oversight

Grant Fraud

Published by the National Science Foundation, Office of Inspector General on 2014-04-17.

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: 109070040                                                                       Page 1 of2



         We initiated an investigation into the potential misuse ofNSF funds by a university 1 professor2
         (Subject), who was the PI on two NSF grants 3 at issue.

         We obtained, reviewed and analyzed all associated grant records and accounting documentation;
         performed an inventory of equipment purchased to determine whether and to what extent items
         purchased by the Subject and charged to the NSF grant funds or university matching funds were
         missing; and conducted several interviews, including interviews with university faculty, students
         and administrators.

         We determined the Subject misappropriated more than $220,000 in NSF and cost sharing funds
         to purchase high-end photography equipment and accessories, surveillance equipment, and
         specialized printers. Forensic analysis of the Subject's NSF-funded computers revealed over
         5,000 personal photos that were connected to NSF-funded cameras. We also determined the
         Subject made materially false statements to NSF and university officials regarding his/her use of
         grant and/or matching funds.

         Concurrently with our investigation, the university conducted an internal investigation and
         determined that, while employed by the university, the Subject improperly charged equipment
         purchases to the two NSF grants and associated university cost share accounts, and falsely
         justified the purchases as appropriate grant expenses. As a result, the university dismissed the
         Subject from his/her tenure position.

         Based on our recommendation, NSF suspended two active NSF awards 4 under the direction of
         the Subject. Once the university dismissed the Subject, NSF terrilinated those two awards based
         on our recommendation. As a result, $325,598 was put to better use.

         Shortly after his/her termination from the university, the Subject formed a small business 5 and
         submitted Small Business Innovation Research (SBIR) proposals to NASA and NSF. The NASA
         proposal was declined and the NSF proposal was funded; however, we recommended NSF
         terminate the grant shortly after it was awarded and before its effective date. Due to the
         Subject's demonstrated lack of present responsibility, w~mment-wide suspension.
         The Subject and the SBIR company were suspended o n - - ·




NSF OIG Form 2 (11102)
                                                     NATIONAL SCIENCE FOUNDATION
                                                      OFFICE OF INSPECTOR GENERAL
                                                        OFFICE OF INVESTIGATIONS

                                            CLOSEOUT MEMORANDUM

Case Number: 109070040                                                                  Page 2 of2




     We referred the matter to the U.S. Attorney's Office for the Northern District of Indiana, which
     accepted the case. Subsequently, the Subject was indicted on three counts of 18 U.S.C. §
     666(a)(l)(A), Theft from Program Receiving Federal Funds, and four counts of 18 U.S.C. §
     1341, Mail Fraud. 6 The Subject pled guilty to the first count of 18 U.S.C. § 666(a)(1)(A). 7 The
     Court sentenced him/her to home confinement for six months and probation for two years, and
     ordered him/her to pay $32,542 in restitution.

     Following the sentencing, we recommended NSF debar the Subject and the SBIR company for
              8
     10 years. Since they had been suspended since -      2011, NSF took that into consideration,
     reduced the debarment period accordingly, and debarred the Subject and the company until
     - 2 0 2 1 . 9 NSF also prohibited the Subject from serving as an NSF reviewer, advisor or
     consultant during the period of debarment.

             Accordingly, this case is closed.




     6
       See attached (Indictment)
     7
       See attached (Plea agreement)
     8
       See attached (debarment recommendation)
     9
       See attached (Notice of Proposed Debarment)
                                       -                                  page 1 of 3

                                                                                         ~
                                                                                          ;.~~   i ,'
                                                                                                 l
                                                                                                         ~-:- r-

                                                                                                     L___ ~-   i



                         UNITED STATES DISTRICT COURT
                         NORTHERN DISTRICT OF INDIANA
                             SOUTH BEND DIVISION


UNITED STATES OF AMERICA                      )      INDICTMENT
                                              )
               v.                             )      18 U.S.C. § 666(A)(l)(A)
                                              )      18 U.S.C. § 1341




