News and Press Releases

Former Penn State Professor Charged in $3 Million Federal Research Grant Fraud Pleads Guilty

FOR IMMEDIATE RELEASE
February 21, 2012

     The United States Attorney's Office for the Middle District of Pennsylvania announced that a former Penn State professor charged with a $3 million federal research grand fraud pleaded guilty today to all counts contained in the felony Information today in federal court before United States District Court Judge Christopher C. Conner, in Harrisburg.

     According to United States Attorney Peter J. Smith, on January 31, 2012, Craig Grimes, age 55, of Raleigh, North Carolina, was charged in a three-count felony Information with wire fraud, false statements, and money laundering. During the time period alleged in the Information, Grimes resided in Boalsburg, Pennsylvania, and was a Professor of Material Science and Engineering at The Pennsylvania State University.

     The Information charged that between June 30, 2006, and February 1, 2011, Grimes defrauded the National Institutes of Health ("NIH") of federal grant monies. The NIH, a component of the United States Department of Health and Human Services, provides funding for medical research through grants.

     Grimes, acting through his solely-owned company, SentechBiomed, State College, PA requested a $1,196,359.00 grant from NIH to perform research related to the measurement of gases in a patient's blood. The measurement of these gases was purported to be relevant to detecting the presence of a disease in infants known as necrotizing enterocolitis.

     In the application, Grimes specifically represented to NIH that he would direct approximately $509,274.00 to the Hershey Medical Center to conduct clinical research on adult and infant subjects. The money was never paid. Instead, the grant funds were misappropriated, in part, by Grimes for his own use. The clinical studies/trials were not performed.

     Count II of the Information charged Grimes with making false statements to the United States Department of Energy in connection with a second federal grant. In August 2009, Grimes, while a PSU professor, completed a grant application seeking a $1,908,732.00 grant from the Advanced Research Projects Agency - Energy(ARPA-E) which was created to foster research and development of energy-related technologies. The ARPA-E grant was funded by the American Recovery and Reinvestment Act.

     ARPA-E seeks to avoid funding research already funded by other government and private entities. It requires applicants for grants to disclose other funding sources. In the application Grimes completed and had submitted to ARPA-E, he allegedly stated there was no other funding, when, in fact, he had received a grant from the National Science Foundation.

     Count III of the Information charged Grimes with money laundering the proceeds of the fraudulent proceeds he received from the National Institutes of Health.

     Grimes faces up to 20 years in prison and a fine of $250,000. A sentencing date has not yet been scheduled.

     According to U.S. Attorney Smith, "The investigation of irregularities in the administration of federal university research grant programs is on-going. Anyone with information concerning suspected research fraud should contact the Office of Inspector General for the appropriate federal agency or the U.S. Attorney's Office."

     Fraud related to U.S. Department of Energy may be reported to: (800) 541-1625.

     Fraud related to U.S. Department of Health and Human Services, including U.S. National Institutes of Health, grants and programs may be reported to: 1-800-HHS-TIPS (1-800-447-8477).

     Fraud related to U.S. National Science Foundation grants and programs may be reported to: 703-292-7100.

     The investigation is being conducted by special agents of the Department of Energy, Office of Inspector General, the National Science Foundation, the Department of Health and Human Services, and the IRS. Prosecution is assigned to Assistant United States Attorney Joseph J. Terz.

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