By Sara Kropf
In Part 1, we reviewed the various rules in place that require research institutions and individual researchers to disclose financial conflicts of interest (FCOIs)—particularly financial support from foreign sources.
The Department of Justice is taking the FCOI rules seriously. Researchers and institutions should recognize that breaking the rules may not mean a slap on the wrist.
The two possible outcomes are criminal charges (most likely wire fraud or federal program fraud) or a civil False Claims Act case.
In August 2019, DOJ charged a researcher at the University of Kansas (KU) with wire fraud and program fraud. The government claims that Feng “Franklin” Tao was working for a Chinese university while doing research at KU funded by the U.S. government.
According to the indictment, Mr. Tao signed a five-year contract with Fuzhou University in China that designated him as a Changjiang Scholar Distinguished Professor. That contract required him to be a full time employee of the Chinese university. The government’s case relies upon the theory that Mr. Tao hid this fact from his university and from federal funders when he was required to disclose it as a conflict of interest.
(This case is being hotly litigated, and we can expect some interesting case law to come out of it.)
More recently, in late January 2020, DOJ charged the Chair of Harvard University’s Chemistry and Chemical Biology Department with one count of false statements (see my post about how a false statement charge likely means DOJ’s substantive case is not strong). The false statement was not for a statement made on a grant application , but rather statements during interviews with government agents. Argh–the cover-up is worse than the crime.
As background, Dr. Lieber’s research group focuses on nano-science and had received $15 million in NIH and Department of Defense grants over the years. According to the allegations in the criminal complaint, Dr. Lieber became a “Strategic Scientist” at Wuhan University of Technology (WUT) in China in 2011, and participated in China’s Thousand Talents Plan from in or about 2012 to 2017. The amount he received from the Chinese university was substantial, allegedly $50,000 per month.
The government claims that Dr. Lieber was not truthful during interviews about his involvement in the Thousand Talents Plan and affiliation with WUT. The affidavit in support of the criminal complaint goes on to say that he was not truthful when interviewed by Harvard and that caused Harvard to make false statements to the government.
No charges were filed against Harvard, so we don’t know how that part was resolved. It seems likely that Harvard cooperated with the investigation, perhaps agreed to improve its compliance policies around FCOIs, and was not charged.
DOJ made clear in its press release that this investigation was part of its larger effort to investigate this type of wrongdoing:
These case are part of the Department of Justice’s China Initiative, which reflects the strategic priority of countering Chinese national security threats and reinforces the President’s overall national security strategy. In addition to identifying and prosecuting those engaged in trade secret theft, hacking and economic espionage, the initiative will increase efforts to protect our critical infrastructure against external threats including foreign direct investment, supply chain threats and the foreign agents seeking to influence the American public and policymakers without proper registration.
Civil False Claims Act
Criminal charges against researchers are increasing, but universities and institutions have not been in the criminal prosecutors’ cross-hairs (at least publicly). However, that doesn’t mean that there aren’t other risks on the civil side.
The biggest liability for a university right now is a case under civil False Claims Act. Under the statute, university (or researcher) could be liable for failing to disclose the source of funding for research that also uses federal funds.
In December 2019, Van Andel Research Institute (VARI) settled a False Claims Act case related to one of its researchers receiving Chinese grants for research that was partially funded by the federal government. The settlement amount was $5.5 million.
The government alleged that in applying for the federal grants, VARI did not disclose any foreign research funding for those researchers or any foreign components of their NIH-sponsored research, even though two researchers there received research funding from Chinese sources. As with the criminal cases I described above, this case was linked to China’s Thousand Talents Program. The Thousand Talents Program.
The key part of the case is the government’s position that VARI “should have known” about the foreign funding and disclosed them. Although VARI had institutional policies and procedures in place to address conflicts of interest, the government claimed that VARI did not take “adequate additional steps to investigate the researchers’ foreign funding sources despite receiving specific information about their Chinese affiliations.”
Although these types of cases are not yet widespread, it’s impossible to ignore the trend here. DOJ will take a close look at foreign researchers, particularly those who are Chinese nationals. Maybe racism plays a role; maybe it’s a legitimate concern. Either way, these types of cases are not going away.
Individual researchers face the biggest personal risk, since they could lose their jobs, face criminal charges, or be deported if they are not U.S. citizens. And universities and other institutions face substantial reputational and financial risk if they do not fully comply with these (fairly new and untested) rules.