The U.S. Attorney’s Office in the Northern District of Georgia has obtained the conviction of a man accused of defrauding the National Aeronautics and Space Administration (NASA) and the National Science Foundation (NSF), right in Bracker & Marcus’ backyard.

Bracker & Marcus litigates cases under the civil False Claims Act, but there is also a criminal FCA statute (18 U.S.C. 287) that the federal Government can use to pursue fraudsters such as Dr. Craig Near of Alpharetta, Georgia, and his company Genziko, Inc. On June 19, 2015, Dr. Near and Genziko were found by a jury to be guilty of procurement fraud, i.e., submitting fraudulent grant and contract proposals to NASA and NSF, including proposals to develop a device that detects micrometeorite damage to the International Space Station via ultrasonic monitoring and an energy harvester to generate energy from vibrations.

Sounds cool, right? Except Genziko misrepresented that it had the ability to pull off such ambitious projects. Genziko’s proposals falsely stated that it employed multiple individuals with impressive credentials in science and engineering, necessary to develop such high tech devices, but who were not employed by Genziko and had no knowledge of the company’s existence. The proposals also contained fraudulent budgets including salaries of these “phantom employees” with fictitious wages, as well as inflated overhead and administrative costs. Moreover, Near pocketed money earmarked for subcontractors and consultants who actually did complete work on the projects.

The NASA and NSF contracts only permit contractors to profit 7%, but through these fraudulent measures, Near was able to conceal profits ranging from 79% to 197% on three proposals. Instead of using the nearly $800,000 in federal research funds for what they were intended, Near spent it almost entirely on himself: a home in the affluent Atlanta suburb of Alpharetta, Georgia, vacations, private school tuition, shopping, and large money wires to family and friends overseas.

Acting U.S. Attorney John Horn released a statement that “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. 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.”

After a two week trial in which he was represented by a federal public defender, Near and Genziko, Inc. were convicted of seven acts of wire fraud and two counts of filing false claims against the federal government. About $84,000 in two bank accounts held by Near was ordered to be forfeited.

After defrauding the federal government of nearly a million dollars, and then requiring the services of a government attorney to defend his actions, Mr. Near should continue to suck on the public teat with an extended stay in a federal penitentiary. Sentencing is scheduled for September 1, 2015.

False Claims Act cases of fraud on NASA or the NSF are uncommon, due to the agencies’ limited resources, but federal and state grant fraud is common. This case illustrates that a qui tam action can come from an unlikely source, and not always a big federal agency such as the DOD or HUD. If you are aware of a contractor acting contrary to the law or their contract, or engaging in fraud in the procurement (application) process, whether it be a small federal agency such as NASA, a state agency such as MARTA, or even a local agency such as your local school board, you may have a False Claims Act case.