FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

JACK YETIV; TREIMEE CORPORATION,        No. 04-76044
                      Petitioners,
                                          HUD No.
                v.
                                        CV-03-00665-
U. S. DEPARTMENT OF HOUSING AND           LRH/VPC
URBAN DEVELOPMENT,
                                          OPINION
                     Respondent.
                                     
        On Petition for Review of an Order of the
      Department Of Housing & Urban Development

                Argued and Submitted
      November 15, 2006—San Francisco, California

                Filed September 20, 2007

    Before: William C. Canby, Jr., John T. Noonan, and
             Richard A. Paez, Circuit Judges.

                Opinion by Judge Canby;
              Concurrence by Judge Noonan




                          12795
                        YETIV v. HUD                    12797


                        COUNSEL

Jack Z. Yetiv, Gardnerville, Nevada, for the petitioners.

Greg Addington, Assistant United States Attorney, Reno,
Nevada, for the respondent.
12798                    YETIV v. HUD
                          OPINION

CANBY, Circuit Judge:

   Jack Yetiv and his wholly-owned TREIMee Corporation
(collectively, “Yetiv”) petition for review of an administrative
decision of the U.S. Department of Housing and Urban
Development (“HUD”) imposing civil monetary penalties
under 12 U.S.C. § 1735f-15(c). The penalties were imposed
for Yetiv’s failure to provide HUD with audited annual finan-
cial statements relating to the operation of Yetiv’s multi-
family housing project, which Yetiv purchased with a HUD-
insured loan. Yetiv presents numerous challenges to HUD’s
decision, most notably that: (1) HUD was without jurisdiction
to impose penalties because Yetiv pre-paid the HUD-insured
loan prior to the final adjudication of HUD’s Administrative
Law Judge (“ALJ”); (2) the decision to impose penalties was
arbitrary and capricious in violation of section 706(2)(a) of
the Administrative Procedure Act (“APA”), 5 U.S.C.
§ 706(2)(a), because the ALJ applied an illogical standard in
determining that the violations were “material” (and hence
eligible for penalties); and (3) the decision imposing penalties
was not supported by substantial evidence. We affirm.

                         Background

   The Park on Westview property (“the property”) is a 212-
unit multi-family housing project in Houston, Texas. Yetiv
purchased the property in 1997 with a HUD-insured loan. To
secure HUD insurance, Yetiv was required to sign a regula-
tory agreement which imposed various duties related to the
management and financial operations of the property, includ-
ing the duty to submit annual financial statements. As a multi-
family mortgagor, Yetiv was additionally subject to the Civil
Money Penalty statute, 12 U.S.C. § 1735f-15, which autho-
rizes HUD to impose civil penalties against mortgagors who
“knowingly and materially” commit certain enumerated viola-
tions. § 1735f-15(b)(1). One of the violations for which civil
                             YETIV v. HUD                            12799
penalties may be imposed is the failure to provide HUD with
annual audited financial statements. See § 1735f-
15(c)(1)(B)(x).

   After Yetiv failed to file financial statements for the five
fiscal years spanning 1997-2001, HUD issued an administra-
tive complaint in July 2002 seeking civil penalties pursuant to
the Civil Monetary Penalty statute. Five months later, prior to
an adjudication on the merits, Yetiv prepaid the HUD-insured
loan. Despite Yetiv’s contention that his early payment
deprived HUD of jurisdiction to maintain the enforcement
action, the HUD ALJ issued a summary judgment order find-
ing that TREIMee “knowingly and materially” violated the
financial reporting requirement for the years 1997 - 2001.
After a hearing to determine the amount of TREIMee’s pen-
alty and the extent of Yetiv’s individual liability as an officer
of TREIMee, the ALJ issued an Initial Decision ordering
TREIMee to pay $50,000.00 for its violations and imposing
a penalty of $20,000 against Yetiv and TREIMee jointly and
severally.1 Yetiv subsequently appealed to the Secretary of
HUD, who adopted the ALJ decision without change. Yetiv
petitions for review and we have jurisdiction under 12 U.S.C.
§ 1735f-15(e) over Yetiv’s timely petition for review.

