Lehigh University: ArkLight Grant Work Performed in a University Lab

Lehigh University agreed to a $200,000 civil settlement over allegations concerning ArkLight grant work performed in a university lab instead of by the small business that won the awards. For someone who knows the lab, the grant proposal or the subcontract payments, the important comparison is concrete: who promised to do the work, and who actually did it.

The Justice Department’s July 31, 2020 announcement said the arrangement operated without Lehigh’s knowledge. Its allegation against the university concerned inadequate controls to detect and prevent the fraud. The professor and the principal investigator named in the proposals faced a separate criminal case.

How SBIR Work Was Supposed to Be Divided

The Small Business Innovation Research program funds research by American small businesses on behalf of the federal government, with the potential for commercialization. As the Justice Department explained the rules governing ArkLight’s awards, the small business could subcontract part of the research to a university, but had to perform the majority itself.

That division gave the participants different jobs. ArkLight was the small-business applicant. Lehigh agreed to serve as a subcontractor on some of its grants. The proposals represented that ArkLight would do most of the work under its designated principal investigator, the person responsible for leading the scientific and technical effort.

ArkLight received $2,740,000 in grants funded by NASA, the National Science Foundation, the United States Department of the Army and the United States Air Force.

The Professor and the University Lab

Between 2004 and 2013, the professor worked at Lehigh and used ArkLight, his sole proprietorship, to apply for the grants. According to the government’s account, graduate students and others in his university laboratory performed all of the research under his supervision. ArkLight did none of it.

The Justice Department said Lehigh received over $1 million as the nominal subcontractor, against the $200,000 it agreed to pay to settle. The government contended that the university was ineligible for those payments because no small business served as the primary contractor.

We see a small-business program turned inside out in that alleged arrangement: the university supplied the laboratory work, while the small business supplied the name that made the awards possible. The university’s alleged failure was letting the difference pass undetected.

The Principal Investigator Named in ArkLight’s Proposals

ArkLight’s proposals listed the professor’s wife as principal investigator and represented that she would lead the company’s share of the research. The Justice Department said the professor himself was ineligible to serve in that role under the applicable program rules.

On paper she ran the science. The government said he did, from his university lab.

Lehigh’s Compliance Settlement

Lehigh’s settlement addressed alleged weaknesses in its compliance program and required it to follow compliance requirements when applying for federal grants or cooperative agreements. The Justice Department credited the university with improving its existing program after learning of the professor’s fraud.

The related criminal case concerned the professor and the nominal principal investigator. According to the Justice Department’s account of that prosecution, a jury found both guilty of wire fraud.

The investigation involved the NASA Office of Inspector General, the Air Force Office of Special Investigations, the Defense Criminal Investigative Service and the National Science Foundation.

Lehigh also assisted the related criminal investigation and trial by responding to subpoenas and making witnesses available for interviews, according to the settlement announcement. The government’s account distinguishes that cooperation after discovery from the university’s alleged failure to detect the arrangement while the awards were being performed.

The research program allowed a small business to subcontract some work to a university, while requiring the small business to perform the majority itself. In the government’s account, ArkLight’s name remained on the award even though graduate students and others in the professor’s university laboratory performed all the work. The location, supervision and division of the research were therefore central to the funding arrangement, not incidental details about where a successful experiment took place.

What Proof Do You Need as a Whistleblower?

For a case about research assigned to a small business but performed in a university lab, the useful proof connects the proposal’s promises to the people doing the work and the payments made for it. We examine those connections with you, including who supervised the research, what the award assigned to each organization and how the work was charged.

Proposal and subcontract terms describe the intended division. Work reports, time records, payroll and payment records can show how that division operated. Someone in research administration may see the award and the charges. Someone in the laboratory may know who performed and directed the work. We assess how those views fit together when examining representations about grant performance.

The important connection is between the promise that helped obtain federal funding and the work the government actually paid for. That is where a lab employee’s or grant administrator’s knowledge can give a federal grant fraud case its substance.

Other Grant Cases Turn on Who Did the Work

The Scripps Research Institute settlement concerned allegations that faculty time spent on new grant applications, teaching, committee work and administration was charged to existing National Institutes of Health projects without adequate effort accounting. A former employee brought the case. The whistleblower’s complaint described a control that existed on paper but allegedly went unused:

U.S. ex rel. Burris v. The Scripps Research Institute, whistleblower’s complaint, paragraph 103

An unsigned form that nobody follows up on says something concrete about oversight. The allegation concerned a payroll control that failed to establish what work federal grants were paying for.

In the Aquasent grant settlement, the government alleged false representations about principal-investigator employment, facilities, financial management, timesheets and matching investors in National Science Foundation SBIR awards. Those allegations show how the promised research operation can be tested through the people, facilities and records behind it.

Whistleblower Rewards in Federal Grant Cases

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. We work with insiders to assess the research commitments, the charges and the decisions behind them, and build the case with whistleblower lawyers who understand federal research funding.

You Know Who Did the Research

If the small business described in a grant proposal bears little resemblance to the team doing the research, tell our whistleblower experts what you saw. We work beside you to turn your understanding of the lab, the supervision and the funding into a case, bringing in federal grant fraud whistleblower lawyers with the right experience. From the first conversation through the pursuit of a recovery, we stay on your side of the table.