SBIR Fraud and Your Institution

Transcription

1 SBIR Fraud and Your Institution Paul J. Coleman Affiliate, Georgia Tech Department of Internal Auditing September 30, 2015 January 2014, Ames IA Former University Professor of over 30 years Pleads Guilty to 2 Felony Counts 1 False statements related to NSF SBIR 2 False statements to University related to travel and Materials & Supplies Company returned $125,000 to NSF and Professor pays $20,000 in restitution August 2014, Houston TX Two University Professor face 29 Count Indictment for False Statements to SBIR Programs at 1 NSF, NASA, DOE and USAF 2 Accused of falsely obtaining over $1.3 Million Charges include Wire Fraud & Conspiracy. 1

2 September 2014, Baltimore MD University Professor Sentenced to 3 years Prison and 3 years supervised release after conviction in Federal Trial for 1 False statements related to NSF SBIR 2 Kick backs from University students for Graduate stipends Ordered to pay $105,000 in restitution. November 2014, Rapid City SD Small Business Owner convicted of filing False Claims to receive SBIR Grant Money from NSF. 1 Owner received over $100,000 2 All the research was performed by a Local University The owner kept all the grant funds for personal use. January 2015, Philadelphia PA University Professor and Wife indicted for Fraud related to NASA s SBIR Program 1 Professor falsely registered company in Wife s name to receive SBIR funds 2 Company Subcontracted with the Professor s University Lab. Company did no work but kept most of the SBIR money from NASA. 2

3 Federal R&D by Agency DOD $78.7 Bil (S&T $13.5 Bil) Health & Human Services (NIH) $31 Bil Department of Energy $11 Bil NASA $9.4 Bil NSF $6.7 Bil USDA/DOC(NOAA&NIST)/DHS $5 Bil DOI(USGS)/EPA/DoED/DOT $3 Bil SBIR and STTR Programs Federal agencies with extramural research and development (R&D) budgets that exceed $100 million are required to allocate 2.8 percent of their R&D budget to fund awards to Small Businesses. Currently, eleven Federal agencies participate in the program: DOD, NIH, DOE, NASA, NSF, USDA, DOED, EPA, DHS, DOT, DOC NIST/NOAA. 21 Billion in SBIR/STTR Funding Phase I 6 month/$150,000 commercially viable projects Phase II 2 years/$1mil to produce a prototype Phase III Commercialization of the product, some agencies provide non SBIR funding Many States Provide matching funding based on awards Projects are to Stimulate Technological Innovation/Foster Technology Transfer and Commercialization. 3

4 SBIR/STTR Program Eligibility For Profit business within the US with less than 500 employees. PI must be primarily employed by the Business during the SBIR award, excludes fulltime employment elsewhere. Small Business must do 2/3 of work for Phase I and 1/2 of work for Phase II. STTR equal between Business and University. Where are the Problems Undisclosed Financial COI by researchers SBIR work conducted at Your Institutions Theft or Embezzlement schemes Purchase Card Fraud False Invoices/Vendor & Consultants Travel Fraud Payroll & Stipend Fraud Policy on Grantee Conflict of Interest (COI) Encourages involvement with industry and private entrepreneurial ventures. Recognizes risk. Requires a written and enforceable COI Policy. Conflicts must be managed, reduced or eliminated. Conflicts that can not be managed must be reported. 4

5 Institutional COI Policies Require Investigator to disclose significant financial interests (self, spouse, children) prior to award and recertify annually: Interests that reasonably appear to affect the grant research or educational activities; Or, in entities whose financial interests would reasonably appear to be effected by the activities funded by the grant. COGR/AAU Defined COI as The term individual financial conflict of interest in science refers to situations in which financial considerations may compromise, or have the appearance of compromising, an investigator s professional judgment in conducting or reporting research. Financial Interests in Research AAMC AAU Managing COI Payments (or gifts) for Consulting Fees, Honoraria, Travel, Service as an officer, director, or board member; Equity interests (stock or stock options) in a non publiclytraded or public traded company (except diversified mutual funds); Royalty income or right to future royalty; Excessive Bonus or milestone payments. 5

6 SBIR & Your Institution SBIR/STTR subcontract to institution/to your researchers. Contracts/Agreements need to be finalized by OSP & Potential Conflicts need to be disclosed & managed. Small Business Incubation / Technology Transfer/ Patent Licensing Offices need to be part of the process. Researchers/Post Doc/Grad Students who start their own SBIR Company need to be aware of institutional policies. What can go wrong wasted time University researchers submit support letters in SBIR proposals but no contracts signed. University research reported to Federal Agencies as company research. SBIR company refuses to pay the university for research provided under contract. Federal Agents with Subpoenas to your institution. When it goes Seriously Wrong Researchers use institutional resources to conduct work for SBIR Company without approval. Researcher starts SBIR company and misuse Post Docs and Grad Students to conduct research without approval. Criminal Investigation identify false charges to the University research accounts and false SBIR reports submitted to Agencies from Company. 6

7 Best Practices to Protect Institution Researchers must disclose interests (COI Process)as SBIR Company owner/consultant/subcontractor. COI Mitigation plan must be put into place to protect subordinates, students and resources. OSP must be consulted and contracts finalized for all SBIR/STTR research conducted. Technology Transfer office consulted to ensure that all University technology is licensed. Questions and Comments