oversight

Grant Fraud

Published by the National Science Foundation, Office of Inspector General on 1998-11-23.

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

,    .--   77-   "1,




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                                                                                           Close-out- ~ r .
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I1                 MEMORANDUM
I
I                                                  99
                                                   -          -   -                                                         -   -



t
I
                   To:               File No. I96120059
I
                                                                      Student Trainee-
I

1                  Through:                                               General for Investigations

                   Re:


                   Background:

                       We received several                                             University of
                                                                               funding by overstating the
                   number of its industrial                                           that the project
                   administrator,-ad                      instructed two employees to inflate their hours to
                   receive additional pay.

                       Investigation:

                       We obtained copies of th         ual reports, which contained the lists of industrial
                                                         of 1992 indicated that membership requirements for
                               cluded either a cash donation of $10,000.00 or a $30,000.00 equipment
                                               of 1992, membership required a $15,000.00 cash contribution
                   or a $45,000.00 equipment donation. We issued subpoenas to the companies listed as
                   participants. Many companies were listed as active members of thep e s p i t e the fact
                   that they had declined membership, paid less than the full amount o membership fees,
                   donated e uipment which did not meet the standard for membership, or merely attended
                   annualf       meetings. We interviewed               who was unable to explain the
                   discrepancies in the membership                            that the employee payments had
                   been inflated by the project administrator without his knowledge.
Findings:

It was found that Dr                                                  of industrial
members                                                       d that he used false criteria

administrator had instructed two employees to overstate their hours to receive additional
pay, which led to improper payroll and overhead charges of more than $9844.00.
                         ---
                       ..-
                                                                                   ;u...s-C
                                                                                          . .   - --
                                                                                                       ....


1003, Demands Against the nited States, for using false statements to o&ain
                                                                       ..,,    money. On
January 22, 1999.,Dr.           as sentenced to three months incarceration'io be foll6wed
by one year of supervi=e.          He was ordered to pay a $l0,00000 fine and
a $25.00 criminal assessment penalty. In addition, he is excluded from receiving federal
financial and non-financial benefits under federal procurement and non-procurement
programs for three years, commencin~on January 3 1, 1999.

The Department of Justice declined to prosecute either the project administrator,
                        r the employee overpayment because the dollar
                               and because the funds had been repaid to NSF by the
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                                                                                               From the issue dated September 241 1999
i


                                          PEER REVIEW
!
                                                                                Presidential Search Adds to
                  TO~DLFY~SN~S             Competition Among Elite Institutions;
                  INFORMAm                 Wisconsin Professor Keeps Tenure
                  TECHWOW
                  MISWEEWS                 Despite Jail Term for Lying
                  t2tRoNWWE
                  PUBUsnm
                  MONEY


                                                  --                                 -
                                                                announcement last week that             5
                                             he plans to step down as president ot
                                             University next year stunned many people in
                  IMLRNCmON(U
                  OPINION a ARISi
                                             academe, but- -some
                                                             - of his former colleagues at the
                                                -
                                              T T
                                                                    had heard as early as this
                  CWOPW
                  wcmmnw B A ~ K             past spring that he was thinking of leaving. Now,
                  ISISUESYDIEPRI             the two institutions may find themselves
                  JOBS
                  mo#r-
                                             competing for the same candidates as they both
                                             search for new leaders.
                                                  --               -
                                                                 a constitutional-lawscholar, served
                  Chronicle                       more than a dozen years as               rovost and                                                 -   A

                                                                                             - ;IS
                                                  law-school dean before taking over                                                                          A

                  How to register                 presidency in 1992. He said that after he steps
                                                  down, he will take a sabbatical and then return to
                  How to subscrihc                - - -
                                                             LO teach undergraduates. "I need a
                                                  season of refreshment and renewal," he said. "And
                                                  it is high time for me to spend more time with
                  Change your user
                                                  family and friends."
                  17~Ille
                                                  The announcement surprised even the chairman
                  C h a ~ ~ xyoour
                               c                  o            Board of Trustees,      -
                  password                        who said               resignation "was neither
                                                  expected nor welcome" among the trustees, who
                  Forgot your                     were pleased with his "extraordinary leadership."
                  pass\vord?
                                --