                        Standard of Review

   We review de novo the scope of an agency’s jurisdiction.
Saratoga Sav. & Loan Ass’n v. Fed. Home Loan Bank Bd.,

, 691 (9th Cir. 1989). HUD’s decision to impose
civil money penalties is reviewed pursuant to the Administra-
tive Procedure Act (“APA”), 5 U.S.C. § 706. 12 U.S.C.
  1
   Yetiv (individually) was not penalized for his pre-2002 violations
because, prior to that year, the Civil Monetary Penalty statute applied only
to mortgagors. Congress amended the statute in 1997 to add additional lia-
ble parties, including officers and directors of corporate mortgagors. Pub.
L. No. 105-65, § 561(a)(2)(B)(i), 111 Stat. 1344, 1415 (Oct. 27, 1997)
(codified as amended at 12 U.S.C. § 1735f-15(c)(1)(A)(iii)).
12800                    YETIV v. HUD
§ 1735f-15(e)(3). Under Section 706, HUD’s action “must be
set aside if the action was ‘arbitrary, capricious, an abuse of
discretion, otherwise not in accordance with law’ or if the
action failed to meet statutory, procedural, or constitutional
requirements.” Citizens to Preserve Overton Park, Inc. v.
Volpe, 

, 414 (1971), overruled on other grounds
by Califano v. Sanders, 

, 105 (1977), (quoting 5
U.S.C. § 706(2)(A), (B), (C), and (D)). We must also set aside
any factual findings that are not supported by substantial evi-
dence. § 706(2)(E).

                          Discussion

   As a threshold matter, Yetiv contends that HUD lacked
jurisdiction to impose civil money penalties because he pre-
paid the HUD-insured loan prior to the final adjudication. We
reject that contention.

   [1] Under 12 U.S.C. § 1735f-15(c)(1)(A), the Secretary of
HUD has jurisdiction to proceed against mortgagors who
commit any of the violations listed in subsection (B), includ-
ing the failure to file an annual financial statement. § 1735f-
15(c)(1)(B)(x). The governing statute does not state that the
Secretary loses jurisdiction to prosecute past violations the
moment a HUD-insured mortgage is paid off. An agency gen-
erally does not lose jurisdiction over a claim for money penal-
ties because of the post-violation actions of the violator. See
Reich v. Occupational Safety & Health Review Comm’n, 

, 1202 (11th Cir. 1997). The general rule is that lia-
bility for civil penalties attaches at the time of the violation,
see, e.g., San Francisco BayKeeper, Inc. v. Tosco Corp. 

, 1159-60 (9th Cir. 2002), and we see no reason to
create an exception in this case. Were we to accept Yetiv’s
argument, the practical effect would be to encourage mortga-
gors to forego the expense of compliance because, in the
event of an enforcement action, they could always escape lia-
bility by prepaying the HUD-insured mortgage before the
assessment of penalties. Yetiv’s early payment of the loan,
                           YETIV v. HUD                        12801
after his failure to supply annual financial statements to HUD,
accordingly did not deprive HUD of jurisdiction to maintain
the enforcement action and, ultimately, to impose penalties.

   [2] At oral argument, Yetiv characterized himself as the
victim of a vendetta: he had paid off his loan, neither HUD
nor the public had lost any money, and it was simply asking
too much to require annual audited statements and to perse-
vere in that requirement after the loan had been paid off.
Unquestionably there is considerable exasperation on the part
of both parties reflected in the record. But surely HUD is enti-
tled to require, by regulation and agreement, that the borrow-
ers it insures regularly document the financial health of their
HUD-insured projects.2 And Congress has authorized HUD to
exact monetary penalties for the failure to file such reports.
See § 1735f-15(c)(1)(B)(x). Collection of a penalty here
serves a deterrent purpose that goes beyond the circumstances
of Yetiv’s successful loan; it discourages other project opera-
tors from failing to file audited financial statements. Requir-
ing such statements across the board is a legitimate regulatory
and legislative goal.

   [3] We also are not persuaded by Yetiv’s primary proce-
dural argument. He contends that HUD’s decision to impose
penalties was arbitrary and capricious because the ALJ used
an illogical standard for determining whether the violations
were “material.” Under the controlling regulations, a material
violation is one that is significant in some respect or to some
degree. 24 C.F.R. § 30.10. The ALJ found that Yetiv’s viola-
tions were significant by considering, as the Secretary
requires, the so-called “totality of circumstances” factors set
forth in 24 C.F.R. § 30.80 (the same factors used to determine
the amount of the penalty). As relevant here, these factors are:
the gravity of the offense, § 30.80(a); any history of prior
offenses, § 30.80(b); the ability to pay the penalty, §30.80(c);
the injury to the public, § 30.80(d); any benefits received by
  2
   Yetiv’s regulatory agreement with HUD also required annual audits.
12802                    YETIV v. HUD
the violator, or the extent of potential benefit to other persons,
§ 30.80(e), (f); deterrence of future violations, § 30.80(g); the
degree of the violator’s culpability, § 30.80(h); and such other
matters as justice may require, § 30.80(j).

