Grant Fraud

Published by the National Science Foundation, Office of Inspector General on 2003-08-20.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                    NATIONAL SCIENCE FOUNDATION
                                                     OFFICE OF INSPECTOR GENERAL
                                                       OFFICE OF INVESTIGATIONS

                                              CLOSEOUT MEMORANDUM

     Case Number: 1-01100025                                                                   Page 1 of 2

           The Office of Inspector General received information on November 8,200 1, from a former
           employee1of a midwestern universig, alleging that NSF grant h d s were spent for
           unauthorized projects.

           The first allegation involved possible false claims. Specifically, the complainant allegedbthat
           various costs, primarily supplies, were inflated and billed to grant accounts and the funds were
           transferred to other university unrestricted accounts for use by the biology department. he
           documentation provided by the complainant related to events well passed any criminal statute of
           limitations. During our investigation it was discovered that these allegations had been made to
           the university previously and an audit of the grants associated with the Biology Deparlment was
           completed in July of 1999. Although this audit did not identify any specific wrongdoing o n the
           part of any university staff, it did identify a total of $16,770 in questionable costs charged to an
           NSF grant. These costs were considered questionable because of a lack of sufficient
           documentation and the report contained a recommendation that that amount be returned to the
           grant account. Documentation was also included to confirm that the funds were returned to the
           grant account on August 3 1, 1999. In response to the audit report the university also
           implemented new procedures for billing supplies to various grant accounts, including the creation
           of a computerized stockroom billing program to track inventories and purchases. Our review of
           these procedures found them to be sufficient. A subsequent follow-up by the university's
           auditing department conducted in May of 2000 confirmed that corrective actions had been taken
           and the previous findings had been resolved.

           The second allegation by the complainant involved another department within the university and
           involved the Principal ~nvesti~atorfor an NSF grant4 improperly charging a total of $1 8K in
           labor and other indirect costs to the NSF grant. The complainant stated that on two separate
           occasions in 1998, the P.I. billed the NSF account in order to pay employees for work unrelated
           to the NSF Award and in support of his personally owned compan The complainant also
           alleged that the lab6 was mired in fiscal mismanagement and had an operating deficit in excess of

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 NSF OIG Form 2 (1 1/0?j
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                                                         NATIONAL SCIENCE FOUNDATION
                                                          OFFICE OF INSPECTOR GENERAL
                                                            OFFICE OF INVESTIGATIONS

                                                   CLOSEOUT MEMORANDUM

           Case Number: 1-01100025                                                                  Page 2 o f 2

                During our investigation we requested that the university conduct an audit of the labor costs
                associated with the specific grant. The subsequent audit report identified a total of $95,606 in
                labor charges and other indirect costs that were mis-charged to the NSF grant account. The
                primary contributor that led to this discrepancy was found to be poor financial management of
                the lab. The investigation also determined that the university had identified several of the same
                issues and implemented corrective actions prior to this investigation. These corrective actions
                have included the implementation of procedures to ensure complete compliance with NSFIgrant
                conditions and the employing of a Fiscal Officer to manage the financial aspects of the lab. No
                information or evidence was identified to indicate that the mis-charging was intentional or
                involved any potentially criminal activity.

                Based on the information identified during this investigation and the university's audit report
                confirming the amount in question, the university was directed to return the funds totaling
                $95,606 to the grant account to be put to better use. Subsequently, on August 15,2003, the
                university transferred the funds from the university's general account to the specific account
                associated with the NSF rant^.

                With the return of the funds to the NSF grant account, this case is closed.