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Press Release

Davis Man Pays $635,000 in Civil Settlement to Resolve Allegations of False Statements to Obtain Grant Frauds

For Immediate Release
U.S. Attorney's Office, Eastern District of California

SACRAMENTO, Calif. — Owen Hughes, the sole proprietor of Eon Research Corporation in Davis, agreed to pay the United States $635,000 to resolve allegations that he knowingly submitted false statements to the National Institute of Environmental Health Sciences to secure Small Business Innovation Research grant funds, Acting U.S. Attorney Phillip A. Talbert announced.

According to court documents, in 2007, Hughes applied for and received a Small Business Innovation Research grant to conduct environmental research, certifying that he had implemented financial safeguards to ensure the proper use of grant funds.

The settlement resolves allegations that despite his certifications, Hughes had no financial policies in place. As a result, Hughes could not substantiate how he had actually used the federal funds he received. The settlement also resolves claims that Hughes commingled grant funds in his personal accounts and then used the commingled funds 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,” Acting U.S. Attorney 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. Therefore, it is imperative that individuals and entities implement sound policies to avoid mismanagement of these limited funds,” said Steven J. Ryan, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Working with our auditors and law enforcement partners, we will continue preserving the integrity of all our grant programs.”

“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 U.S. Department of Health and Human Services. “In this case, using forensic tools, our auditors identified suspicious grant disbursements and partnered closely with investigators and the United States Attorney’s Office throughout the investigation.”

The National Institute of Environmental Health Sciences is a component of the National Institutes of Health, which is itself a component of U.S. Department of Health and Human Services.

This case was the result of 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. The claims settled by this agreement are allegations only, and there has been no determination of liability.

Updated March 29, 2021