtedness of Puerto Rico and the municipalities of San Juan and Ponce shall be allowed in excess of 10 per centum of the aggregate tax valuation of its property *. In computing the indebtedness of the people of Puerto Rico, municipal bonds for the payment of interest and principal of which the good faith of the people of Puerto Rico has heretofore been pledged and bonds issued by the people of Puerto Rico secured by bonds to an equivalent amount of bonds of municipal corporations or school boards of Puerto Rico shall not be counted, but all bonds hereafter issued by any municipality or subdivision for which the good faith of the people of Puerto Rico is pledged shall be counted." You state that the records of your Department show that the aggregate assessed valuation of real and personal property in Puerto Rico on June 30, 1932, amounted to $324,309,117; that on the said date there were outstanding bonds of the Government of Puerto Rico of the face value of $28,378,000; that the total amount of temporary loans outstanding was $379,494.54; and that the total amount of municipal bonds outstanding, to which the good faith of the people of Puerto Rico had been pledged since the amendatory Act of March 4, 1927, aggregated $1,299,500, making a total of $30,056,994.54 to be considered when ascertaining the total bonded indebtedness which the Government of Puerto Rico is authorized to incur. Therefore, it is apparent that the proposed issue will not increase the bonded indebtedness beyond 10 per centum of the aggregate of the assessed valuation, the maximum permitted by law. Section 1 of the Act of April 6, 1931, reads in part as follows: "That the Treasurer of Puerto Rico is hereby authorized, empowered and directed to issue bonds of The People of Puerto Rico up to the sum of one million dollars ($1,000,000), pursuant to the terms hereinafter set forth. The proceeds from the said issue of bonds of one million dollars ($1,000,000) shall be covered into the Treasury of Puerto Rico in the fund created by the "Act for the Development of the Water Resources," approved April 29, 1927, and known as "Special Fund for the Development and Use of the Water Power," and shall be applied by the Commissioner of the Interior to the construction of the works of the Toro Negro Hydro-electric Project, including the completion of the Guineo Dam and the diversion of the waters of the Matrullas River for the generation of electric power at the Toro Negro-Hydro-electric Plant; Provided, That this bond issue shall be made and sold as the work progresses, in partial amounts of one hundred thousand dollars ($100,000), or such multiples thereof, as according to the estimate of the Commissioner of the Interior, shall be required to take care of the expenditures of construction, so that the progress of the work may continue without interruption Section 2 of said Act, as amended by the Act of July 12, 1932, provides that the bonds may be in coupon form of the denomination of $1,000 or registered form of the denomination of $5,000, or both, shall bear interest at a rate not exceeding six per centum per annum, payable semi-annually on the first day of January and July, and shall be redeemable within twenty years from the date of issue, but reserving to the Government of Puerto Rico the option and the right to redeem all or any of the said bonds at par, with accrued interest, after the first ten years from the date of issue upon giving notice as prescribed by the Act, both principal and interest to be payable in Puerto Rico, at the office of the Treasurer of Puerto Rico, or at the Treasury of the United States, in gold coin of the United States of the present standard of weight and fineness. Section 3 provides that the bonds may be sold by the Secretary of War of the United States, or by the Treasurer of Puerto Rico, or by any fiscal agent appointed for the purpose by the Treasurer of Puerto Rico, with the approval of the Governor, on terms most advantageous to the people of Puerto Rico and as near the date of issue as possible; and that the Treasurer with the approval of the Governor, under the limitations prescribed therein, shall have absolute intervention and authority in all matters connected with the said bonds, including the terms and denominations thereof, and the manner, time, and method of their issue and sale. The Treasurer is authorized and directed to pay the principal and interest when due and an amortization fund for the redemption of the bonds is provided. For the payment of both principal and interest the good faith of the people of Puerto Rico is irrevocably pledged. The amendment of section 2 of the Act by the Legislature in Special Session had been recommended by the Governor in his message of June 21, 1932, hereinbefore mentioned, and the amendment therefore accorded with the provision of section 33 of the Act of Congress of March 2, 1917, as amended by the Act of March 4, 1927 (U. S. C., Title 48, sec. 818), that no legislation shall be considered at Special Sessions other than that specified in the call therefor or in a special message by the Governor. There was transmitted with your letter a statement signed by the Commissioner of the Interior of Puerto Rico, setting forth his estimate that a total amount of $500,000 will be required in order to continue until July, 1933, the projects for which the bond issue is provided, and also a statement signed by the Treasurer, setting forth his determinations in those matters left to his discretion, and this has been approved by the Governor in accordance with the Act of the Legislature. I find that all the statutory requirements regarding the issue and sale of the said bonds have been complied with and that the form of bond submitted is in conformity with the law and the determinations of the Treasurer, approved by the Governor. The form of bond properly recites that "under the provisions of section 3 of the Act of Congress, approved March 2, 1917, as amended by the Act of March 4, 1927, this bond is exempt from taxation by the Government of the United States, or by the Government of Puerto Rico or of any political or municipal subdivision thereof, or by any State, Territory, or possession, or by any county, |