Conflicts, Concealment, Convictions, Cost The real impact and cost for undisclosed Conflicts

March 2013 Paul Coleman, CFE, Sr. Special Agent National Science Foundation Office of Inspector General Office of Investigations

National Science Foundation Conflict of Interest (COI) Policy Encourages involvement of researchers and educators with industry and private entrepreneurial ventures. Recognizes such interactions carry an increased risk of conflict of interest. Requires Grantee Institutions (with over 50 employees) to have a written and enforceable COI Policy. Conflicts must be managed, reduced or eliminated prior to the expenditure of grant funds. Conflicts that can not be managed must be reported to NSF.

Institutional COI Policies Require Investigator to disclose significant financial interests (self, spouse, children) prior to award and recertify annually: Interests that reasonably appear to affect the grant research or educational activities; Or, in entities whose financial interests would reasonably appear to be effected by the activities funded by the grant.

COGR/AAU Defined COI as The term individual financial conflict of interest in science refers to situations in which financial considerations may compromise, or have the appearance of compromising, an investigator’s professional judgment in conducting or reporting research.

Financial Interests in Research AAMC-AAU Managing COI Payments (or gifts) for Consulting Fees, Honoraria, Travel, Service as an officer, director, or board member; Equity interests (stock or stock options) in a non-publicly-traded or public-traded company (except diversified mutual funds); Royalty income or right to future royalty; Excessive Bonus or milestone payments.

TN Univ Education Grants 1996 – NSF awards LSC Grant for Hands on Science Training. PI was Director of Education Center – PI and her Assistant start Hands on Science Training Company 2000 – NSF awards USP Grant to public school district, sub to university, Center Director as PI 2001 – NSF awards Research Grant

Allegations – Funds used for Private Consulting Activities 2002 – School district ends USP Grant; terminates relationship with Center Director – OIG opens investigation, reviews School records, finds NSF USP grant funds paid to Center Director as consultant. OIG & University Internal Auditor reviews records for NSF grants under the PI. PI & Assistant interviewed, served subpoena.

Failure to Disclose Conflicts 2000 – PI submitted disclosure and did not disclose company or $4300 payments – PI submitted disclosure and did not disclose company or $5600 payments – PI failed to disclose $30,500 from school and $18,300 from company – PI failed to disclose $4300 from school and $36,000 from company.

Findings – Funds used for undisclosed Business Activities PI signed university financial disclosure statements from 2000 to 2003 that failed to disclose $100,000 earned from consulting relationship with school and company. Determined that PI and her Assistant diverted NSF and university funds, $44,000, to pay expenses for private consulting work.

Significant Developments After Referral to US Attorney – 2005 PI’s Assistant dies, investigation focuses on PI personal gain, concealment of interests. PI disclose collaboration with MNPS but not payments. Disclosures were partial. Identified a restricted university account for Hands-on Science Supply containing $3 million from local school districts.

Significant Actions and Federal Indictment – 2006 February, PI retires from university and a new Center Director takes over Grants as PI. May, university returns $3 mil to local school districts for Science Training Programs. September, PI indicted for Mail and Wire Fraud for using of grant funds to pay for travel & private consulting activities.

Case Resolution – 2007 PI entered Guilty Plea to a federal felony charge of making False Statements. Sentenced to 6 months home confinement; Two years of supervised probation; Ordered to pay restitution of $29,595. NSF issued a government wide Debarment of PI from federal programs for 5 years.

School Superintendent Case July 2007, University Auditor reported: CA Site Director on research grant received duplicate travel reimbursements from university & his School District in CA. Superintendant retired from School District in August 2007 and accepted temporary position at local university campus.

Superintendant’s Grant Experience 1996 NSF Grant – LSC Science Education 2001 NSF Grant – LSC Math Education 2001 NSF/TN Univ – Research Site Director 2004 DoED Grant – Science Ed-CaMSP Collaborator with two Professors of Education CA University on various state grants and Education Consultant and Guest Speaker

Initial Investigative findings Former Superintendent failed to disclose various outside activities and payments: TN Univ. Payments for salary and travel related to CA research site from NSF grant. Travel, honoraria, consulting payments for speaking and outside education activities. CA Univ. payments from various grants and sub-awards transferred from school district.

Undisclosed Consulting and Duplicate Travel Payments 68 Duplicate payments to the superintendant all charged to the School District which duplicated 27 other institution. 11 Duplicate payments to his Science Center staff, all cash returned to Superintendant. $60,000 in duplicate travel payments $70,000 in consulting/speaking fees.

