oversight

Grant Fraud

Published by the National Science Foundation, Office of Inspector General on 1995-09-29.

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

TO: AIGI       File Number: I95020004                                         Date: 15 March 2002

Subject: Closeout Memo                                                                  Page 1 of 1


     There was no closeout written at the time this case was closed. The following information was
     extracted from the file in conformance with standard closeout documents.

     Our office was informed that the subject' was alleged to have forged the complainant's name, taken
     the control of a NSF grant from the PI', and misappropriated the grant funds. Our investigation
     revealed that $10,128.90 was mischarged to the NSF grant3. The subject's university4refunded that
     money to NSF.

     Accordingly this case is closed.




      L
                Prepared by:                     Cleared by:

               Agent:          Attorney:       Supervisor:     AIGI

   Name:



 Signature &
    date:
                                               Investigative Report No. I95020004

                                                                L
                                                            Background



                                                      -
                                                     Biology Department

                                       _;located in                       ,is an historically black university
                that was founded by                                            in      on the basic principle
                of providing education to young people without regard to race, creed, or sex. The faculty,
                administrative st@ and Board of Trustees are racially integrated. The biology
                department at                   offers programs leading to Bachelor of Arts, Bachelor of
                Science, and Masters degrees. The program in biology is directed toward meeting the
                needs of students in three general areas: (1) preparation for graduate studies in the natural
                sciences, (2) preparation for training in the health sciences including medicine, dentistry
                and nursing and (3) preparation for careers with governmental or industrial agencies.

                                                           B.
                                                    The Allegation of
                                                Misappropriation of Funds
                                            and Other Background Information

                        In 1989, Dr.                                 (the subject), professor of biology at
                                , hired Dr.              (the complainant) to work as a biology research
                assistant professor at the university. The subject brought the complainant to        to work
                on a research project that was hnded by NASA.' After the complainant's arrival at
I
                the subject submitted a proposal to the National Science Foundation (NSF) entitled "'
                          -
I               The proposal (             ,
                                           listed the complainant as SheQo-p~for the prbject. The
1
                proposal was declined by NSF. An NSF reviewer noted-thatthe Co-PI had more
                experience in the area of the proposed research than did the PI. Subsequently, the subject
                suggested to                   -
                                               administration that the complainant submit a proposal on the
                topic. The university approved the subject's suggestion and the complainant submitted a
                similar proposal to NSF. In August 1990 the complainant received an NSF Research in
                Undergraduate Institutions (RUJ.) award .                     of          The complainant
                was to perfbrrn research on a          biology project entitle
                                                                                             1n Febkary
                1993            ded additional hnds oi$          for the &mplainant's research. The

    -   -
            i   ' NASA provided the subject with $          in funds for biological research. The fundingbegan in May
                1989 and continued through December 1993.                    .   .
                     original request plus the amendment brought the total for the award to $      . The
                     entire award complete with a six month non-funded extension expired in July, 1993.

                            In February 1995 the NSF Office of Inspector General (OIG) received an
                    allegation of misappropriation of fhnds from the complaintint. The allegation was referred
                    to us by the                              of the Federal Bui-eau of Investigation. The
                    complainant alleged that in the pail o f 1990, the subject "coerced" him into signing
                    paperwork that ceded control of the grant to the subject. The complainant asserted that
                    he was forced to sign this paperwork because the subject would have refhsed to sign
                    documentation which would extend the complainant's visa to work in the United States if
                    he did not agree to allow the subject to administer the grant finds.

                            The complainant also alleged that grant fhnds budgeted for undergraduate stipends
                    in his NSF RUI grant were used the pay graduate-level stipends. The complainant stated
                    that the subject's practice of improperly paying his graduate students with the
                    complainant's grant fhnds began approximately in September 1992 and continued through
                    July 1993. The complainant stated that the subject began misusing the grant funds by
                    asking the complainant to sign blank, monthly student stipend appropriation forms. The
                    complainant said that he did sign several of these blank forms, then refused to continue
                    after which he claims the subject began to forge his signature. The complainant also
                    asserted that the subject bought supplies and equipment for other research being
                    conducted in the labs at                   with finds awarded specifically for the RUI
                    project. The complainant stated that he brought the shject's misconduct to the attention
                !   of               _  officials, but they took no action. ' !'I:..
                                                                                    1 ,-

1                                                              II.
                                                            Findings

