GREENSBORO, N.C. – Bio-Adhesive Alliance, Inc. (Bio-Adhesive) was sentenced yesterday in federal court for false statements made in grant applications submitted to the Environmental Protection Agency and the National Science Foundation, announced Acting U.S. Attorney Sandra J. Hairston.
United States District Court Judge Catherine C. Eagles of the Middle District of North Carolina ordered Bio-Adhesive to pay restitution in the amount of $562,500.00 to the National Science Foundation and $319,199.69 to the Environmental Protection Agency a $800 special assessment, and serve five years of a probationary term. The defendant corporation pleaded guilty in March 2021 to two counts of false statements.
According to court records, Bio-Adhesive was founded in February of 2013 by Employee-1, Employee-2, and Employee-3. Employee-1 is the President and Co-Owner of Bio-Adhesive. At the time of founding until the summer of 2019, Employee-1 was an Assistant Professor in the Applied Engineering and Technology Department at North Carolina Agricultural and Technical State University (“A&T”). Employee-2 is a Co-Owner of Bio-Adhesive and, until the summer of 2019, was an Associate Professor in the Civil, Architectural and Environmental Engineering Department, also at A&T. Employee-1 and Employee-2 are married to each other. North Carolina Secretary of State documents list Employee-3 as the Chief Operating Officer of Bio-Adhesive. Until the summer of 2019, Employee-3 was a graduate student at A&T. At all times relevant herein, Employee-3 was pursuing a Master’s Degree in Civil Engineering from A&T and worked as a Graduate Assistant at A&T.
The Environmental Protection Agency (EPA) and the National Science Foundation (NSF) are federal agencies that participate in set-aside programs for small businesses, including the Small Business Innovative Research (SBIR) Program and the Small Business Technology Transfer Program (STTR). SBIR supports federal research and development (R&D) with potential for commercialization of the developed product, and STTR expands funding opportunities in the federal innovation R&D arena. The programs require that applicants establish the technical merit, feasibility, and commercial potential of proposed R&D efforts in Phase I. In Phase II, the awarding agency must determine the quality of performance of the small business awardee organization in Phase I and the potential of the proposed project prior to providing further federal support.
Bio-Adhesive applied for and received multiple STTR and SBIR grant awards from NSF and EPA between 2013 and 2016. The awards totaled $1,375,000. Not all of the awarded funds were disbursed: Bio-Adhesive received, in total, $881,669.69 in award funds from NSF and EPA. During this time period, Bio-Adhesive submitted multiple proposals that contained misrepresentations regarding its eligibility to seek SBIR and/or STTR grant awards from NSF and EPA, as well as other material aspects of their project, including employees, budget, and recommenders. For example, on or about July 30, 2015, in an NSF SBIR/Phase II award application, Bio-Adhesive represented that:
“Applicants that make false representations in order to access government grants are cheating taxpayers and taking resources from honest researchers and businesses,” said Acting United States Attorney Hairston. “We commend NSF-OIG and EPA-OIG for their vigilance and determined investigation of the Bio-Adhesive fraud.”
“The National Science Foundation’s Small Business Innovation Research program provides small businesses with funding to conduct research and development work that will lead to the commercialization of innovative new products and services,” said NSF Inspector General Allison Lerner. “Today’s sentence serves as a reminder that fraud in the SBIR Program will not be tolerated. The NSF Office of Inspector General remains committed to ensuring the integrity of the SBIR program and will actively pursue oversight of these taxpayer funds. I commend the U.S. Attorney’s Office and our investigative partners for their support in this effort.”
“Protecting the integrity of research and development programs funded by the U.S. Environmental Protection Agency is a priority for my office,” said EPA Inspector General Sean W. O’Donnell. “This sentencing follows a joint effort with the National Science Foundation’s Office of Inspector General. The EPA Office of Inspector General is committed to working with its law enforcement partners in bringing to justice individuals who defraud the SBIR and STTR programs.”
The case was investigated by the National Science Foundation Office of Inspector General and the Environmental Protection Agency Office of Inspector General. The case was prosecuted by Assistant United States Attorney JoAnna G. McFadden.