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Cornell Research Grant Fraud

June 14, 2010

We’re paying for studies to heal sick kids and the elderly. We’re getting swindled instead.
By Michael Crowley
From Reader’s Digest

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It is very unethical and it is fraud.
You’ve heard of surgical nurses and night nurses — but how about “phantom nurses”? That’s what Kyriakie Sarafoglou, a doctor at Cornell University’s medical school, claims she found when she grew suspicious about the way government grant dollars were being spent there a few years ago.

The National Institutes of Health (NIH) had given Cornell’s Weill Medical College a five-year, $23 million grant to study some heartbreaking children’s diseases, like Hodgkin’s. But Sarafoglou, who cared deeply for the young patients participating in the research, thought that some big dollar figures weren’t adding up. The federal government agreed and filed a lawsuit against Cornell claiming that the university had been awarded federal funding for research that never happened.

According to the suit, Cornell was billing the NIH for nurses who were supposed to focus exclusively on pediatric research. Yet they were routinely pulled out to treat regular patients. What’s more, the feds learned that Cornell had falsified the grant application by including the salaries of phantom nurses — RNs who no longer worked at Cornell. It looked like a huge scam, with doctors bilking the government with overstated expenses and misdirected money.

It didn’t end there, though. In one study on diabetes, for instance, researchers projected participants would spend a total of 100 days in the hospital. Why would the study require so much expensive hospital time? Actually it didn’t. Participants were just given a blood test — not exactly the kind of procedure that requires an overnight stay. Cornell has admitted no wrongdoing, insisting it had broad discretion on how it spent the money. But the university did pay a $4.4 million settlement to the government — not exactly a ringing endorsement of its innocence.

Isolated case? If only. The shocking thing is that trickery like this is happening at many of America’s best universities and hospitals. From Harvard to the Mayo Clinic, big-name institutions are paying multimillion-dollar settlements over charges they abused federal dollars.

At a time when we’re racing to cure AIDS and cancer and head off the bird-flu threat, every penny of our national medical-research budget is extremely precious — especially now that the White House has proposed a freeze on NIH spending.

Not all researchers may be lining their own pockets, but some of the nation’s top scientists are ignoring the rules and treating federal grants like playthings to use as they wish.

Brian Martinson, a medical-ethics expert at HealthPartners Research Foundation, says that many scientists don’t see the problem, and regard diverting money “as an accounting issue.” Schools may argue that they need to be creative to fund all of their projects, regardless of how the money was originally earmarked. But flat-out lies about spending grant money is a little like a business mogul using corporate funds to build a mansion in order to “properly entertain clients.” It’s fraud. It’s wrong. And it’s illegal.

The University of California at Irvine received millions in grant money to study the genetic causes of cancer — a critical part of understanding the disease. But an audit by the university suggested that a top researcher may have misspent more than $2 million of the funds, including $1.35 million on developing a software program — one that the researcher had previously been warned was duplicating work being done by the state. The researcher, however, disagreed with the audit, claiming that her program would ultimately be superior to the state’s.

It seems not even Harvard can be fully trusted with federal money. In 2004, Harvard and an affiliated hospital, Beth Israel Deaconess Medical Center, paid $2.4 million to settle charges they misused grants from the National Institute on Aging. The Justice Department alleged that from 1994 to 1999 Beth Israel researchers spent nearly $2 million of $5.4 million in grants on expenses and salaries not covered by the grant. Some of the money went to scientists who lacked the U.S. citizenship required by the grant.

And here’s the final insult: diverting grant money. Why? To get more grant money, of course. It’s the ultimate pyramid scheme. Eric T. Poehlman, a top obesity researcher who spent years at the University of Vermont and the University of Maryland, even admitted last year that he had actually falsified data to win more than half a million dollars in federal funds.

It’s not supposed to work that way at all. “When you are given federal money, there’s a contractual agreement to do what you said you would do,” says Adil Shamoo, editor of the journal Accountability in Research, who also notes that misspending grant money is a common practice. “It is very unethical and it is fraud.”

Unfortunately, research grant fraud is hard to find. Usually it takes a brave whistle-blower to step forward — that’s how cases at the Mayo Clinic and others came to light. But six UC-Irvine employees claimed they were laid off after questioning suspicious activities there. And Sarafoglou alleged that her initial complaints were ignored and that she was ostracized by colleagues.

That’s why no one should have to blow the whistle in the first place on researchers who play sleight-of-hand games with the public’s money. Universities should provide more oversight and audit grant projects. It doesn’t take a brain surgeon to figure that out.

Outraged? Write to Michael Crowley at

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