Owner of tech company pleads guilty to falsifying federal grant request

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A Delaware man pleaded guilty to wire fraud in connection with false representations that he made in a final report to the United States Air Force, a release from the United States Attorney’s office in Delaware stated.

Pengcheng Lv is a co-owner of AlphaSense, Inc. a small technology company located in Wilmington.

Starting as early as 2008 and continuing through at least 2016, prosecutors said Lv made false representations in grant proposals and payment requests to United States government agencies, including the United States Department of Energy (DOE), Air Force, Navy, and Army, the Defense Advanced Research Projects Agency, the National Science Foundation (NSF), and the National Aeronautics and Space Administration (NASA).

Lv was seeking funds for scientific research.

The total loss due to to Lv’s conduct is between $250,000 and $500,000. As part of Lv’s plea, he also agreed to enter into a civil settlement to pay $700,000 in damages to the government for violations under the False Claims Act, the release stated.

Lv’s grant applications were submitted to the government agencies in connection with grants or contracts that were administered through the Small Business Innovation Research (“SBIR”) and Small Business Technology Transfer (“STTR”) programs. The SBIR and STTR programs encourage domestic small businesses to engage in federal research and development that has the potential for commercialization. These funding programs are highly competitive and require a showing of adequate and qualified staffing and, in some cases, industry support, according to the release.

According to the release, his actions involved forging letters from university professors and industry professionals and including such letters in his proposals to the government as evidence of capability, support, or interest; representing that AlphaSense had employees with impressive experience and education when many of those individuals had never worked for AlphaSense; and, pocketing money that had been earmarked through the government awards to others, including “ghost” employees.

“Lv deceived numerous government agencies into awarding federal grants or contracts that should have gone to honest, qualified, and deserving small businesses,” said U.S. Attorney David C. Weiss. “Fraud in the award process serves to undermine public trust and confidence in such programs, and harms deserving small businesses looking to commercialize their ideas. With our agency partners, we will continue to identify and punish those who use the federal funding process to line their own pockets and we will disgorge bad actors of any ill-gotten gains.”

“I commend the outstanding investigative efforts of our law enforcement partners and the work of the USAO for the District of Delaware in reaching this plea,” said NASA Inspector General Paul K. Martin. “Their teamwork resulted in ensuring aggressive oversight of taxpayer funds used for scientific research by NASA contractors and grantees.”

“The SBIR and STTR programs are critically important in the generation of scientific breakthroughs and technological innovations. Those who defraud our programs are a threat to our nation. The Department of Energy, Office of Inspector General will continue to work with our law enforcement partners to hold all who violate the integrity of our Nation’s scientific programs accountable,” said Department of Energy Inspector General Teri L. Donaldson. “Thank you to the U.S. Attorney’s Office and our law enforcement partners on this joint investigation.”

Lv faces a maximum penalty of 20 years imprisonment, three years supervised release and fine equal to the greater of $250,000 or twice the gross loss, and a $100 special assessment. Actual sentences for federal crimes are typically less than the maximum.

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