Admin. Financial Violations (PI/PS)

Published by the National Science Foundation, Office of Inspector General on 2007-02-12.

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

I    Case Number: I06010001                                                                 Page 1 of 1      I
          OIG received information internally from OIG Audits regarding a county audit report1 that found
          evidence of financial fraud described as "improper or unauthorized diversions of millions in
          endowment monies, federal grants and private donations" at an institution2.

          The Federal Bureau of Investigation notified NSFIOIG that it had an ongoing investigation on the
          institution's former Chief Financial officer3. OIGIINV was later contacted by the lead FBI
          Special ~ ~ eand  n told
                                t ~that the Assistant United States Attorney (AUSA)' handling this,matter
          had deferred the case to the local County rose cut or^ who had already begun to pursue an
          investigation into the matter.

          Copies of the interim and final audit reports performed by the county7 were obtained and
          reviewed. The final report stated that the institution received substantial cash advances from
          NSF awards during the years audited8, in violation of NSF policies governing such advances, and
          inappropriately used those advances for its operating expenses rather than for NSF projects. The
          diversion of funds caused a delay of several months in the transfer of unused balancesg to two
          principal investigators who moved to different institutions, and prevented the institution from
          earning interest on the advances while on deposit pending expenditure on NSF projects. The
          institution eventually returned the remaining unused advances to NSF" and began administering
          its NSF awards on a reimbursable basis.

          The audit report and financial records from NSF indicate that the misuse for institutional
          purposes was temporary, and that the award funds were eventually properly expended on NSF
          projects, transferred with principal investigators to other institutions, or returned to NSF.
          Because NSF suffered no monetary loss beyond foregone interest, the District Attorney declined
          to add the misuse of NSF funds to his charges. Recovery of imputed interest is not feasible due
          to the institution's financial problems and NSF7svague oversight/enforcement policy on interest.

Il        Accordingly, this case is closed.

 NSF 01G Form 2 (1 1/02) ,