                  Hou to advertise
                                                  Executive-search consultants say the number of
                                                  top presidencies open now means the competition
                  Privacy policy                  for candidates may be stiff. '       _ (resident,
                                                      -                     this summer said that he
                  Feedback                        will step down next year.
                                                  chancellor c                        is retiring-
                  ~ c i p                         next summer. And the
                                                               --   . - also is searching for a new               --..
     -
    e Chronicle: View results
                                              *   I*




                                        i                         \so is searching for a new
     v
                                        chancellor, following the death this summer of

                                              liUl     _
                                                      is one of the best opportunities out
                                                           '
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                                            there, but it will be a competitive market," says
                                    I
                                                                      , a managing director of
                                            college+presidentialsearches at
                                I



                                                   - s well into its search, a university
                                            spokksman said last weekd                   ays that
                                            the fact thar        - has a couple of months' lead
                                            may
                                              . - be to*
                                                        its advantage. '      - has a leg up in
                                            terms of timing," she says.
                                                   -
                                            And despite the             allure, whoever is
                                            tapped will have to deal with such challenges as
                                            the controversial merger of the institution's
                                            teaching
                                            - - - hospitals     with those of the,
                                               -         c San Francisco. The new entity,
                                                                     has lost $60-millionin its
                                            second year.              himself has recently
                                            joined in criticism of the parmership.

                                            ~cHdemicleaders and search experts last week
                                            said it was premature to speculate on likely
                                            candidates for the)             ?residency. But
                                                                - , a former head of the
                                                                                      and a former
                                            vice-president at            , notes that
                                            pattern has been to choose a provost or strong
                                            academic scholar.



                                            Falsdjnng information on federal grant
                                            applications and serving three months in jail need
                                            not cost you your tenure at th;

                                              .
                                            At least, not if you're              And not if
                                            administrators bungled by signing a legal deal
                                            some years ago that makes you untouchable.

                                            A professor of electrical engineering. -
                                            was jailed in February after he pleaded guilty to a
                                            federal misdemeanor charge. He admitted to
chn,niclc: View results



                              listing more corporate sponsors than he had
                              actually attracted when he applied for millions in
                              grant money from the National Science
                              Foundation.

                              This month, having semed his tern     -
                              was back on the campus teaching. He hasn't
                              received a warm reception from officials. In a
                              letter to              , the chancellor,
                          I          ,,told the professor that dismissing him
                              "remains my decided preference." But,
                              said he was "acceding to your retum to the
                              faculty," because he was bound by the legal
                               agreement.

                              The legal deal was snuck in 1996, when
                              Wisconsin decided to oust :.--. -------- from the
                              directorship of its Engineering Research Center.
                              The university said his management and
                              budgeting practices were creating turmoil in the
                              center and began investigating the center's
                              activities. But to oust him without going through
                              lengthy due-process proceedings!              struck a
                                    --
                              deal saying that stripping him of his directorship
                              would resolve the matter. When the investigation
                              ended, concluding that                   d lied on
                              grant applications, _        A was stuck with  the
                              professor.

                                            . lawyer.                   - who says
                               his client committed no crime and entered a guilty
                                                                          --
                               plea only to avoid prolonged legal battles said
                                     .- -- jhouldn't be surprised that it can't fire

                                              After all, -        a says, he made

                               administrators sign another agreement reiterating
                               the first deal in 1998.

                               He dismissed the chancellor's
                               "public-relations-orientedletter," saying that
                                      had written it to appease "certain blowhard
                               legislators" who were threatening to hold the
                               university's budget hostage because they were
                               angry about                return to the campus.