Undisclosed and Fraudulent TN University Salary Payments Salary as CA Site Director from 2002 to $150,000 (2006 & $50,000) Salary to family friends in 2006 & 2007 for processing student testing data - $46,000 Salary to superintendent’s son from 2005 to 2007 for teacher videos $24,000 Payments in 2003 through consultant to the Superintendent for test data - $20,000

Data submitted under the Research Grant Between 2006 and 2008, $2,095,596 was expended by TN Research Team on the NSF Research Grant. In 2006, Superintendent, as the CA Site Director, provided student data. In April 2007, student data was published claiming that the Superintendant’s special Hands-on-Science method produced the highest gains in state student test scores, above the state proficiency level.

Falsification of Research Data In 2008, the TN Research Team conducted site visit to 5 school districts in CA and found: Research design and protocols were not followed and misrepresented; CA student test scores from the Superintendent’s schools were altered. Student test scores form four other school districts in CA were questioned. Investigation compared test scores from all 5 school districts to the superintendent’s data.

% of these scores were false, 39% fabricated and 54% altered.

56 % of these scores were false, 3% fabricated and 53% altered.

real 4.6 real 5.1 real % of these scores were fabricated or altered.

Falsification of Data for Kit- Based and SGI Raw Scores 55% of Kit-Based scores were false, 3% fabricated and 52% altered. 67% of SGI scores were false, 7% fabricated and 60% altered. A fake SGI score of 6.02 was above the California proficiency level of 6.0.

Falsification of Data for Text- Based Raw Scores Results were falsely reported to be from 5 th grade students taught without kits. 7 of 10 classes were fabricated, listing names of 6 th grade students from other schools. Of the 3 remaining classes, 87 % of scores were false.

Superintendent’s Associations with CA University Staff Collaborated on grant projects, publications, and presentations with two Education Professors, one was Assistant Dean at the local campus. Superintendent, as PI on NSF and DoEd Grants transferred funds to the local school district. Education Professor was PI on university sub-award and was Co-PI on the NSF Grant proposal. Assistant Dean was PI on DoEd sub-award. Grant payments by university Grant Coordinator.

Superintendent’s Undisclosed Conflicts with NSF Grant Recommended to Board that NSF funds for research and teacher stipends be transferred to CA Univ. NSF research funds included salary for Assistant Research Director. Recommended NSF payments for consultant, who also worked as CA university grant coordinator. The Professor and Grant Coordinator initiated NSF salary payments ($78,000) to the Superintendent as Assistant Research Director.

Superintendent’s Undisclosed Conflicts with DoEd Grant Recommended to Board that DoEd funds be transferred to CA university, included salary for Assistant Researcher. Assistant Dean and Grant Coordinator initiated salary payments ($32,000) to the Superintendent as Assistant Researcher. Recommended DoEd payments for company, to conduct external evaluation. Company was owned by Assistant Dean.

Superintendent’s Undisclosed Conflicts with Company Initiated DoEd Grant payments to company totaling $395,000. Asstistant Dean and Professor performed external evaluation receiving $152,250 each. Superintendent was paid $90,000 by Assistant Dean through the company as Assistant Researcher. Company invoices, approved by the Superintendent as PI on DoEd Grant, stated that the $90,000 was for an Assistant Researcher.

CA Univ. Staff Undisclosed Conflicts with Superintendent Assistant Dean, Professor, and Grant Coordinator did not disclose to the university the outside work and payments from the Superintendent. They did not disclose possible conflicts with the Superintendant prior to processing university grant funded salary payments to him. They all resigned or retired from the university in lieu of termination.

Federal Indictments Superintendent was indicted for Wire Fraud and Theft of Program Funds for the submission of duplicate travel voucher and submitting false student test scores to receive fraudulent salary payments from the Research Grant. Superintendent, Assistant Dean and Professor were indicted for conspiracy to commit Wire Fraud and Theft of Grant Funds related to the false salary payments from the NSF and DoEd Grants.

Convictions and Sentencing Superintendent plead guilty to two counts of Wire Fraud, one related to the TN research grant and one related to the CA NSF and DoED grants. Superintendent was sentenced to 10 months confinement, 3 years parole, and ordered to pay $325,000 in restitution. Assistant Dean and Professor plead guilty to submitting False Statements and sentenced to 5 years supervised probation. All ordered not to work in Education.

Cost of this Case CA university paid contractor $130,000 to review grant accounts; determined $800,000 was wrongfully spent from various grants; returned $264,000 to NSF. PI from TN Research Grant: all time & funds expended from 2006 was wasted. Investigation collected over 300,000 documents from 28 different institutions.

Questions? Paul Coleman, CFE, Sr. Special Agent National Science Foundation Office of Inspector General Office of Investigations