Newark company to pay $2.75 million to settle allegations of false claims for government work

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A Newark company will pay $2.75 million to settle a case involving federal agencies.

E.M. Photonics, Inc. and its Chief Executive Officer, Eric Kelmelis, agreed to pay the settlement to resolve allegations that the company violated the False Claims Act.

The federal government alleged that from January 2009 to April 2014, EMP received funds under seven different contracts and grants awarded through the federal Small Business Innovation (“SBIR”) and Small Business Technology Transfer (“STTR”) programs.

The federal initiatives are the nation’s largest source of early stage/high-risk funding for start-ups and small businesses, a release from the office of the U.S. Attorney for Delaware stated.

E.M.uses parallel computing platforms to accelerate extremely complex applications, according to ot the company’s website.

To be eligible for the program small business must be American-owned, organized as a for-profit entity, and have less than 500 employees.

Contracts and grants at issue were awarded by a variety of federal agencies, including the Department of the Navy; Defense Advanced Research Projects Agency; Department of the Air Force; Department of Energy; and the National Aeronautics and Space Administration.

The government alleged that Kelmelis and EMP engaged in two schemes to defraud the SBIR/STTR programs.

First, EMP and Kelmelis directed EMP employees, or caused others to direct EMP employees, to falsely complete timesheets for direct labor that the employees did not perform and submit false invoices and public vouchers to the funding agencies for direct labor that was not performed on these contracts and grants, the government allegedly.

Second, EMP and Kelmelis sought and received SBIR/STTR funding for essentially the same work already performed and funded by another government agency and falsely certified that such work was, in fact, non-duplicative.

The government alleged that both of these schemes were designed to maximize charges to each contract or grant.

U.S. Attorney for Delaware, David C. Weiss said, “The SBIR and STTR programs are critical components to our government’s economic strategy to fuel innovative small businesses across the United States. Any small business who seeks to participate in these programs must do so with integrity. In this era of limited government resources, our office is committed to ensuring that every dollar spent on these critical economic programs is properly used – the public demands nothing less

“I applaud the outstanding efforts of our agents and law enforcement partners, who successfully investigated this matter and with this agreement highlight the importance of protecting federal research funds,” said NASA OIG Special Agent in Charge, Curtis Vaughn.

The claims resolved by the civil agreement are allegations only, and there was no determination of civil liability.

This case was investigated by Assistant U.S. Attorneys Jamie M. McCall and Jennifer Hall. This matter was also investigated by multiple agencies, including the Defense Criminal Investigative Service, National Aeronautics and Space Administration’s Office of Inspector General, Naval Criminal Investigative Service – Northeast Field Office, U.S. Air Force Office of Special Investigations, U.S. Army Criminal Investigation Command, and U.S. Department of Energy’s Office of Inspector General.

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