                               As for his client, "He's very happy to be back in
                               the classroom,"noting that                       T   ?   ~

                               grant proposals out for new projects.
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                                                            From the issue dated November 20,1998


        -scPmrd*9:.
                           w i s k n s i n Professor Acknowledges
                           Lyingion NSF Grant Applications
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        n#lm"sm
        INFORMATION              fa:?
        TECHNOLOW          An engineering professor at the
        ms WEEKS
        GHR0Nm.E                 ..              pleaded guilty last week to
        PU85191HiW         a misdemeanor charge of using false information
        MONEY              to obt& research grants from the National
        OOYERNMMa          Science Foundation. Prosecutors in the case plan
        POUnCS
        NEW 0-
        COMPEmKmS
                           to re&nmend the maximum-- .
                                                         fine $100,000            --        --
        CO(UMUNRT
                               X,
                           fora*e. professor,
        COUEQBB
        I-NAl
        OPINION & ARIIB
                           ~ a & don allegations made by three university
        CWOPW              empibyees, federal officials investigated the


                           managed. They found that _               in
                           appl-    for N.S.F. -grantmoney, had inflated the
                           number of corporate partners in the research
                           center. The center received millions of dollars
        Chronicle          from the agency, but prosecutors said they did not
                           know how much of the money had been won
        How to register    because of the false information.
                                                                            - -    -
                           In addition to paying the fine               nust
                           relinquish all administrative and financial control
                           of gikts, but he will be allowed to continue
                           supervising the research of students supported by
        Cha11.y~
               your user
                           grants.
        tlanle

        Change yoitr
                            .,-..-
                                          -awyer                    said most of
        1~assword           the complaints against his client had been proved
                            false by university and N.S .F. investigations.
        Forgot your
        password!           'TheN.S.F. was very resolute that there had to be
                            a penalty," he said. "They want to make sure that
        How to advertise
                            a n m g they get from any university is 100 per
        Privacy policy
                            cent accurate."
                                 -


    0   Feedback

        Help
                                                     the U.S.Attorney for
                            the western District of Wisconsin. said that the
                            ca&"lsends an unambiguous message to academia
                            and beyond [that] regardless of one's position,
L'
Chmide: View results
         t

.,.                        and beyond [that] regardless of one's position,
                           lying to obtain money for any purpose will not be
                           tolerated."

                                        will continue as a professor at the
                           university, sair                 ~xecutiveassistant
                           to the provost. The university and ,.-_
                           agreed two years ago, after the university had
                           begun investigating the employees' complaints,
                           that he would step down as director of the
                           research center.

                           The professor did not intend to deceive the
                           N.S.F., -           ,aid. "It was his opinion that
                           there was flexibility in the reporting," he said.

                            But the prosecutor that handled the case,
                              ---- --             said       - _--had
                            intentionally inflated the number of research
                       '

                            partners to increase the chances of receiving grant
                            money. Prosecutors will not take any action
                            against the university.


                            http://chronicle.com
                            Section: Government &a Politics


                           Copyright O 1998 by The Chronicle of Higher Education


                             Find that book and buy it
                             &mniale.uoxn/boalre
 0..

Chronicle: V$w results




                                                From the issue dated February 5,1999


                              Wisconsin Professor Gets Jail Time for
                              Lying to Win Federal Grants


                              A professor of electrical engineering at the
       THIS WEPPS
       CHROQJlW
                                                          :re was sentenced last
       ~   ~
                              month to three months in jail and fined $10,000
       MONEY                  for falsifymg information on a federal grant
                              application.

                              Federal prosecutors had not sought jail time for
                              -          ., who had pleaded guilty to listing
       I-NAL
       OPINION & ARTS
                              more corporate sponsors than he had actually
           eOUOQW             attracted when he applied for millions of dollars
       INRHIMATBQN BAWK       from the National Science Foundation.
       1 S S 1 ) E S ~ ~
       JOBS
                              But in the sentencing, U.S.Magistrate Judge
           .FRMyTRROE
                                                  said he had assigned jail time
                              to assure academic researchers who follow the
                              rules chat "theyare not chumps, fools, or suckers."
       Chronicle
                                          had said that he listed the
       Ho\v c o register      corporations on his grant application in hopes that
                              they actually would become sponsors.

