Northwestern University settled federal fraud charges yesterday following a suit filed by a whistleblower under the federal False Claims Act. University administrators agreed to repay the government $3 million although admitted no wrongdoing. False claims act cases against non-profits are still rare but are increasing in frequency.
According to the complaint unsealed yesterday, Professor Charles Bennett was a cancer researcher in the university’s School of Medicine. While employed by the school, Bennett oversaw research monies from the National Institute of Health. NIH is an agency of the U.S. Department of Health and Human Services meaning its funding comes from taxpayers.
The lawsuit, originally filed by a whistleblower, says that Bennett took taxpayer monies earmarked for research and used it for family trips, hotels and to hire unqualified family and friends. He was caught when an alert purchasing coordinator filed a federal whistleblower complaint.
In announcing the settlement, Chicago’s U.S. Attorney, Gary Shapiro, said, “Allowing researchers to use federal grant money to pay for personal travel, hotels, and meals, and to hire unqualified friends and relatives as ‘consultants’ violates the public trust and federal law. This settlement, combined with the willingness of insiders to report fraud, should help deter such misconduct, but when it doesn’t, federal grant recipients who allow the system to be manipulated should know that we will aggressively pursue all available legal remedies.”
As noted above, cases against nonprofits and schools are still rare. The “conventional wisdom” says that fining a school only hurts students. In recent years, however, some universities now have hospitals and research centers that rival the biggest and best private sector facilities. In other words, they act like big business.
The whistleblower in this case, Melissa Theis, is slated to receive $498,100 for her efforts. Federal law permits cash awards of 15 to30% of whatever is collected by the government.
The Northwestern case was investigated by the Federal Bureau of Investigation and DHHS. Chicago FBI Special Agent-in-Charge Cory Nelson said, “The FBI takes allegations of fraud seriously, especially those allegations from insiders who are often in the best position to detect wrongdoing long before it would otherwise come to the attention of law enforcement.” We agree.
Becoming a whistleblower is relatively easy. You must have inside “original source” information of a fraud against the government or a federally funded program. Generally, you must also be the first to come forward. Common false claims act cases include Medicare fraud; use of foreign made products in government contracts; mortgage fraud involving the FHA, Fannie Mae or Freddie Mac; and misuse of government contractor fraud.
Although the University settled without any admission of wrongdoing, Bennett still maintains his innocence. No word whether he will keep his position at a different university now that the federal complaint was unsealed.
If you wish to become a whistleblower and think you have a case, give us a call. We represent whistleblowers and help them stop fraud and collect the largest award possible.
For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries are protected by the attorney – client privilege and kept in strict confidence.
Mahany & Ertl – America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Minneapolis, Minnesota; Portland, Maine and San Francisco, California. Services available in many jurisdictions.
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Posted by Brian Mahany, Esq.