THE GRAND JURY CHARGES:
                                              )
                                              )      CAUSE NUMBER:
                                                                                             •                     I

                                    COUNTS 1-3
      (Theft from Program Receiving Federal Funds Under 18 U.S.C. § 666(A)(1)(A))


       During each of the one-year periods set forth below according to each count, within the

Northern District of Indiana and elsewhere,




being an agent of the                                     an organization that received in a one-

year period benefits in excess of $10,000 under a federal program involving a grant, contract,

subsidy or other forms of federal assistance, did knowingly embezzle, steal, obtain by fraud,

converted to another, or intentionally misapplied money or property valued at $5,000 and more,

which was owned by and under the care, custody, and control o - :


             COUNT                         DATES

                    1      February 1, 2006- January 31, 2007

                    2      August 1, 2007- July 31,2008
                    .,
                    .)     August 1, 2008 - July 31, 2009




       All in violation of title 18, United States Code, Section 666(a)( 1)(A).
THE GRAND JURY FURTHER CHARGES:
                                        -                                  page 2 of 3




                                         COUNTS 4-7
                              (Mail Fraud Under 18 U.S.C. § 1341)


       Beginning on a date unknown to the Grand Jury and continuing up to and including

July 31,2009, within the Northern District oflndiana and elsewhere,



did knowingly devise and intend to devise a scheme to defraud and to obtain money and property

by means of materially false and fraudulent pretenses, representations, and promises and

omissions of material fact.

       On or about the dates set forth below, within the Northern District oflndiana, and

elsewhere,



for the purpose of executing the above-described scheme, caused the checks to be sent and

delivered by the United States Postal Service and private commercial interstate carriers, as set

forth below:




       COUNT              DATE                                 ITEM




             5      December 7, 2007                              Check No. 01218066
                                          $3,038.23 to Dotworkz (PO #Pl455758)
                                      -                                 page 3 of 3




          6          April23, 2008                                 Check No. 01237215




          7          April 1, 2009                              Check No. 01288978
                                        $13,910.29 to Genes Camera Store
                                        (PO #P1506796)




      All in violation of Title 18, United States Code, Section 1341.




                                            A TRUE BILL:




                                            s/Grand Jurv Foreperson
                                            Grand Jury Foreperson




APPROVED BY:

      DAVID CAPP
      UNITED STATES ATTORNEY




By:

      Assistant United States Attomey
                                                                           page 1 of 6




                              UNITED STATES DISTRICT COURT
                              NORTHERN DISTRICT OF INDIANA
                                  SOUTH BEND DMSION


UNITED STATES OF AMERICA                      )
                                              )
               v.                             )       CAUSE NUMBER:
                                              )
                                              )



                           PETITION TO ENTERAPLEAOFGUILTY



       The Defendant above named respectfully represents to the Court as follows:

        1.     My full true name is                and I request that all proceedings against me be

had in the name which I here declare to be my true name.

       2.      I have attended school and I have the ability to read, write, and speak the English

language.

       3.      I am represented by counsel and my lawyer's name i s - -

        4.     I have received a copy of the Indictment and have read and discussed it with my

lawyer, and believe and feel that I understand every accusation made against me in this case.

        5.     I have told my lawyer the facts and surrounding circumstances as known to me

concerning the matters mentioned in the Indictment and believe and feel that my lawyer is fully

informed as to all such matters. My lawyer has since informed me and has counseled and advised

with me as to the nature and cause of every accusation against me and as to any possible defenses I

might have in this case.
                                                                             page 2 of6




         6.     I understand that I am entitled to have all of my rights which may be involved in this

matter explained to me, and that I have the right to have any questions I may have answered for me.