   [4] Yetiv argues, and we tend to agree, that some of these
factors (notably, the violator’s ability to pay), while perhaps
relevant to the determination of the amount of a penalty, have
no logical relationship to the significance of the underlying
violation. The issue here, however, is not whether HUD’s
materiality standard is logical in the abstract, but whether its
application in this case resulted in a decision that is arbitrary
or capricious. The ALJ acknowledged the inapplicability of
some of the HUD-prescribed factors, but carefully based his
decision on two factors that do logically relate to materiality:
the injury to the public, and the fact that Yetiv benefitted eco-
nomically from his violations. Relying on irrelevant factors
renders an agency adjudication arbitrary and capricious. See
City of Los Angeles v. U.S. Dep’t of Commerce, 

,
874 (9th Cir. 2002). Here, however, the ALJ did not do so.
Yetiv has cited no authority, and we have found none, for the
proposition that a decision based on appropriate consider-
ations may be set aside simply because the standard used to
reach it requires consideration of other factors that were found
to be inapplicable (and therefore did not guide the determina-
tion). HUD’s standard for determining materiality is certainly
a candidate for revision, but we cannot say that the ALJ’s
decision to impose penalties in this case was arbitrary or
capricious.

   [5] Nor are we persuaded by Yetiv’s challenges to the suffi-
ciency of evidence. In support of his finding that Yetiv’s vio-
lations were committed “knowingly,” the ALJ relied on
admissions by Yetiv, an attorney, that he was informed of the
financial reporting requirement prior to entering into the regu-
latory agreement. These admissions constitute substantial evi-
dence of a knowing violation even if, as Yetiv claims, his
private mortgage broker advised him that the financial report-
                            YETIV v. HUD                           12803
ing requirement was not routinely enforced. See 12 U.S.C.
§ 1735f-15(h) (a knowing violation may be established,
among other ways, by proof that the mortgagor acted “with
reckless disregard” of the statutory prohibitions).

   [6] In support of his conclusion that Yetiv’s violations were
material, and to determine the amount of the penalty, the ALJ
found that Yetiv benefitted by failing to provide the required
audited statements for the five years in question in an amount
at least equal to the cost of compliance. At the penalty phase,
the ALJ additionally relied upon a survey showing that, for
the fiscal years 2001 and 2002, the annual financial audit
costs of fourteen comparable Houston-area, multi-family proj-
ects ranged from $6,000 to $24,631, and averaged $9,118.
Because, as the ALJ noted, the audit costs reflected in the
government’s survey included both the cost of audited finan-
cial statements and the cost of preparation of tax returns, it
was not possible to determine with precision what portion of
the total costs were attributable to the cost of audited financial
statements. Despite this deficiency in the record, the ALJ was
entitled to infer from the survey that a substantial portion of
the $9,118 average was incurred for the preparation of an
audited financial statement. We conclude, therefore, that suf-
ficient evidence exists to support both the determination of
materiality, see Order on Secretarial Review, Matter of Asso-
ciate Trust Financial Servs. (Associate Trust III), HUDALJ
96-008-CMP (Nov. 20, 1997) (evidence of even one factor
may lead to a conclusion that a violation is material),3 and the
amount of the penalties imposed ($50,000 against TREIMee,
and $20,000 against Yetiv and TREIMee jointly).

  We have carefully reviewed the many other arguments
  3
    Our conclusion that evidence of economic benefit to Yetiv was suffi-
cient to support the imposition of penalties makes it unnecessary to con-
sider Yetiv’s argument that the ALJ erred when he found that the risk to
the insurance fund caused by Yetiv’s violations was an “injury to the pub-
lic” cognizable under 24 C.F.R. § 30.80(d).
12804                    YETIV v. HUD
presented by Yetiv, individually and for his corporation, and
find them to be without merit. Accordingly, the ALJ’s order
imposing civil money penalties is

  PETITION FOR REVIEW DENIED.



NOONAN, Circuit Judge, concurring:

   At oral argument, Yetiv, a lawyer representing himself,
made a spirited case that he was the object of bureaucratic
spite. Reading the record has not entirely dispelled that
impression. Yetiv says he was doing what others did; the gov-
ernment had no loss; he was picked on out of pique. Nonethe-
less, Yetiv’s legal arguments do not carry the day.
Analogously, a claim of “selective prosecution” of a crime is
rarely a winner. Oyler v. Boles, 

, 456 (1962)
(“the conscious exercise of some selectivity in enforcement is
not in itself a federal constitutional violation.”) HUD, when
I first became acquainted with it in redevelopment work fifty
years ago, was a lumbering agency, slow to act and not very
vigilant in the performance of its duties. It does not seem to
have changed. Yet an annual report on the financial health of
projects financed by the federal government is not an unrea-
sonable requirement. Failure to file is a material harm to the
agency providing the money. However casually and unexpect-
edly HUD decides to make an example of a developer, it acts
within its jurisdiction and is not arbitrary in asserting the need
of annual reports as a material aid to its activities.