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Virginia Tech professor accused of fraud in obtaining SBIR/STTR funding for start-up

By Jesse Schwartz
Published: October 4th, 2017

A Virginia Tech professor has been accused by federal authorities of conspiracy to commit or defraud the United States in an effort to secure research funding for his start-up.

Yiheng Percival Zhang, a professor at the university’s biological systems engineering department, along with two associates, allegedly submitted false information to the National Science Foundation (NSF) and “conspired and engaged in a scheme to defraud NSF,” according to the FBI.

In 2010, Zhang launched the start-up GFI to commercialize a sustainable process for producing biofuels and biomaterials based on microbial technology. The company was eventually dissolved, and Zhang created a new startup, CFB, aimed at advancing the same technology.

To support his business, Zhang secured funding through the Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) grants managed by NSF and the U.S. Department of Energy. Both programs carry strict requirements on how the funds are tracked and utilized. STTR requires the funded start-up to partner with a research institution such as a lab or university. The institution is required to receive at least 30% of the funding and conduct 30% of the research.

Court documents argue that Zhang broke this agreement, alleging that CFB has received five awards totaling $1.1 million and that two of those awards totaling $375,000 may contain “potential violations.” Authorities also found that the company filed “false statements concerning time and effort” to obtain a March 2016 award of $584,083; that a December 2016 award was requested for work that had already been completed; and that Zhang did not give Virginia Tech their allotted portion of a November 2015 award totaling $149,265.

 “Dr. Zhang denies any wrongdoing and disputes the allegations,” says his attorney E. Scott Austin. “He looks forward to a public disclosure of the facts so that he can maintain his hard earned reputation and good name as an American professor and scientist.”

Source: The Virginian-Pilot

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