         7.    I understand that I have a right to plead NOT GUJLTY to any offense charged

against me, and that under a plea of NOT GUJLTY the Constitution guarantees me:

               (a)     the right to a speedy and public trial by a twelve-person jury of my peers,

selected according to law, in the Northern District of Indiana which must return a unanimous

verdict ofGU1LTY before I can be convicted;

               (b)     the right to be released on reasonable bail until my trial occurs;

               (c)     the right to see, hear, and cross-examine all the witnesses against me at my

trial;

               (d)     the right to use the power and process of the Court to compel the production

of any evidence, including the attendance of any witnesses, in my favor at my trial;

               (e)     the right to the assistance of counsel at every stage of the proceedings,

including upon an appeal if need be;

               (f)     the right not to testifY without prejudice; and,

               (g)     that in the event that I should be found GUJLTY of the charge against me, I

would have the right to appeal my conviction on such charge to a higher court.

         8.    I understand, also, that ifl plead GUJLTY, I waive the right to trial by jury and all

ofthe other rights mentioned above.




                                                  2
                                                                           page 3 of6




       9.      Notwithstanding the above, I have, with the assistance of counsel, entered into an

agreement with the United States Attorney's Office as follows:

               (a)    I agree to plead guilty to Count 1 of the Indictment that charges me
       with Theft from Program Receiving Federal Funds in violation of Title 18, United
       States Code, Sections 666, because I am GUILTY ofthese offenses;

               (b)    I agree with the following facts:

                       "I purchased a camera valued at over $5,000 in United Sta~ in
       ~ with :fimds granted by NSF for a science project through t h e -
       - - The project had received over $10,000 in United States Currency in a one
       year period under the grant. This camera was purchased by myself for personal,
       professional use, and to assist myself on the grant work However, the camera was not
       part of the approved grant or project approved by the NSF nor did I get approval to use the
       camera for personal matters.";

               (c)     I further understand that the maximum possible penalty for a
       violation of Title 18, United States Code, Section 666, is imprisonment of up to ten
       (10) years and a fine ofup to $250,000, a term of supervised release ofup to three
       (3) years, and a mandatory $100 special assessment due at the time of sentencing;

                (d)     I understand that under the U.S. Sentencing Guidelines, the Court,
       in light of an investigation by the United States Probation Office, will determine the
       applicable sentencing guideline range, and that the Court will determine all matters,
       whether factual or legal,,relevant to the application of the sentencing guidelines including,
       but not limited to, the adjusted offense level, the relevant circwnstances in the case, the
       criminal history points and category, relevant conduct, the grouping of offenses, victim-
       related adjustments, role in the offense adjustments, career offender status, criminal
       livelihood and acceptance of responsibility as well as possible departures from the
       application of the U.S. Sentencing Guidelines. I understand that the U.S. Sentencing
       Guidelines are advisory only, and that the specific sentence to be imposed upon me will be
       determined by the judge after a consideration of a pre-sentence investigation report, input
       from counsel for myself and the government, federal sentencing statutes, and the U.S.
       Sentencing Guidelines;




                                                 3
                                                                    page 4 of6




        (e)    I lllderstand that the law gives a convicted person the right to appeal the
conviction and the sentence imposed; I also lillderstand that no one can predict the precise
sentence that will be imposed, and that the Court has jurisdiction and authority to impose
any sentence within the statutory maximum set for my offense( s) as set forth in this Plea
Agreement; with this lillderstanding and in consideration ofthe government's entry into this
Plea Agreement;

               I expressly waive my right to appeal or to contest my conviction
and my sentence or the manner in which my conviction or my sentence was
determined or imposed, to any Court on any ground, including any claim of
ineffective assistance of counsel unless the claimed ineffective assistance of
counsel relates directly to this waiver or its negotiation, including any appeal
under Title 18, United States Code, Section 3742, or any post-conviction
proceeding, including but not limited to, a proceeding under Title 28, United
States Code, Section 2255;

        (f)    I also agree to prepare a complete and truthful Financial Statement
provided by the United States Attorney's Office and return the Statement to the United
States Attorney's Office on the date this Plea is entered. This Financial Statement will be
used to enforce the Court's sentence;