                              But one of the prosecutors charged that
                              -.
                                       lad inflated the number of research
                              partners to increase his chances of receiving grant
           Change your user
           narne
                              money. N.S.F. officials have said that it's unclear
                              whether the inflation had helped
           Change your        grant proposal to win approval.
           ~~assworcl
                                      .   -    a lawyer for            called
                              the sentencing "ridiculous" and "beyond the pale."
                                           jail term was to begin February 19.
           How to ad\vrtisc
                                           admitted having used false
           Privacy policy
                               information to obtain grants for the university's
                                 -                                              1
                                            - which he managed. He was
                              removed as the center's director two years ago,
           Help               after charges against him were first made, but has
                              continued working as a professor there.
e Chronicle: View results
'.
 ._                         continued working as a professor there.

                            The sentence prohibits him from using federal
                            grant money for the next three years.

                            University officials have said they are unsure what
                            implications the sentencing would have on
                                        ~ntinuedemployment by the
                            institution.


                            http://chronicle.com
                            Section: Short Subjects


                             Find that book and buy it
                             chronicle.mm/books
NOV 13 '98    12:SfPfl USAO-'-Y,'MIWL-WL~


                                              U. S. Department of Justice
                                               United Swtes Arcorrrey
                                               Werrern District of wisconsin
                                              Suite 200, CiQ S~atlon                     6081264-5158
                                              660 W. WashingronAwnue
                                              P.0. Box ISUS
                                              Madison, WI 53701-1585
                                              November 3, 1998



                   zj
  Attorney at Law

   Madlson, WI 53703


  ~ t t o r n eat~~ a w.

  Milwaukeel WI 53202-3602

          Re:                               -

  Dear Counsel:



          The purpose of thls letter Is to reduce to writlng a proposed plea agreement
   between the defendant and the United States relating to the above-captioned case,
  The defendant has agreed to plead guilty to Count I of the information which charges a
  violation of Title 18, United States Code, Section 1003. This statute carries a maximum
  possible penalty of one year in prison, a one hundred thousand'dollar fine and a $25,00
  special assessment. The defendant agrees to pay the crimlnal assessment at or prior
  to sentencing. The defendant understands that the Court will enter an order pursuant
  to 18 U.S.C.  5 3013 requiring the immediate payment of the criminal assessment, In an
  approprlate case, the defendant could be held in contempt of court and receive an
  additional sentence for failing to pay the criminal assessment as ordered by the Court.



        The Unlted States agrees that this gullty plea wlll be in corr~pletesatisfaction of
 all possible crlminal violations which have occurred In the Western District of Wisconsin
 relating to the conduct described in the information' or which were known to the United
 States as of the date of this plea agreement.
              Novernber 3,1998
'            Page*                                                ,



                    The United States agrees to recommend that the defendant receive the
             maximum reduction In the sentenclng guideline calculations for acceptance of
             responsibility, This recommendation is based upon facts currently known to the United
             States and is contingent upon the defendant accepting responsibility according to the
             factors set forth In WSSG 93E1.1. The United States is free to wlthdraw thls
             recommendation if the defendant has previously engaged in any conduct whlch is
         .   unknown to the United States and is inconsistent with acceptance of responsibility, or if
             he engages In any conduct between the date of this plea agreement and the
             sentenclng hearing which is inconsistent with acceptance of responsibility,

                    The Unlted States reserves the right to make whatever comments it deems
             relevant to the sentenclng process, both to the sentencing judge and the probation
             officer.The defendant understands that all relevant conduct as defined in USSG
             51B1.3 will be considered by the sentencing judge in determining the appropriate
             guideline range and resulting sentence.

             CoJJateral..E&cts   and                           ion Concernina Fine



    e                The defendant understands that the United States will recommend the maximum
             fine in this case. The defendant Is free to make any argument concerning penalties.
             The defendant agrees to be voluntarily excluded from receiving federal financial and
             non-financial assistance and benefits as set forth in the attached addendum.



                     The defendant agrees to complete a financial statement and to return It to this
             office prior to the sentencing hearing. The financial statement form is being provided to
             the defendant wlth this letter.

