Woburn-Based Company to Pay Over $2 Million to Resolve Grant Fraud Allegations

WOBURN, MA — A Woburn-based research and development company has agreed to pay $2.25 million to resolve allegations of grant fraud, U.S. Attorney Carmen Ortiz announced Friday.

According to the U.S. Attorney's office, Agiltron, Inc. and its president Jing Zhao have agreed to pay the sum to resolve allegations that they used federal government grant funds improperly. In addition, the government is alleging that Agiltron and Zhao engaged in a scheme which maximized charges to each grant or contract.

“When the government awards precious funding to foster innovation, it expects and requires grant recipients to use the money appropriately,” said Ortiz in the announcement. “It is unlawful and unfair to other deserving grant applicants for companies to submit falsified information to take advantage of government funding.”

According to the announcement, Agiltron and Zhao allegedly engaged in a scheme in which they directed and allowed employees to charge labor hours to the awards, even when those hours did not correspond with the employees’ actual time and effort. They also directed and allowed employees to alter their completed timesheets, with the goal of maximizing charges to each grant or contract.

The government also alleges that Zhao and Agiltron directed and allowed employees to discard documents instructing them on how many hours to charge or change on their time sheets.

“Fraudulently certifying efforts to obtain funds intended to support innovative research under the SBIR/STTR programs is unacceptable. I commend the U.S. Attorney’s Office and the investigative teams for their sustained and vigorous effort in reaching this settlement agreement,” said Allison Lerner, Inspector General of the National Science Foundation in a statement.

Agiltron received funds under 15 grants and contracts through the federal Small Business Innovation (SBIR) and Small Business Technology Transfer (STTR) programs, which are intended to provide opportunities for small businesses to develop products that they can ultimately commercialize, according to the announcement.

"The government’s investigation of Agiltron originated when the Offices of Inspector General of multiple agencies participating in the SBIR and STTR programs, including the National Science Foundation, Department of Defense, Department of Homeland Security, Department of Energy, and National Aeronautics and Space Administration, learned of allegations that Agiltron was improperly billing time and effort to SBIR/STTR grants and contracts.

In 2013, the Department of the Air Force suspended Agiltron and Zhao, as well as Agiltron’s related companies, from government contracting, in part because of suspected improper billing. In reaching an administrative agreement with the Air Force to terminate the suspension, Agiltron implemented a number of remedial measures to correct its accounting practices and internal controls. The settlement agreement resolves multiple federal agencies’ claims for civil damages arising from allegations of fraudulent time-and-effort billing to SBIR/STTR grants and contracts," according to the U.S. Attorney's announcement