       (g)     The parties make the following recommendations:

               (i)    The government agrees to recommend a two (2) level reduction for
                      acceptance ofresponsibilitypursuantto § 3 El.l(a). The
                      government further agrees to make a motion lllder § 3E1.1(b) for an
                      additional one (1) level reduction for acceptanceofresponsibility
                      in the event defendant's applicable offense level is follld to be a
                      Level 16 or greater. I lllderstand that the government's obligation to
                      recommend acceptance of responsibility pursuant to this Plea
                      Agreement is contingent upon my continuing manifestation of
                      acceptance of responsibility. Should I deny my involvement, give
                      conflicting statements of my involvement, or engage in additional
                      criminal conduct such as the personal use of controlled substances, I
                      further lllderstand that the government shall not be bollld to
                      recommend the reduction based upon acceptance of responsibility;

               (ii)    The government agrees to dismiss the remaining Colllts at
                       sentencing;




                                         4
                                                                            page 5 of 6




               (h)    I understand that the government has reserved the right to tell the Court the
       good things about me and the bad things about me, and to fully inform the Court of the
       nature and extent of my of my offense;

              (i)       I further understand that the Court is not bound by any of these
       recommendations and that I AM NOT ENTITLED TO WITHDRAW TillS GUlLTY
       PLEA if the Court decides not to accept these recommendations, except as outlined in
       paragraph 9( o );

                (j)    The Defendant agrees to waive all rights, whether asserted directly or
       through a representative, to request or receive from the United States any further
       records, reports, or documents pertaining to the investigation or prosecution of this
       matter. This waiver includes, but is not limited to, rights conferred by the Freedom
       of Information Act and the Privacy Act of 1974. Further, the Defendant
       acknowledges that he has received all discovery required by law prior to the entry
       of this Plea and that he has reviewed the same with his attorney;

              (k)     Other than what is contained in this Plea Agreement, no predictions,
       promises or representations have been made to me as to the specific sentence that will be
       imposed;

               (1)    As a term ofthis Plea Agreement, the parties agree that restitution in this
       matter is $32,542 and the Defendant agrees to make restitution to the National Science
       Foundation in the amount of $32,542;

                (m)     The United States Attorney's Office for the Northern District of Indiana has
       agreed not to pursue any additional charges on reports it has concerning this Defendant that
       it has in its possession at this time. The United States Attorney's Office for the Northern
       District of Indiana has also agreed to seek and support immunity in other jurisdictions on
       those matters that have not been charged; and

               (n)     The parties further agree under the provisions ofRule ll(c)(l)(c) to make a
       recommendation of a binding home detention in this matter. This binding recommendation
       is contingent on the defendant continuing his cooperation with law enforcement. If the
       court cannot accept this Agreement, the Defendant is free to withdraw this Plea Agreement.

               (o)                                          CTCHTPrnmPntwill not object to a home
       detention assignment at                                          due to an employment
       opportunity.

       10.     I am prepared to state to the Court my reasons based on the facts in this matter that

cause me to believe that I am GUILTY as charged.



                                                 5
                                                                            page 6 of6




        11.    I believe and feel that my lawyer has done all that anyone could do to counsel and

assist me, and that I now understand the proceedings in this case against me.

        12.    I declare that I offer my Plea of GUILTY freely and voluntarily and of my own

accord, and no promises have been made to me other than those contained in this Petition, nor have

I been threatened in any way by anyone to cause me to plead GUILTY in accordance with this

Petition.

        13.    I understand and acknowledge that this Petition, once filed with the Court, is a

public document and available for public viewing.




