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Public College and Former Professor Pay $575K to Settle Whistleblower Lawsuit over Misuse of Federal Grant Funding for Vacations, Bonuses, Outside Research

iStock-535434995-1-300x300A postdoctoral research staff member discovered the fraud and filed a whistleblower lawsuit under the qui tam provisions of the False Claims Act.

New York City public university Hunter College and the former director of its HIV studies center have agreed to pay a combined $575,000 to settle allegations they violated the False Claims Act by knowingly misusing National Institutes of Health (NIH) grant funding while falsely certifying their compliance with federal requirements.

The case, initiated by a qui tam whistleblower, alleged that former Hunter psychology professor Jeffrey Parsons-Hietikko improperly diverted tens of thousands of dollars in NIH grant funds to pay for personal expenses and to compensate HIV studies center staff for unrelated projects.

The whistleblower, a Hunter postdoctoral staff member, received $120,750 from the settlement as an award.

False certifications, use of NIH funds for improper purposes

According to the U.S. Department of Justice, Parsons-Hietikko extensively used NIH grant funds to cover personal expenses, including scuba diving adventures in the Cayman Islands, the Dutch Antilles, Cuba, Costa Rica, Fiji, Cozumel, and Belize. He also allegedly sought and obtained reimbursement from NIH grant funds received by Hunter to pay for his 50th birthday celebration in Puerto Rico, and for airfare for his family to travel to South Africa.

In addition, Parsons-Hietikko used NIH grant funds to support his private consulting work, the government alleged. For example, while being reimbursed by private clients for travel in connection with consulting projects they commissioned, Parsons-Hietikko fraudulently obtained duplicative reimbursements from NIH grant funds, which he pocketed as a “windfall.”

Hunter also allegedly improperly used NIH grant funds to pay Parsons-Hietikko $90,000 in retention bonuses.

Additionally, Hunter and Parsons-Hietikko allegedly submitted false timekeeping records to the NIH misrepresenting the time that Hunter staff spent on NIH related projects. This resulted in the improper use of NIH grant funds for work conducted on behalf of private clients.

While doing so, Parsons-Hietikko and Hunter repeatedly submitted certifications and re-certifications to the NIH and the U.S. Department of Health and Human Services (HSS) falsely attesting that the grant funding was only being used for authorized research and academic purposes in compliance with federal rules and regulations. Specifically, they allegedly falsely classified travel and other expenses as Facilities and Administrative (F&A) costs—referred to as “Indirect Costs”—properly chargeable under the grants when, in fact, the expenses in question did not qualify as “Allowable Costs” under NIH rules. They also allegedly falsely represented personal travel expenses as being grant-related and for academic or research purposes when they were not.

Significantly, Hunter and Parsons-Hietikko admitted to the substance of the allegations in their settlements with the Justice Department.

Former distinguished professor

Parsons-Hietikko was formerly a star psychology researcher at Hunter who was known for studying sex and drug use in the gay and bisexual communities and risks for transmitting HIV. Hunter’s HIV studies center, founded by Parsons-Hietikko in 1996, focused on identifying and promoting strategies to curb the spread of HIV and improve the lives of people who had the infection.

Between 1996 and 2018, Parsons-Hietikko secured an estimated $55 million in NIH grants, making him one of Hunter’s top research funding generators, according to the whistleblower’s complaint, which was filed in August 2019.

The government, which intervened in the case in January 2021, alleged that Hunter provided Parsons-Hietikko with numerous perks, including discretionary spending accounts, and allowed him ample leeway to charge for personal entertainment.

The False Claims Act and grant fraud

Federal agencies provide billions of dollars a year in grant funding to universities, nonprofits, and state and local governments. Bad actors commit grant fraud by knowingly including inaccurate information in grant applications, falsifying research results, misrepresenting how grant funds will or have been spent, falsely certifying compliance with grant program requirements, or using funds for personal expenses or other inappropriate or unauthorized purposes.

Such misconduct violates the False Claims Act, which imposes substantial liabilities on parties who knowingly submit false claims for payment to the U.S. government or its agencies. The False Claims Act authorizes private parties known as whistleblowers or qui tam relators to initiate lawsuits on the government’s behalf. The government may decide to intervene in the case.

Fraud against the U.S. government—including grant fraud—harms the public at large. The Justice Department relies on False Claims Act whistleblowers to expose fraud which otherwise would be difficult or impossible for agencies to detect. Whistleblowers are generally entitled to 15-30% of any recovery as an award.

Speak to a False Claims Act whistleblower attorney

If you know of grant fraud or other type of fraud against the U.S. government or its agencies, it is important to speak with an experienced whistleblower attorney. To receive a whistleblower award, you must file a qui tam lawsuit. Simply reporting the wrongdoing through an agency tip line is not sufficient.

Reach out to grant fraud whistleblower attorney Mark A. Strauss for a free consultation. Communications are protected by the attorney-client privilege and are confidential.