[Office-of-research] Yale Agrees to Pay $7.6M to Resolve Allegations Regarding Mismanagement of Federal Grants

Bruce Morgan bruce.morgan at ucr.edu
Tue Jan 13 15:49:40 PST 2009

I am distributing this press release from the US Attorney's office regarding
the recent settlement involving Yale University and allegations regarding
the mismanagement of federal grant funds.  This settlement, the actions of
the U.S. Attorney's Office and the Offices of Inspector General at the
National Science Foundation, Department of Health and Human Services,
Department of Defense, Department of Energy and NASA make clear that the
federal government expects grantees to adhere to the policies and
regulations applicable to the management and administration of federal


Yale University's press release regarding the settlement, its cooperation in
the investigation and the corrective actions that it took during the course
of the investigation is available at


Please circulate this message broadly within your unit to anyone who is
involved in the management and/or administration of sponsored awards,
including principal investigators and co-principal investigators.


Bruce Morgan

Assistant Vice Chancellor for Research


United States Attorney
District of Connecticut

December 23, 2008          




Nora R. Dannehy, Acting United States Attorney for the District of
Connecticut, today announced that YALE UNIVERSITY has entered into a civil
settlement agreement with the Government in which it will pay $7.6 million
to resolve allegations that it violated the False Claims Act and the common
law in the management of federally-funded research grants awarded to the
university between January 2000 and December 2006.

Acting U.S. Attorney Dannehy explained that the grant awards were made by
approximately 30 federal agencies and entities, including the Department of
Health and Human Services, the National Science Foundation, the Department
of Energy, the Department of Defense, and the National Aeronautics and Space
Administration. These five agencies provided  approximately 94 percent of
the almost $3 billion in federal grant funding to YALE UNIVERSITY during the
time period at issue.

The investigation focused on allegations involving two types of mischarges
to federal grants.  Both types of mischarges arose as violations of the
basic principle that recipients of federal grants are allowed to charge to
each grant account only "allocable" costs, which are  costs that relate to
the specific objectives of that grant project.  The first allegation
involved cost transfers and the requirement that costs transferred to a
federal grant account must be allocable to that particular grant account.
The settlement resolves allegations that some YALE UNIVERSITY researchers at
times improperly transferred charges to a federal grant account to which
those charges were not allocable.  Researchers allegedly were motivated to
carry out these wrongful transfers when the federal grant was near its
expiration date and they needed to spend down the remaining grant funds.
Federal regulations require that unspent grant funds be returned to the

The second allegation involved salary charges and the requirement that
charges to federal grant accounts for researcher time and effort must
reflect actual time and effort spent on a particular grant.  The Government
alleges that some researchers at YALE UNIVERSITY at times submitted time and
effort reports, for summer salary paid from federal grants, that wrongfully
charged 100 percent of their summer effort to federal grants when, in fact,
the researchers expended significant effort on unrelated work.  Researchers
allegedly were motivated to carry out these wrongful salary charges by the
fact that they are not paid their academic-year salary by YALE UNIVERSITY
during the summer.  The only salary received by these researchers during the
summer was the result of the effort they charged to federal grants.  Absent
the alleged grant mischarges, the researchers would not have been paid.

The $7.6 million payment comprises two components: $3.8 million in actual
damages for the false claims, and $3.8 million assessed as penalties for the
false claims.  The False Claims Act provides for up to treble damages and
penalties of $5,500 to $11,000 per false claim submitted to the Government.

"This settlement sends a clear message that the regulations applicable to
federally-funded research grants must be strictly adhered to," stated Acting
United States Attorney Dannehy.

Acting U.S. Attorney Dannehy also noted that YALE UNIVERSITY cooperated
fully in the Government's investigation, which began with the service of
multiple investigative subpoenas on the university in 2006.  Throughout the
investigative period, YALE UNIVERSITY also made extensive efforts to
significantly improve its management of federal grants.

As a result of the settlement, there will be no lawsuit filed against YALE
UNIVERSITY regarding the more than 6,000 grants covered by the settlement
agreement.  In entering into the settlement, YALE UNIVERSITY did not admit
liability and the agreement indicates that the parties settled this matter
to avoid the delay, uncertainty, and expense of litigation.

The settlement resulted after a lengthy investigation conducted by the
Department of Health and Human Services, Office of the Inspector General;
the National Science Foundation, Office of the Inspector General; the
Department of Energy, Office of the Inspector General; the Defense Criminal
Investigative Service; the Department of the Army, Criminal Investigation
Command; the Defense Contract Audit Agency; the National Aeronautics and
Space Administration, Office of the Inspector General; and the Federal
Bureau of Investigation.


The matter was handled within the U.S. Attorney's Office by Assistant U.S.
Attorneys William A. Collier, John B. Hughes and David J. Sheldon, and
Auditor Susan N. Spiegel


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