Grant Fraud

Published by the National Science Foundation, Office of Inspector General on 1997-03-31.

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      I   File Number: I95120050                                      I   Date: 17 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 subject1was alleged to have obtained money fi-om students by
     falsely claiming to grant or obtain science scholarships. We investigated with other federal
     agencies,2 and filed a civil complaint against the subject. The subject agreed to a settlement that
     included forfeiture of funds for reimbursement to students, $10,000 fine, and $350,000 bond prior to
     future scholarship service actions.

     Accordingly this case is closed.

                   Prepared by:                   Cleared by:
                  Agent:          Attorney:     Supervisor:     AIGI

Signature &
                                    13 April 1997


              To:   File
                    I95 120050

                    Investigative Attorney

         Subject:   Case Update

 In December 1995 we received an allegation regarding an entiq calling itself the
                        -      , was fraudulently offering scholarship services to

 students, in exchange for a small processing fee. We worked with Inspectors from the
 U.S. Postal Service to investigate the matter. The investigation determined that the
 subject,             -                                 ad used mail drops in Maryland and
 Washington, D.C. to receive processing fees from students, but had failed to provide the
 scholars hi^ services ~romisedir, -      solicitations, The U,S. Attorney for Baltimore
 declined prosecution in the matter, but in January 1994 the U.S. Postal Service had
 issued a cease and desist order againsd.

        In April 1996 we became aware that          - was continuing to operate the
 fraudulent scholarship assistance program. We contacted the Federal Trade Commission
 (FTC), which indicated that it was considering a consumer ftaud complaint agairist
 A   .
   ..--- 3 n 9 August 1996, St'-              provided an affidavit tc         A the
 FTC, in which he detailed NSF OIG's investigation and its concerns about
      -       - activities.
         In August 1996,             filed a Complaint for Permanent Injunction agairist
            :,..  and against                   vho had also participated in the scheme.
 On      10
         April 1997, the FTC filed a proposed settlement agreement in the U.S. District
 Court for the District of Maryland, whereby the subjects agreed to forfeit funds seized by
 the FTC at various mail drop sites, and for the funds to be used to reimburse victims of
 their scheme. In addition,        -                 will pay judgments of $10,000 and
 $9,000, respectively, and will post bonds in the amount of $300,000 and $50,000,
 respectively before engaging in future scholarship services. The settlement has been
 approved by the subjects and by the FTC,and is now awaiting the District Court's
                                      3 1 March 1997


           To:     File
                   I95 120050

        Fror?                          nvestigations Section

                   Special Agent-in-Charge

      Subject:     Closeout Memo for Investigation No. I95 120050

In December 1995 OIG received information that an organization calling itself the
                          _,.---- ,- - - j was fraudulently offering scholarships to science
students in exchange for a $10 processing fee. On 17 September 1996 the Federal Trade
Commission filed a request for an injunction with the U.S. District Court for the District
of Maryland, Northern Division, asking that the court bar the defendants from continuing
their activities. To our knowledge, there have been no further incidents such as those in
this case. Based on this information, this case is closed.