From the Wall Street Journal – University to Pay Millions in Fraud Suit

This article relates directly to the type of things we help our clients AVOID.  This is a Top 10 Accounting Mistake, make no doubt.  –Tom Pistone

Northwestern University agreed to pay nearly $3 million to settle claims that a former cancer researcher fraudulently used federal grant money for personal expenses, including food, hotels and airfare for family trips between 2003 and 2010.

The settlement in the civil suit was unsealed Tuesday by the U.S. Attorney for the Northern District of Illinois, which investigated claims brought by a whistleblower under the False Claims Act.

Northwestern, which is in Evanston, Ill., cooperated with the investigators and didn’t admit to any wrongdoing, according to a statement by the university…

The researcher, Charles L. Bennett, was co-director of Northwestern’s Robert H. Lurie Comprehensive Cancer Center and a professor at its Feinberg School of Medicine, according to the settlement agreement. He left Northwestern in 2010 and is now director of the Center for Medication Safety and Efficacy at the South Carolina College of Pharmacy.

James M. Becker, an attorney for Dr. Bennett, said, “We deny the allegations.…We are actively engaged in discussions to resolve the allegations.”

At the time of the alleged fraud, Dr. Bennett was the principal investigator on research funded by the National Institutes of Health, studying adverse drug events, multiple myeloma, a blood disorder known as thrombotic thrombocytopenic purpura, and quality of care for cancer patients.

According to the settlement agreement, he allegedly billed federal grants for family trips, meals and hotels for himself and friends, and for “consulting fees” for unqualified friends and family. Northwestern also allegedly improperly subcontracted, at Dr. Bennett’s request, with various universities for services that were paid for by the NIH grants.

“Allowing researchers to use federal grant money to pay for personal travel, hotels, and meals and to hire unqualified friends and relatives as ‘consultants’ violates the public trust and federal law,” U.S. Attorney Gary S. Shapiro said in a statement.

The allegations were investigated by the NIH, Federal Bureau of Investigation, U.S. Department of Health and Human Services Office of Inspector General and the U.S. attorney’s office.

The whistleblower, Melissa Theis, worked as a purchasing coordinator in the Feinberg school’s department of hematology and oncology, processing invoices when she “noticed some red flags,” according to her attorney, Linda Wyetzner, of the Evanston firm Behn & Wyetzner Chartered.

The federal False Claims Act allows private citizens who allege government programs are being defrauded to file actions on behalf of the government and receive a portion, usually 15% to 30%, of any recovered damages. Ms. Theis will get $498,100 in settlement proceeds, according to the agreement. She left Northwestern and is working in an unrelated field, her attorney said.

Dr. Bennett is a well-known researcher on cancer, hematology and drug safety. He has been the principal investigator on numerous research projects funded by the NIH, the Veterans Administration, the American Cancer Society and private industry, and he has published more than 200 peer-reviewed articles, according to a biography on the website of the National Cancer Institute, where he served as a project investigator.

NIH awards millions of dollars in research grants annually. Expenses can be generally allocated to a grant only if they advance the grant’s work or are necessary to the grantee’s operation, according to the NIH website.

As reported in the Wall Street Journal by Melinda Beck on July 30th, 2013.

View her Stream at:  http://stream.wsj.com/story/latest-headlines/SS-2-63399/SS-2-290451/

Write to Melissa Beck at HealthJournal@wsj.com

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