APPROVED:

       DAVIDCAPP
       UNITED STATES ATTORNEY



By:

                               Attorney




                                                 6
SENSITNE                                                                                           SENSITIVE




       National Science Foundation
        Office of Inspector General




            Debarment Recommendation
              Case Number 109070040
                               March 29, 2013

                     ·. . ·.Thi~.>~e~~rt ~t··Jri~~~tig~tio.iiis···pr6vide·~·•.·i~··yJu
                      ..      ..       FORiJFFICIAL USE ONLY.              .
.• . Iteol}tains prqtectedpe~so.nal. infomiatiol4 the·~a~th~riZ~dcli~closure ofwhich·mayresult in.
    P~!sonalcrimi~alliabilitylinder the Privacy Act, 5 U.S. c. § 552ll_. This report may be further.
 :disclosed·withiil NSF only to individuals\vh() must nave kriowl~dge ofits contents tcJ
     facilitate NSF's, assessment and resolution ~f this mart~r. This reportmay be disclosed
·'outside NSF only \nider the Freedom oflnfon:ilationa.nd Privacy Acts, 5lJS.C. §§ 552 & .
     552a: Pleasetake appropriate precautions handling this report of investigation,

                                                                                         NSF OIG Form 22b (1j13)
                                      Executive Summary

Allegation:          OIG initiated an investigation based on an allegation that
                     -(Subject) misused NSF grant funds.

Subject:                                 , Principal Investigator (PI) or Co-PI for multiple federal
                     grants, totaling in excess of$6,800,000, from the National Science
                     Foundation, Department of the Army and the Department of the Navy
                     since 2002.
OIG
Investigation:                                                    ·ect, who served as PI on NSF
                                                                         ...     -       . .. -
                                                                     '!"'!"'!.~Q.ri.P C'P~!P'!"'r:l!
                                                                     .l...l.J..~'\..&.......-   u...,.. •   .....,.~,._.L
                                                                                                                            f'!T!'P.C"f-!A-nr:!.h!P.
                                                                                                                            '":1-.......-u ...
                                                                                                                                      .a.u-.L.LU......,.a..-


                     equipment purchases using NSF funds. OIG determined that the Subject
                     misappropriated in excess of$220,000 in NSF and cost sharing funds to
                     purchase high-end photography equipment and accessories, surveillance
                     equipment and specialized printers. Furthermore, forensic analysis of the
                     Subject's NSF-funded computers revealed over 5,000 personal photos that
                     were connected to NSF-funded cameras.

University Action:                                                conducted an internal investigation
                                                while employed by. ., the Subject 1n-n"r"'""r1
                     ~~u""'""''"'" e1~Ullpment purchases to two NSF grants,                 and
                                                       Ill
                                            and associated       cost share accounts, and falsely
                     justified the purchases as appropriate grant expenses. As a result, . .
                     terminated the Subject from his tenure position, effective June 2, 2010.

Prosecution:         OIG worked with the U.S. Attorney's Office for the Northern District of
                     Indiana in the subsequent prosecution against the Subject, charging him
                     with three counts of 18 U.S.C. § 666(a)(l)(A), Theft from Program
                     Receiving Federal Fun~, and four counts of18 U.S.C. § 1341, Mail
                     Fraud. The Subject pled guilty to the first count of 18 U.S.C. §
                     666(a)(l)(A). The Court sentenced him to probation for a term of two
                     years, home confinement for six months, and ordered him to pay $32,542
                     in restitution.

Government Wide
Suspension:          Due to the Subject's demonstrated intention and capability to continue
                     applying for and receiving federal grant funds despite his termination from
                     Ill,  OIG sought government-wide suspension. The            ·   and his
                     company,                             were suspended on

OIG
Recommendation:      Pursuant to 2 C.P.R.§ 180 et. seq., and based upon the facts described
                     herein, OIG recommends that NSF debar the Subject and his company for
                     a period of 10 years.
I.      OIG INVESTIGATION

            A. Factual Background and OIG Assessment

On July 24, 2009, OIG initiated an investigation into
inappropriate purchases charged to NSF grants and cost i:>u.<:uu''l">
(Subject), who was an electrical engineering professor at the
The two closed NSF awards ·             in the allegations

                                                            The Subject served as a Principal
Investigator (PI) on both awards. The allegations were based on evidence that the Subject, an
avid photographer, used NSF and cost sharing funds to purchase high-end photography
equipment and other equipment unrelated to his work under the grants to facilitate his hobby.

