SAN FRANCISCO – A South Bay tech startup, eBibelot, and its CEO, Melody Fallah-Khair, are facing a significant financial penalty after resolving allegations of improperly obtaining federal grant funds, according to prosecutors. The settlement comes after a multi-year investigation and will result in the company and its leader paying over half a million dollars to address the misconduct. This case highlights the critical importance of transparency and adherence to regulations within federal grant programs. The U.S. Attorney’s Office alleges that eBibelot and Fallah-Khair violated the False Claims Act by concealing Fallah-Khair’s concurrent full-time employment with a multinational telecom company while receiving a National Science Foundation (NSF) small business innovation grant. The investigation revealed that between May 2019 and April 2021, Fallah-Khair dedicated at least 40 hours per week to this external role, despite certifying in the initial grant application that she would exclusively focus on eBibelot as the project’s principal investigator. This breach of the grant’s terms, which stipulated that principal investigators must prioritize the small business during the award period, is at the core of the legal action. Prosecutors contend that eBibelot further compounded the issue by failing to disclose Fallah-Khair’s outside employment in subsequent post-award certifications to the NSF, actively concealing information from the agency overseeing the grant. This deliberate omission represents a direct violation of the False Claims Act, which aims to prevent fraud and abuse within federally funded programs.
The total settlement agreement announced on Monday totals $630,000, reflecting the severity of the alleged misconduct and the potential financial impact of the violation. U.S. Attorney Craig H. Missakian emphasized the importance of integrity in taxpayer-funded research, stating, "Taxpayer-funded research must be conducted with the highest integrity." He continued, "When recipients of federal funds fail to comply with the terms of the grant, they divert valuable research dollars from deserving small businesses." The case underscores the rigorous oversight mechanisms implemented by the NSF and the U.S. Department of Justice to safeguard federal grant programs and ensure accountability among recipients. This settlement sends a clear message that any attempt to misrepresent information or circumvent regulations regarding federal funding will be met with swift and decisive action. The Department of Justice’s ongoing use of the False Claims Act demonstrates its commitment to protecting these vital resources and promoting ethical conduct within the scientific research community.
Moving forward, this case will likely serve as a cautionary tale for other organizations seeking federal grants, reinforcing the necessity of complete transparency and strict adherence to all grant requirements. The investigation’s conclusion highlights the significant consequences associated with non-compliance and the proactive measures taken by the Department of Justice to combat fraud and abuse within the grant system. The funds recovered will be used to support other legitimate small business innovation grants, furthering the government’s mission to foster economic growth and technological advancement. This settlement also reinforces the importance of robust internal controls and compliance programs within organizations receiving federal funding, ensuring that resources are utilized effectively and ethically. The legal action taken demonstrates a commitment to upholding the integrity of federal grant programs and protecting taxpayer dollars.