             Challenges to w ~ l i n e s / & p g &

                    The defendant and the United States both reserve the right to comment on, and
             to challenge or support, the guideline computations which will be calculated by the
             probation'officer and the sentenclng judge. The parties may submit evidence, through
             testimony or othewise, to challenge or support the guideline calculations including any
             calculations relating to guideline departures. In addition, the defendant and the United
             States both reserve the right to appeal the sentence imposed, If appropriate, pursuant
             to 18 U.S.C. 5 3742. In the event of an appeal by either party, the United States
             reserves the right to make all arguments it deems appropriate in support of or In
             opposltlon to the sentence imposed by the Court.

    4B
     November 3, 1998
     Page3




            The defendant understands that any guideline computation discussions are not
     part of the plea agreement. The defendant should not rely upon the possibility of a
     particular sentence based upon any guideline computation discussions between
     defense counsel and the United States.



            If your understanding of our agreement conforms with mine as set out above,
    would you and the defendant please sign this letter In the appropriate space below and
    return It to me. By slgnature below, the defendant acknowledges his understanding
    that the United States has made no promises or guarantees regarding the sentence
    which wlll be imposed. The defendant also acknowledges his understanding that the
    Court is not required to accept any recommendations which may be made by the
    Unlted States and that the Court is free to impose any sentence up to and including the
    maxjrnum penalties set out above, subject to those limitations Imposed by the
    sentencing guidelines.


                                               Very truly yours,


                                               United States Attorney
                                                                    -            -      /




                                                                   _-
                                                                             /




                                               By:
                                                I'

    Date                             ,-
                                               skis st ant ~ h i t e dstates Attorney


    Date                                                                                      I


                                              Attorney for the Defendant                      i




    Date

a   TMO: kb
                                              Defendant


    Enclosure
                                         ADDENDUM

        The defendant agrees to be voluntarily excluded, as contemplated In 45 C.F,R. 9
620, from receiving federal financial and non-financial assistance and benefits under
federal non-procurement programs and procurement programs and activities for three
years beginning on January 31, 1999. During the three-year voluntary excluslon period,
the defendant wlll not recelve or be supported by any funds from, or serve as Principal
Investigator (hereafter PI) or co-PI for, nor have primary flnancial or adrninlstrative
responsibility, substantive flnancial or adrnlnistrative control over, or critical financial or
administratlve Influence on, a grant, contract, or ~00p0fativeagreement, or any associated
lower-tier transaction as deflned in 45 C. F.R. ยง 620.1 10, wlth any agency of the Executive
Branch of the federal government, Violation of this agreement shall be grounds for
debarment under 45 C.F.R. 5 620 in addition to any other remedy. The defendant
understends that hls name will be added to General Services Administration government-
wide list of debarred/voluntarily excluded indlviduals for the three-year voluntary exclusion
period.                                                                @




      This agreement does not prohiblt the defendant from conducting research,
supervisinn the research of students, or collaborating wlth others conducting research, in
th6  V   I -. ., - --.
             ~   ~   .   ~              or its successor(s)
 - -.  .-. .        -                        or its successors(s) "'  - 0; anywhere else--so
                                                                           '



long as he does not serve es PI or &PI for, nor have primary financlal or administrative
responsibility for, substantive financial or administratlve control over, or critlcal financial or
administratlve influence on, research supported by a grant, contract, or cooperative
agreement, or any associated lower tier transaction, with any agency of the Executive
Branoh of the federal governrnent.

       This agreement is.In no way meant to otherwise prohibit or restrict the defendant
from fully performing his duties as a Professor of                     - --. - .Y          at the
        ..       ...- - -.--a A!---
                             1-
                                                                      ,\


                                     Thls agreehent has no affect whatever on the a;thority
                                       ?as over the defendant's activities--so long as the
defendant does not serve as PI or co-PI for, nor have primary financial or administrative
responsibility for, substantive flnancial or administrative control over, or critical financial or
adrninlstrative influence on, research supported by a grant, contract, or cooperative
agreement, or any associated lower tier transaction, with any agency of the Executive
Branch of the federal government.

       This agreement does not prohibit the defendant from applying for funding from any
agency of the U.S. government before this agreement has expired, provided that (1) the
existence of this agreement Is disclosed as requlred by the funding agency, and (2) the
starting date of the funding is after the expiration of this agreement.