Published on:

Laser Technology Firm Settles Allegations It Violated the False Claims Act by Improperly Using Foreign Subcontractors on Federally Funded Research Projects

iStock-1136317631-1-300x200The hiring of the subcontractors by Vescent Photonics allegedly violated conditions on the use of Small Business Innovation Research (SBIR) grant funding.

Laser manufacturer and military contractor Vescent Photonics Inc. has agreed with the U.S. Department of Justice to pay $400,000 to resolve allegations it violated the False Claims Act by improperly employing foreign subcontractors on research projects funded by U.S. government grants.

SBIR program grants

According to the Justice Department, Vescent, which is based in Colorado, hired foreign nationals located outside the United States to conduct research using grant funds it received through the federal government’s Small Business Innovation Research (SBIR) program.

The SBIR program issues grants to fund private-sector “seed” or early-stage research and development projects. It is intended to support scientific and technological innovation in the U.S. economy and promote the commercial application of research results. However, SBIR eligibility rules require that all work be performed in the United States.

Despite this, Vescent, a laser technology manufacturer and federal military contractor, allegedly certified its compliance with program requirements while using overseas subcontractors for U.S. Air Force and NASA SBIR projects.

Grant fraud and the False Claims Act

The False Claims Act imposes significant liabilities on parties who knowingly defraud the federal government or its agencies. Under the statute’s qui tam provisions, private parties known as whistleblowers or relators can sue violators on the United States’ behalf and receive 15-30% of the lawsuit’s proceeds as a reward.

Grant fraud is a serious offense that falls within the False Claims Act’s purview. Potential grant-fraud whistleblowers should be alert to potentially actionable misconduct, including grant recipients making false statements in applications or extension or renewal documents, reporting fraudulent research data or results, or using grant funds for prohibited or unauthorized purposes.  The Vescent case serves as an example of the consequences of violating the False Claims Act and the type of misconduct to which potential grant-fraud whistleblowers should be alert.

Call a whistleblower attorney

If you know of parties engaged in grant fraud or otherwise defrauding an agency of the U.S. government, it is important to speak with an experienced whistleblower lawyer about your rights under the False Claims Act. Reach out to grant fraud whistleblower attorney Mark A. Strauss for a free consultation. All communications are confidential and attorney-client privileged, even you do not ultimately become a client.

Importantly, you must file a False Claims Act lawsuit to be eligible for a qui tam whistleblower award. Simply reporting fraud to a government agency or tip line will not suffice.