Pleasanton Biotech Company Agrees to Pay Over a Half Million Dollars to Resolve Allegations That It Improperly Obtained Federal Grant Funds

SAN FRANCISCO – Cyion Technologies LLC (Cyion), a Pleasanton-based company involved in biological research and drug discovery, has agreed to pay $528,335.74 to resolve allegations that it violated the False Claims Act by improperly accepting and drawing down funds from federal grant awards that it was ineligible to receive.

The settlement relates to two Small Business Technology Transfer (STTR) and one Small Business Innovation Research (SBIR) awards that Cyion obtained from the National Institutes of Health (NIH).  The terms and conditions of the STTR and SBIR grants preclude companies whose principal investigators hold outside full-time employment from applying for or receiving such awards.  The settlement resolves allegations by the United States that at the time Cyion applied for the STTR grants in 2017 and SBIR grant in 2023, and drew down funds through 2019 and 2024, respectively, Cyion failed to disclose that its principal investigator held outside full-time employment in violation of the terms and conditions of the awards.

“NIH small business research grants are intended to fuel innovation, not reward companies that break the rules,” said United States Attorney Craig H. Missakian.  “The requirements governing these grants, including restrictions on outside full-time employment, are not optional.  When companies misrepresent their eligibility to obtain federal funding, my office will vigorously enforce the False Claims Act to hold them accountable and protect taxpayer dollars.”

“Cyion Technologies’ failure to disclose its principal investigator’s outside full-time employment undermined the purpose of federal small business research grants,” said Robb R. Breeden, Special Agent in Charge of the Pacific Regional Office of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG).  “These programs exist to support eligible innovators conducting critical scientific research – not to provide funding to entities that misrepresent their eligibility.”

Assistant U.S. Attorney Savith Iyengar handled this matter for the government.  The investigation and settlement resulted from a coordinated effort by the U.S. Attorney’s Office for the Northern District of California and HHS-OIG.   

The investigation and resolution of this matter illustrate the government’s commitment to combating fraud in federal grants.  One of the most powerful tools in this effort is the False Claims Act.  Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to HHS-OIG at https://oig.hhs.gov/fraud/report-fraud/.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.

Attachment:

• Cyion Settlement Agreement