                                                         A.
                          The University Conducted a Limited Investigation of the Allegations.
                     The Subject Did Not Coerce the Complainant Into Giving Up Control of the Grant
                               Funds and He Did Not Forge the Complainant's Signature
    I

    I
                            We determined that the President of                  had appointed an investigating
                    committee headed by the Director of the Division of ath hi ma tics and Natural Science to
                    look into the allegations made by the complainant. The committee determined that stipend
                    payments to students approved by the subject were proper. However, the division
        I
                    director recommended to the president that an external auditor review the matter
        I           following an additional allegation by the complainant of fiaud by the subject. The
                    president directed an internal auditor to conduct an investigation. The investigation was
                    not completed. No W h e r action was taken by
                                                                          < ;      :.
                                                                                           _
                                                                                      3fficials.
                                                                          ,.a,",


                            We found no evidence to support the allegation of coercion by the subject. The
            -   -   Director of the Office of Budgets and Grants at the university stated that the complainant
                    himself approached her about allowing the subject to administer the grant fbnds because
the complainant was not familiar with the standard administrative procedures at the
university. The subject stated that the director requested his involvement in administering
the grant following the initial suggestion by the complainant. The complainant did not
provide persuasive evidence to support the allegation that he was coerced into giving up
administrative control of the grant. Based on our interviews with university officials and
with the complainant, we find that the complainant voluntarily agreed to permit the
subject to manage the grant finds. Without corroborating 'evidence of any sort, we also
reject the allegation that the subject refbsed to sign documentation extending the
complainant's visa.

         We found no evidence to support the allegation of forgery by the subject. In
 September 1990, the complainant signed a letter autho-8      the subject to administer the
 complainant's NSF RUI grant. The letter stated that the.&mplainant authorized the
subject to represent him "in all administrative responsib&&s of the grant including the
signing of Purchase Orders etc." The letter indicated that <&pieswere sent to the subject
and the current Dean of Academic Affairs. The university expressed no opposition to
allowing the subject to manage the grant finds. The investigating committee reviewed this
letter and determined that the subject had authority to administer the grant. Therefore, the
committee did not investigate krther the subject's actions concerning the payment of
student stipends. The committee did, however, determine tha                     was at fault
for not n o t w g NSF of the decision to allow the subject to administer the complainant's
grant. We reviewed purchase requests for expenses related to the grant and determined
that each time the subject signed the complainant's name, he signed his name as well,
acknowledging that he was signing for the complainant, as authorized by him as well as by
the university. We find that the complainant's allegation of forgery is without merit
because the subject had university approval to administer the grant finds.

                                             B.
                                Student Stipends Were Paid
                            Contrary to the Purposes of the Grant
                                                                 i


        We reviewed account summaries of the complai.&t's grant along with other
documentation made available to us and discovered that three students were paid
graduate-level stipends in the amount of $500 per month,totaling $7,000. These finds
were taken directly £tom the complainant's grant which qas supposed to support only
undergraduate research and study.2 University officials confirmed that the three students
in question were not undergraduate students; they had received their bachelor's degrees
prior to conducting research at       and prior to receiving stipend payments. The
university however, classified them as "special students." According to       academic
policy, "special students" are those students who have completed undergraduate
requirements and have been awarded degrees. However, these students are not filly
enrolled in the graduate program at                    "Special students" must meet certain
requirements before they are hlly admitted into the graduate program.

   The NSF award letter for the complainant's grant              clearly states that the funds provided
by the award are to support "Research Experiencesfor Undergraduates."
         We discovered that not only were these students paid graduate-level stipends from
 grant funds reserved for undergraduate students, they did not perform research on the
 RUI project. The students were in fact working on another project with the subject,
 which was funded by another NSF grant.) One student who was paid a graduate-level
 stipend clearly recalls working with the subject only on a project involving (
           The subject stated that he could not recall that the student worked with him
because she was enrolled at                   for only one semester from August 1992
through December 1992. The subject adthitted, however, that the other two students
who were paid graduate-level stipends performed research on the subject's Research
Improvement in Minority Institutions (RIMI) project, not the complainant's RUI project.
He also admitted that he knew that the students received graduate-level stipend payments
which came directly from the complainant's grant. During the course of the limited
investigation conducted by the university, it determined that the students for which the
subject requested stipends were properly enrolled at                   and had been properly
recommended by the Chair of the Biology Department to conduct research and to receive
stipends from the grant finds. University officials did not question the appropriateness of
graduate-level stipend payments to those students. No one at ;                  referred to
the grant to determine whether or not conditions existed which would exempt certain
students fiom receiving payments fiom the complainant's grant.

