Alpharetta Business Owner Convicted of Defrauding NASA

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An Alpharetta business owner has been convicted of defrauding a federal agency out of nearly $800,000 in research grants.

Craig D. Near was convicted June 19 by a federal jury on seven counts of wire fraud and two counts of filing false claims against the United States, the U.S. Attorney’s Office for the Northern District of Georgia said.

The convictions were related to a procurement fraud scheme targeting the National Aeronautics and Space Administration and the National Science Foundation, the office stated.

“For years this defendant supported himself and his family in a suburban lifestyle, with practically his only earnings being the fruits of his scheme defrauding the government,” said Acting U.S. Attorney John Horn. “The Small Business Innovation Research Program, which Near defrauded, supports technological innovation by investing federal research funds in critical priorities. Near’s scheme diverted funds that should have been used for these important goals.”

According to Horn, Near submitted fraudulent grant and contract proposals from June 2008 to June 2014 to various federal agencies in an effort to obtain money for scientific research. Near submitted all of the proposals through his company, Genziko, Inc.

Prosecutors argued all of the proposals falsely stated that Genziko had multiple employees, and listed credentials of a management team with many years of experience in the relevant scientific and engineering specialties, without the knowledge or consent of several of those individuals, Horn outlined in his case.

Some of the proposals also contained fraudulent budgets. Through his company, Near inserted a variety of fake costs into the fraudulent budgets, including salaries for engineers and technicians who were not needed to accomplish the research work.

Horn states Near pocketed the salaries for these “phantom” employees and also collected inflated overhead and general and administrative costs from the government based on their fictitious wages.

At the same time, Horn said Near also pocketed money earmarked for the university subcontractors and scientist consultants who actually completed work on the research projects.

Horn states these techniques allowed Near to hide that he was making profits ranging from 79 to 197 percent on the three proposals that were actually granted by the government. These profits were far in excess of the seven percent maximum that was allowed for these contracts by the NSF and NASA.

In sum, Near and Genziko, Inc., received closed to $800,000 in federal research funds on the three granted proposals.

Rather than using the money for the scientific research, prosecutors said Near spent it almost entirely on personal expenses such as mortgage payments, private school tuition for his children, vacations, shopping and large money wires to family and friends overseas.

“The NASA Office of Inspector General is committed to ensuring aggressive oversight of taxpayer funds used for scientific research by NASA contractors and grantees,” said Paul Martin, NASA Inspector General.

Allison Lerner, the National Science Foundation inspector general, added the convictions sends “a strong signal to anyone who would seek to defraud this program and divert taxpayer dollars intended for scientific research to personal use.”

Sentencing has been scheduled for 10 a.m. Sept. 1 before United States District Judge Thomas W. Thrash.

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