The U.S. federal government disburses billions in grants annually to worthy recipients. These awards aim to make life better by promoting research and development, finding new disease treatments plus improving education, infrastructure, housing and much more. Of course, big money attracts fraudsters. Here we examine three main types of schemes and how fraud examiners can prevent and deter grant fraud. We also dissect the government’s latest anti-fraud guidance.
Vesta Brue said she wanted to develop electronic pillboxes customized for HIV and pediatric patients, among others. So, she began her companies, LifeTechniques Inc. and Care Team Solutions LLC, and applied for millions of dollars in federal grants from the National Institutes of Health (NIH). But she lied on applications to get those awards. And then she spent much of the cash on plastic surgery, jewelry, home renovations and massages. She also misused grant money for marketing and promoting her businesses — a blatant violation.
“Ms. Brue defrauded the government in two ways, each of which cost taxpayers,” said U.S. Attorney Kerry B. Harvey in July 2016. “By including false statements in grant applications, her companies received grants to which they were not entitled, thereby depriving qualified small businesses of those funds. Ms. Brue then diverted the funds — which should have been used to develop new healthcare technologies — to support herself and her businesses.”
A U.S. District Court ordered her and her companies to pay a $4.5 million civil judgment. In a related criminal case, Brue pleaded guilty to making a false claim to the U.S. in connection with grants awarded by NIH to her partner’s company, Telehealth Holdings, LLC. She was sentenced to seven months in prison and an additional seven months on home detention.
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