        Also during the course of our investigation we disoovered through interviews with
the complainant and biology students at                          -
                                                        :$fiat certain undergraduate
students were receiving stipends fiom the complainant?.$,grant but were actually
performing research on the subject's R.IMI project. We found that a total of $1,695.50 in
funds from the complainant's grant were used to pay stipends to students who did not
actually work on the complainant's RUI project. University officials did not question the
appropriateness of these payments from the complainant's grant.

         The subject stated that he charged expenses related to his RIM project to the
complainant's grant because it was soon to expire. We recommend that the graduate-level
stipends and the.stipends paid to undergraduate students who worked on the RlMI
project, be charged to the subject's RIMI grant. This amount should be credited to the
RUI grant and ,because the grant has expired, refunded to NSF.




                                                                     *   t,i,<.

   In October 1992 the subject was awarded a grant for ~ ~ " & ~ r O v e r nin  e Minority
                                                                                  nt        Institutions,
Ww                     The award  in the mount   of           (&iddenting   subseqbent  amendments     to
the original amount requested) was for research on a project entitled ,"r
                                                          The funding for this research will expire in
March 1997.
                                         C.
        G n n t Funds Were Improperly Spent on Supplies and Equipment to Support
      the Biology Department Generally, and to Support other Research Projects
                          Conducted in the Subject's Labs

         We found that the subject had been using finds awarded to the complainant for
research on the RUI project to purchase general biology supplies and equipment to be
used by all students working in the biology laboratories at               ,. The subject
admitted purchasing items for general use in the biology department and baying for them
with finds from the complainant's grant. The subject admitted that many of the supplies
that he purchased could be used in much of the research being conducted in the biology
labs. He stated that certain items were even purchased f o use
                                                            ~ on his own NASA-finded
and NSF-finded projects. We determined that during 19)2 and 1993, the subject charged
to the complainant's grant, $1,289.12 for general supplieq. The subject estimated that only
15% of the supplies that he purchased with hnds fiom the complainant's grant were being
used to conduct research specifically for the complainaht's.project. Therefore, $1,095
was wronfilly charged to the complainant's award. In addition, the subject charged
$320.90 in expenses related to his own NSF fbnded research and $17.50 for expenses
directly related to a research project finded by NASA.

       We recommend that these finds for supplies be charged to the appropriate
accounts. $1433.40 should be credited to the RUI grant and, because the grant has
expired, refinded to NSF.

                                             D.
                                    The Subject Submitted
                              Misleading Progress Reports to NSF
                                     On His RIM1 Project

        We discovered that in the first two years of the subject's NSF RIMI grant which
began finding in October 1992, most of the categories budgeted-and
                                                          ..!,..,.
                                                                .       specifically student
stipends-had been greatly underspent. The subject st&d that he had available to him
over $1,000,000 in finding from which to pay for studb&tipends and other research
expenses, and he used those finds to support students working onthe NSF RIM project.4
However, in progress reports submitted to NSFcovering October 1992 through May
1993 and October 1993 through September 1994, the subject stated that several students

   In additionto NSF, the following organizations have provided funding for the subject's biology
research at               : NASA provided funds totaling $            that began in May, 1989 and
continued through ~ecember,1993, the Kellogg Foundation has provided funds totaling $               that
began in July, 1993 and will continue through July 1996, the Department of Education provided $
in funds beginning in September 1993 and continuing through August 1996 and the Hughes Foundation
has provided $         that began in September 1993 and will continue through August 1997. Including
the subject's NSF award, he has received a total of          for biology research at :                iiom
1989 through 1997. All of these grant funds are to support the training of minority students in biology
research.
fiom        ;onducted research on the NSF project and were supported with finds fiom the
NSF RIM1 award. According to records maintained by the university, only one graduate
student at     . received a single stipend of $400 in May 1994. The subject admitted that
students listed in his progress reports to NSF fiom Octobbr 1992 through September
1994, except for one, were in fact not being supported pdth NSF finds. The subject
admitted that while he had been conducting research for;the project, he had not been
charging the RIMI grant finds allocated for that purpose: The subject stated that f?om
1992 through 1994, he charged expenses related to the RIMI project to the complainant's
NSF grant and to private grants because those finds would expire before his RIMI grant
would. He wanted to spend those finds before they ran out. The subject stated that he
knew that he had time remaining on the RIM1 grant in which to spend the finds.

