Sterling Biomedical: Capacity Claims and a Project Reported Complete

Sterling Biomedical and its president and CEO agreed to pay $200,000 to resolve allegations of false grant capacity claims and a project not performed as described. The government alleged that the executive misstated the company’s size, assets and ability to conduct research, then told the National Science Foundation that funded research was complete. An insider who knew the company’s resources or worked on the project could see the distance between those representations and the work itself.

Sterling was a biotechnology company in Lynnfield. The U.S. Attorney’s Office for the District of Massachusetts announced the False Claims Act settlement on September 21, 2015, together with the National Science Foundation’s inspector general.

Company Size, Assets and Capacity to Perform

The government’s capacity allegations concerned what Sterling’s president and CEO said in proposals submitted to the National Science Foundation. He allegedly misrepresented the size and assets of the business and its ability to perform the proposed research.

For someone inside a research business, the useful comparison is specific. What resources did the proposal say the company had? What research did it say those resources would support? The people preparing the proposal and the people expected to do the work may see different sides of the same promise. We connect their knowledge to the statements submitted to the agency.

The stakes extend to other researchers competing for the funding. In announcing the settlement, the U.S. Attorney described falsified information as a way to gain an advantage over deserving applicants. The NSF inspector general said the alleged scheme diverted scarce research dollars from advancing new technologies. We see the unfairness plainly: a false account of what a business can do competes against another applicant’s honest account of its resources.

A Project Reported Complete

The government alleged that Sterling’s president and CEO failed to perform the funded research as described for one grant, then falsely represented to NSF that he had completed it. The later completion claim is what connects the proposed work to the account the agency received afterward.

That sequence matters to a scientist or project employee who knows what actually happened. Comparing those statements with the project’s actual work makes the discrepancy concrete: what was promised, what was done and what was reported.

We would examine the completion representation alongside the funded research description and the work that supported it. Who prepared the account sent to the agency, and what information did that person have?

That is the problem with a paper finish line. For an insider concerned about false grant performance certifications, knowledge of the actual project gives meaning to the words on the final report.

NSF Funding and the Civil Settlement

Sterling received $539,000 in National Science Foundation grant funding between 2009 and 2011. We see the gap: the joint settlement was smaller than the funding the company received.

Sterling and its president and CEO also agreed not to apply for National Science Foundation funding for five years.

Research Claims and the Records Behind Them

Sand 9’s SBIR grant case concerned allegedly false accounting and timekeeping assurances, paralleling Sterling’s alleged misrepresentations about the resources supporting its research.

Like Sterling’s completion allegation, allegations that The Scripps Research Institute charged existing grants for work on new applications and other activities turn on whether the reported work matched the work performed.

The Evidence Behind a Capacity or Completion Claim

An insider’s contribution is knowing which statement conflicts with what happened inside the company.

The person who prepared a proposal may know the basis for its claims about company size and assets. Someone involved in the research may know whether the work described to the agency matches the project. Someone responsible for reporting may know what information reached the person making the completion claim.

Our work is to connect those views to particular statements and payments. A general concern about the business becomes much more useful when the insider can explain which proposal statement or performance report was false and who knew the underlying facts.

A Whistleblower’s Share of the Recovery

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. That whistleblower reward recognizes the value of information that connects a false representation to government money. We work alongside research insiders to build the case around the project they know, from the first conversation through our partnership with research grant fraud whistleblower lawyers.

You Know What the Project Actually Produced

If a proposal described resources the business did not have, or a report claimed research was complete when you knew otherwise, speak to one of our Whistleblower Experts about what the project really produced. We build your grant fraud case with you and bring in research grant fraud whistleblower lawyers who understand capacity claims and performance reporting. We bring the judgment and partnership to pursue your strongest grant fraud whistleblower case alongside you.