Technology startup eBibelot, based in Saratoga, and its CEO, Melody Fallah-Khair, have agreed to pay $630,000 to settle a federal lawsuit that claimed they violated the False Claims Act by improperly certifying compliance with the terms of a National Science Foundation grant that restricted full-time outside employment.
The settlement announced by the U.S. Attorney’s Office for the Northern District of California concerns eBibelot’s 2019 application for a Phase II Small Business Innovation Research grant from the National Science Foundation. Prosecutors said that in the application, Fallah-Khair certified that she would serve as the project’s principal investigator and maintain primary employment with eBibelot.
The terms of the NSF grant required that principal investigators devote their primary employment to the small business at the time of the award and throughout the award period, a requirement that generally precludes other employment exceeding 19.6 hours per week.
The settlement resolves allegations that, contrary to this certification, Fallah-Khair began working full-time for a multi-national telecommunications 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 federal government said eBibelot failed to disclose its principal investigator’s full-time outside employment in multiple post-award certifications. In one such certification, Fallah-Khair was explicitly required to disclose any other employment but reported none.
Under the settlement agreement, eBibelot and Fallah-Khair will pay $630,000.
“Taxpayer-funded research must be conducted with the highest integrity. When recipients of federal funds fail to comply with the terms of the grant, they divert valuable research dollars from deserving small businesses,” said U.S. Attorney Craig H. Missakian.
“The SBIR program is vital to fostering innovation in small businesses, and protecting it from abuse is essential. I appreciate the U.S. Attorney’s Office for its strong commitment to safeguarding its integrity,” said Megan E. Wallace, Acting Inspector General for the National Science Foundation.
The claims resolved by the settlement are allegations only, and there has been no determination of liability, according to prosecutors.