I l l conducted an investigation into the Subject's allegedly inappropriate purchases, hiring
outside counsel and forensic auditors/experts to conduct the investigation. The investigators
interviewed the Subject and other       IIIII   employees, imaged the Subject's computers and
cameras, and reviewed all equipment purchases on the two NSF grants in question.           IIIII
investigators concluded that the Subject purchased photography equipment, computers, printers,
and accessories with NSF and cost sharing funds, and used the equipment for extensive personal
purposes, with negligible, if any, scientific use.

-convened a committee of the Subject's peers to adjudicate the charges brought against him.
A hearing was held on April 27, 2010, during which the Subject was given the opportunity to
present documentary evidence and witness testimony, as well as cross-examine Ill's
witnesses. By unanimous vote, the committee affinned . .'s determination that dismissal was
warranted and supported by clear and convincing evidence. The Subject was notified of the
committee's decision in a letter dated May 4, 2010, and he appealed the decision shortly
thereafter. His appeal was reviewed by the faculty Appeal Board, which "affirm[ ed] that
adequate cause exists for the sanction of dismissal." The Subject was notified of his dismissal in
a letter dated June 2, 2010.

OIG obtained, reviewed and analyzed all associated grant records and accounting
documentation; performed an inventory of equipment purchased to determine whether and to
what extent items purchased by the Subject and charged to the NSF grant funds or university
matching funds were missing; and conducted several interviews, including but not ·limited to,
interviews with faculty, students and administrators at . . . . In addition, OIG reviewed and
compared written communications and rebuttals by the Subject, as well as the transcript of his
disciplinary hearing at . . .

OIG's criminal investigation concluded that the Subject misappropriated in excess of $220,000
for high-end photography equipment, accessories, surveillance equipment, and specialized
printers. Of this, approximately $128,000 was directly charged to two NSF grants for which he
served as PI, and the approximately $92,000 remaining was charged to university cost sharing
funds. Moreover, OIG's investigation indicated that the Subject made materially false
statements to NSF and   IIIIIofficials regarding his use of grant and/or matching funds.



                                                   2
    Given the Subject's federal award history, his emplo:Yment situation, and the fact that shortly
    after his termination fromIIIII he immediately submitted Small Business Innovation Research
    (SBIR) proposals to two federal agencies for funding of his own company, OIG determined that



..
    there was an immediate need to issue the suspension to prevent additional federal funding from
    being granted and released to the       ·       · the        ·   criminal investigation. NSF
    suspended the Subject and his company,                           government-wide o n -
         ;



               B. Prosecution by Department of Justice

    OIG presented its fmdings to the U.S. Attorney's Office for the Northern District of Indiana,

U.S.C. § 666(a)(l)(A), Theft from Program Receiving Federal Funds, and four counts of 18
U.S.C. § 1341, Mail Fraud.

On                    the Subject pled guilty to one count of Theft from a ,_.,.,...fY"I",,.,..
Federal Funds, in violation of 18 U.S.C. § 666(a)(l)(A), a felony. On                           , the
Court sentenced him to probation for a term of two years, six months of home confinement, and
ordered him to pay $32,542 in restitution to NSF.


II.          DEBARMENT

               A. Grounds for Debarment

NSF may debar a person for "Conviction ... for. .. Commission of embezzlement,
theft ... or ... Commission of any other offense indicating a lack of business integrity or business
honesty that seriously and directly affects [the person's] present responsibility.. .I The Subject
pled guilty to violating 18 U.S.C. § 666(a)(l)(A) for theft from a program receiving federal
funds. His conduct demonstrated a lack of business integrity and honesty.

              B. Burden of Proof

In debarment actions, the burden of proof lies with NSF to demonstrate by a preponderance of
the evidence that cause for debarment exists. 2 "If the proposed debarment is based upon a
conviction or civil judgment, the standard of proof is met. "3 Since this proposed debarment is
based on the Subject's felony conviction, the burden of proof is met.




