Highlights
Volume 1, September 2003

Civil and Criminal Investigations

Investigation Leads to Guilty Plea and Prison

A researcher was sentenced to a year in prison after pleading guilty to embezzling $202,000 in NSF grant money and other funds. In 1994, a nonprofit organization engaged in scientific research and education activities received a 5-year, $3.8 million grant to enhance local public school teachers' communication of science to their students. The subject was hired to work under the grant as Co-Principal Investigator, and spent the next 5 years embezzling funds and stealing items purchased under the project.

The organization became suspicious of the subject in 1999 and began an internal review. He acknowledged the fraud uncovered by the organization, but did not disclose the full extent of his fraudulent activities, which were subsequently uncovered during the OIG investigation. The organization allowed the subject to continue working on the grant project, though it removed his ability to charge expenditures to the grant and required him to repay the $108,497 over the next 4 years. The organization reimbursed $56,676 to NSF, the portion of the subject's theft attributable to the NSF grant.

After examining all of the organization's records pertaining to expenditures under the NSF grant, we found a large number of suspicious transactions that had not been previously identified by the organization. An extensive interview with the subject confirmed the full scope of his fraudulent activities.

Slightly more than half of the subject's fraud was accomplished by purchasing items with NSF grant funds and other project-related accounts and taking them home for his personal use, thereby committing the crime of conversion. The subject converted literally hundreds of items over a period of five years. He habitually used the VISA card issued to him for the project by the organization as if it were his own, buying expensive clothing and jewelry for his wife, clothing and toys for his children, and household items such as groceries, garden and pet supplies, and hardware.

When the subject purchased items for his personal use that could plausibly be considered as project-related (such as science-related children's books), he accurately identified them on the reimbursement form. For receipts that contained no information about the nature of the store or the items purchased, the subject simply made up explanations that sounded project-related. He also fabricated invoices and receipts when the actual receipt or invoice would reveal that the items were clearly for his personal use. An example is shown below. (for further details see Semiannual Report)

• NSF Employee Refuses to Cooperate With
  Investigation (see Semiannual for Details)

• South Pole Computer Security Is Compromised in
  Three Incidents (see Semiannual for Details)

• Investigation of Cost-Sharing Concerns (see Semiannual for Details)

• Over $100,000 in Grant Funds Are Restored (see Semiannual for Details)

• NSF Places Research Company on
  Cost-Reimbursement Status (see Semiannual for Details)

• Grantee University Works to Develop Sound Internal
  Audit System (see Semiannual for Details)

• NSF Program Assistant Fabricates Jury Duty
  Notice (see Semiannual for Details)

• NSF Proposes Debarment of University Grant
  Administrator (see Semiannual for Details)

 Jul 08, '04