       To date, the subject has spent only $178,435.78 of the $        awarded by NSF.
In March 1995, the subject submitted a progress report to NSF covering the period of
October 1994 through March 1995. We reviewed records of student stipend payments
fiom October 1994 through June 1995 and discovered that the students listed in the
March 1995 progress report properly received stipend payments fiom the RIM award.
Expenditure accounts as of June 1995 reflect that the subject has appropriately spent the
NSF RIMI hnds budgeted for stipend payments for the 1994 through 1995 period.

        The Director of the Budgets and Grants Office at                       was aware that
the subject had a surplus of money on his finded projects that he was nit spending. The
director and the current Dean of Academic Affairs at the Gniversity stated that they
discussed with the subject that he should be spending theigrant fbnds to accomplish the
purposes of the research. University officials stated that-the subject is conducting valid
research at. ,however he is not conscientious about determining the correct grant
finds to charge for expenses related to his research. After interviewing students and
university officials, and after touring the biology labs at the university, we agree that the
subject is performing substantial research at                     In addition, we found no
evidence that the subject benefited personally fiom his actions.

        Nonetheless, NSF has provided nearly $          to the subject based on somewhat
exaggerated progress reports. We recommend that the Division of Human Resource
Development (HRD) and the Division of Grants and Agreements @GA) require the
subject to provide a full and complete report on the work completed under the award to
date, cosigned by the Authorized Organizational Representative (AOR). HRD should
assess whether the unspent grant finds should be returned to NSF.

        In addition, the university must take steps to oversee the subject's disbursement of
NSF finds. We recommend that the university review this matter and take appropriate
action(s), including developing adequate controls to supervise the subject's expenditure of
NSF finds. The university should submit a report to DGA and HRD which describes the
action(s) taken and controls implemented. When DGA:a.qdHRD receive the report fiom
the university, we recommend that they determine whe&& hrther action should be taken
by NSF to protect NSF funds.
                                           m,
                                      Conclusions

        From September 1992 through the expiration of the grant in July 1993, the subject
improperly charged $7,000 in graduate-level stipends to the RUI grant. During the same
time period the subject improperly charged $1,695.50 to the RUI grant to pay
undergraduate students who conducted research on the subject's own NSF h d e d RIMI
project. The subject improperly charged $1433.40 to the RUI grant for biology supplies
and equipment which were not used to support the com~lainant'sresearch. In total, the
subject improperly charged to NSF grant                   $10,128.90 for student
stipends, supplies and equipment.

        The subject submitted somewhat misleading pro&ess reports to NSF in which he
stated that several students were conducting research forG@is
                                                           RIM1 project when in fact the
students were being supported with finds fiom sources other than NSF.


                                          Is'.
                                  Recommendations

       Based on our findings and conclusions, we recommend that:

1.     The university refind to NSF $10,128.90, the amount improperly charged to RUI
       grant                  for student stipends, supplies and equipment.

2.    HRD and DGA require the subject to provide a fill and complete report on the
      work completed under the award to date, cosigned by the AOR.

3.    HRD assess whether the unspent grant finds should
                                                    ..
                                                        be returned to NSF.
                                                              t




4.    The university review this matter, take appropriate action(s), including developing
      adequate controls to supervise the subject's exp@iditure of NSF finds, and
      submit a report to DGA and HRD, which describ$s .. the action(s) taken and
                                                          .
                                                          .
      controls implemented.                            .c

.     DGA and HRD review the report provided by the university and determine
      whether firther action should be taken by NSF to protect NSF finds.


      The university has agreed to implement all of our recommendations.
    Professor of Biology



                                          September 26, 1995



    Office of hspector ~ e n e r a l
    National Science Foundation
    4201 Wilson Blvd
    ~rlington,Virginia 22230

    Re: OIG Investigation Report No. 195020004

    Dear

I           I do not differ with the statement of facts regarding the investigation by NSF Office of
    Inspector General. And I am very agreeable that improved controls withln the University be
    observed such that the investigator is more responsible and accountable for the language of the
    report and for reporting on expenditures pursuant to grants awarded by federal agencies.
    Frankly, I have not understood this to be the internal operating procedure prior to now. I
    welcome the accountability of the research investigator in reporting on research expenditure
    and program activity. I believe my research interests can continue to be pursued with NSF in a
    more reliable and responsible manner in the years ahead.



                                         Sincerely,