1 2 C.P.R. § 180.800(a)(3)-(4)
2
  2 C.P.R.§ 180.850(a) & .855
3 2 C.P.R. § 180.850(b)



                                                  3
             C. Relevant Factors

The debarment regulation lists 19 factors for the debarring official to consider. 4 The following
factors are pertinent to this case:

                1. Actual or Potential Harm or Impacts

OIG's investigation indicates that the Subject's actions during the periods from July 1, 2002 -
June 30, 2005 and from September 15, 2005- August 31, 2008 resulted in unauthorized charges
in excess of $220,000 to NSF and matching funds, at least $128,000 of which was directly
charged to two NSF grants for which the Subject served as PI. This conduct clearly indicates a
significant lack of integrity and the violation of public agreements resulting in the
misappropriation of approximately $220,000 that should have been used to further the goals of
the NSF grants at issue.

                2. Frequency or Duration of Incidents6

The Subject's wrongdoing extended over a six-year period, between 2002 and 2008. In total,
the Subject made or authorized in excess of 175 improper purchases, to include high-end
cameras, associated photography accessories and equipment, surveillance cameras, printers, and
other inappropriate charges to federal grants and matching funds for which he had fiduciary
responsibilities.

                3. Pattern ofWrongdoing7

The Subject made inappropriate charges to two NSF grants and cost sharing funds totaling in
excess of $220,000, over a period of approximately six years. There was no indication that the
Subject would have stopped his misconduct of his own volition; he was forced to stop only when
he was caught by~ administrators, who suspended him and conducted an internal
investigation. The Subjectmade no attempt to correct the inappropriate charges.

As an example of his pattern of wrongdoing, on March 31, 2005, at his request and with his
justification,~ requested a grantee-approved no cost extension for the MRI grant, for the
following reason: "One of the vendors (SHF in Germany) had substantial production difficulties
and decided to skip a cycle. We should thus be able to get better equipment, but not until next
year. In the meanwhile we are using a loaner to proceed with the research."

In actuality, between March 31, 2005 and June 30, 2006, the Subject made no purchase from
SHF in Germany with the MRI grant funds or cost share funds. Rather, he made in excess of
150 improper purchases with the remaining NSF and matching funds to local vendors including
Apple and Dodd Camera and Video, establishing a clear pattern of abuse.

4   2 C.F.R. § 180.860
s 2 C.F.R. § 180.860(a)
6   2 C.F.R. § 180.860(b)
7   2 C.F.R. § 180.860(c)


                                                4
                4. Role in Wrongdoings

The Subject was solely responsible for misusing NSF funds and using NSF-purchased equipment
for personal use.

                5. Repayment9

As part of his plea agreement, the Subject agreed to pay $32,542 in restitution.

                6. Cooperation of the Subject10

The Subject participated in ~s investigative efforts and in July 2009, immediately prior to
his interview with Ill     investigators, the Subject returned approximately $80,000 of equipment
he purchased with NSF and matching funds to            Ill-    The Subject, through counsel, also
negotiated a plea agreement with the U.S.               s Office for the Northern District of Indiana,
resulting in the guilty plea entered on

               7. Position Held by the Subject11

The Subject served as PI on the two NSF grants at issue, over which he had the primary fmancial
oversight. Thus, the Subject had professional fiduciary responsibilities to serve as a responsible
steward of NSF funds, and misused his position to make inappropriate charges to federal grant
and matching funds.


ill.   RECOMMENDATIONS

Based on the Subject's criminal conviction, and in order to protect the interests of the public,
NSF and the federal              we recommend that NSF debar the Subject and his company,
                        for 10 years.




s 2 C.F.R. § 180.860(£)
9 2 C.F.R § 180.860(h)
w 2 C.F.R. § 180.860(i)
n 2 C.F.R. § 180.860(k)



                                                 5
Attachments:

Tab 1: Indictment, U.S. v.

