SAN FRANCISCO – A South Bay tech startup and its CEO will pay more than half a million dollars to resolve allegations they improperly obtained federal grant funds, prosecutors said.
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In 2019, Saratoga-based eBibelot and its CEO, Melody Fallah-Khair, submitted an application for a small business innovation grant from the National Science Foundation, certifying that Fallah-Khair would serve as the project’s principal investigator and maintain primary employment with eBibelot, according to the U.S. Attorney’s Office.
The terms of the grant required that principal investigators devote their primary employment to the small business at the time of the award and throughout the award period, prosecutors said.
Prosecutors alleged Fallah-Khair began working full-time for a multinational telecom company shortly after submitting the grant application and devoted at least 40 hours per week to this outside employment from May 2019 through April 2021.
The tech startup did not disclose its principal investigator’s full-time outside employment in post-award certifications to the NSF, violating the False Claims Act, prosecutors said.
Under a settlement agreement announced Monday, eBibelot and Fallah-Khair will pay $630,000.
“Taxpayer-funded research must be conducted with the highest integrity,” U.S. Attorney Craig H. Missakian said in a statement.
“When recipients of federal funds fail to comply with the terms of the grant, they divert valuable research dollars from deserving small businesses,” he said. “My office will continue to use the False Claims Act to protect federal grant programs from fraud and abuse.”
