Feds settle with man to pay $635K for making false statements to get grants

A Davis man will pay $635,000 in a civil settlement to resolve allegations of making false statements to a national institute to get smallbusiness research grant money, a U.S. Department of Justice official said.

In a press release issued Monday, the Acting U.S. Attorney for the Eastern District of California, Phillip A. Talbert, said Owen Hughes, owner of Eon Research Corp. in Davis, agreed to pay the United States the six-figure sum to settle allegations of knowingly submitting false statements to the National Institute of Environmental Health Sciences to receive the taxpayer money.

According to court documents, in 2007, Hughes applied for and received a smallbusiness innovation research grant to conduct environmental research, certifying that he had established financial safeguards to make sure the money would be used properly, Talbert indicated in the prepared statement.

Despite his certifications, Hughes had no financial policies in place, he said, adding that, as a result, Hughes could not substantiate how he had actually used the federal money he received.

The settlement also resolves claims that Hughes commingled grant money with his personal accounts, then used the commingled cash for his aviation hobby by paying aircraft hangar rental fees and buying aircraft parts.

“This settlement sends a clear message that recipients of federally funded grants must strictly adhere to the regulations applicable to those grants and fully account for their use of federal funds,” Talbert said. “Recipients who fail to do so risk significant consequences.”

“Establishing required financial policies is a key component to proper accounting of SBIR grants,” added Steven J. Ryan, special agent in charge for the Office of Inspector General of the U.S. Department of Health and Human Services.

“It is vital that agencies work together to hold grantees accountable for the use of taxpayer funds,” said Lori Pilcher, regional inspector general for audit services at the HHS. “In this case, using forensic tools, our auditors identified suspicious grant disbursements” and worked with federal investigators to settle the matter.

The National Institute of Environmental Health Sciences is a component of the National Institutes of Health, itself a component of HHS.

The case stemmed from an investigation by the HHS Office of the Inspector General.

Assistant U.S. Attorneys Colleen Kennedy, Rachel Muoio, and Steven Tennyson handled the matter for the United States.