Tab 2: Plea Agreement, U.S. v.

Tab 3: Judgment, US. v.




                                 6
                                     NATIONAL SCIENCE FOUNDATION
                                          4201 WILSON BOULEVARD
                                         ARLINGTON, VIRGINIA 22230



        -~X.
           p;......•~~···~
                     ii

        OFFICE OF THE
       DEPUTY DiRECTOR




    VIA CERTIFIED MAIL/RETURN RECEIPT REQUESTED




           Re: Notice of Debarment-

    Dear

       ~~,J·~•-uv·v~ 17, 2013, the National Science Foundation ("NSF") issued to your client, •
                    a Notice of           Debarment (''Notice") in which NSF proposed to debar him
    and his company,                              (the "Company") from directly or indirectly
    obtaining the benefits of Federal grants for a period often years. The Notice sets forth in detail
    the circumstances giving rise to NSF's decision to propose this debarment. Specifically, NSF
    proposed debarment b e c a u s e - pled guilty to a charge of Theft from a Program
    Receiving Federal Funds. In the Notice, NSF provided- with an opportunity to
    respond to the proposed debarment.

    On or about October 1, 2 0 1 3 , - , through counsel, submitted his response.-
    asserted that debarment was not appropriate or, in the alternative, that his debarment period
    should be reduced. In support of his position,- made two primary arguments: (1) he
    relied on guidance provided by NSF program managers, who informed him that his actions were
    consistent with NSF grant policy; and (2) NSF should account for the fact t h a t - ha.S
    been serving a government-wide suspension s i n c e - 2011.
\

    Analysis

    I am not persuaded by the first argument. -           pled guilty to a charge of Theft from a
    Program Receiving Federal Funds. As he outlined in his response, at his plea hearing, he
    admitted that he purchased camera equipment and accessories worth thousands of dollars using
    NSF grant funds, even though this equipment was not approved for purchase in connection with
    the grant. Such conduct is clearly outside the bounds of what is permitted by NSF grant policy.
    Notwithstanding- failure to provide any details in support ofhis allegation, I have
    confirmed that the cognizant program officers never authorized you to use the grant funds in the
    manner you did.

    I, however,. am r e d u c i n g - period of debarment, and that of the Company, in light of
    the second argument. Pursuant to government-wide debarment and suspension regulations, an
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agency's debarring official "must consider the time [an individual] was suspended" if a
suspension precedes the debarment. 2 CFR 180.865(b). - a n d the Company have been
suspended since           2011. Thus, in accordance with the governing regulations, I am
crediting            and the Company as if they have been debarred since that date, and
reducing their debarment period accordingly.


 Conclusion

 For all ofthe foregoing r e a s o n s , - and the Company are debarred u n t i l - ,
 2021. During this period of debarment,- and the Company are precluded from
 receiving Federal financial and non-financial assistance and benefits under non-procurement
 Federal programs and activities unless an agency head or authorized designee makes a
 determination to grant an exception in accordance with 2 CFR 180.135. Non-procurement
 transactions include grants, cooperative agreements, scholarships, fellowships, contracts of
 assistance, loans, loan guarantees, subsidies, insurance, payments for specified use, and donation
·agreements.

In addition,- and the Company are prohibited from receiving Federal contracts or
approved subcontracts under the Federal Acquisition Regulations at 48 CFR Subpart 9.4 for the
period of this debarment. 2 CFR 180.925. During the debarment p e r i o d , - may not
have supervisory responsibility, primary management, substantive control over, or critical
influence on, a grant, contract, or cooperative agreement with any agency of the Executive
Branch of the Federal Government.

Moreover, during the debarment p e r i o d , - is prohibited from serving as a reviewer,
advisor, or consultant to NSF.

If you have any questions regarding the foregoing, please contact-, Deputy General
Counsel, at (703) 292-8060.



                                                      Sincerely,




                                                     -
                                                     Senior Advisor