Government Grant Fraud

Government grant fraud is the misuse of public funding. This type of fraud occurs when recipients of federal grants (education organizations, nonprofits, private businesses) make misrepresentations in grant applications, misreport how the funds they received were spent, or divert the funds.

Some typical government grant fraud schemes include:

• Double-billing or inflating overhead costs
• Failing to meet government grant conditions and hiding noncompliance
• Submitting false research data in applications to secure grants
• Using the funds for personal or unrelated expenses

Some of the federal government agencies that provide grants and may be affected by this kind of fraud are:

• Small Business Administration (SBA)
• U.S. Department of Defense (DOD)
• U.S. Department of Education (ED)
• U.S. Department of Health and Human Services (HHS)
• U.S. Department of Housing and Urban Development (HUD)
• U.S. Department of Justice (DOJ)

Government grant fraud diverts funding from legitimate programs and can erode public trust in science, education and defense. Instances of this fraud should be taken seriously. 

Government grant fraud is often uncovered thanks to individuals who witness the fraud firsthand. Under the False Claims Act, individuals who suspect government grant fraud can sue on behalf of the government through a qui tam lawsuit.

This type of whistleblower lawsuit allows the individual to help the government investigate and potentially recover the grant funds that were unearned or misused. Reporting government grant fraud can help prevent grant funds from being misused in the future. Whistleblowers may also be awarded a percentage of the recovered funds.

Whistleblowers often work in jobs that have access to financial reports and government grant documentation. These roles may include federal workers, grant administrators, researchers, auditors and financial officers.

Real-world signs of grant fraud

To report fraud, it’s important to understand how this kind of fraud might happen. Here are some examples or signs of grant fraud:

• Deceitful grant applications: Falsifying certain information on an application to obtain money from a government grant.
• False progress reports: Claiming milestones were met when research or project work has stalled.
• Mismatched budgets: Spending that exceeds or deviates from the approved grant proposal.
• Improper sub-awards: Subcontracting to affiliated entities without disclosure.
• Ghost employees or vendors: Billing for individuals or services that don’t exist.

A qui tam whistleblower lawyer familiar with fraud litigation can help you build a case regarding this illegal activity.

You may be able to report government grant fraud to the office of inspector general of the agency that administered the grant or a fraud hotline. In addition, you may choose to pursue a qui tam submission. This involves contacting a lawyer to help put together your submission. The submission is then filed under seal in federal court for the government to investigate. You must have an attorney to pursue a qui tam case.

Once the claim is investigated, the government may go back to the whistleblower to request more information regarding the claim. When all of the necessary details have been gathered, the agency will decide how they’d like to proceed with the grant fraud accusation. This may include help from law enforcement to track down the individuals involved.

If the government agencies find that grant fraud occurred, potential outcomes may include civil penalties, settlements or even criminal prosecution. The whistleblower may be awarded as much as 30% of the recovered funds from the grant fraud investigation and retaliation protections under the False Claims Act. This act provides legal remedies if a whistleblower experiences retaliation because they reported. Employers who retaliate against whistleblowers may end up paying for attorney fees, back pay, court costs, out-of-pocket costs and punitive damages.

*We represent our clients on a contingency fee basis. This means you will not pay any fees or expenses unless you obtain a recovery. If you receive compensation, our fee will be a percentage of your recovery and will be calculated before any of your claim and lawsuit costs and expenses are deducted. Costs and expenses will be deducted and paid from your recovery.

Who can be held liable for federal grant fraud?

Any individual or entity who has committed federal grant fraud can be held liable for this illegal activity. This includes individuals, grant recipients, universities, researchers, nonprofit executives, contractors and anyone else who knowingly participated in the grant fraud.

Can I report grant fraud if I’m not sure it’s illegal?

Yes, you can still report what you believe to be government grant fraud, even if you’re unsure if it’s illegal. You should report any information you have that suggests grant misuse to the proper agencies. They can then investigate and take further action if necessary.

What protections exist for whistleblowers?

Whistleblowers who report fraud or illegal actions are protected under the Whistleblower Protection Act (WPA). This act protects federal employees from employer retaliation, including termination, demotion or pay reduction.

How can a federal grant fraud lawyer help whistleblowers?

A federal grant fraud lawyer can help whistleblowers file a lawsuit regarding the fraud and take the necessary precautions to keep the whistleblower anonymous (if they wish). Lawyers can also help whistleblowers understand what retaliation protections are in place.

Motley Rice’s whistleblower attorneys have represented a variety of whistleblowers and individuals who strive to hold companies and individuals accountable for their unethical and illegal activity.

Our attorneys have litigated for individuals who have blown the whistle on:

• Banks and other financial services companies
• Companies that receive government grants, loans or financing
• Defense contractors and other government contractors
• Healthcare providers
• Major pharmaceutical companies
• Universities

Read more on our whistleblower litigation experience.