MassTech, Inc. has agreed to pay $1.9 in settlement money to the United States in a recent SBIR fraud lawsuit, which alleged that the company falsely certified itself as a small business so that it would be able to receive Small Business Innovation Research (“SBIR”) awards.

The SBIR program is meant specifically for small businesses—hence the name. The program’s purpose is to be more inclusive of small businesses and their concerns in federally research and development.

Requirements to receive funds from SBIR are strict. In order to qualify, a company must have fewer than 500 total employees. This eligibility requirement must be maintained not just at the time of the award, but throughout the entire period in which they’re receiving the award.

According to the SBIR fraud lawsuit, the United States claims that MassTech—along with its CEO Arnold Lee and CFO Richard Lee—misrepresented to government programs that MassTech as eligible for the SBIR both at the point of application and through the time they were receiving the award. By doing so, the defendants allegedly committed SBIR fraud against the government, the lawsuit claims, since the company received funding that it should not have received.

Though the MassTech, Arnold Lee, and Richard Lee denied these allegations, they agreed to a settlement amount to bring an end to the SBIR fraud lawsuit.

“Entities that participate in government-funded research grants must truthfully report their eligibility to participate in these programs, including the SBIR program. Companies and individuals that misrepresent their eligibility in order to obtain government funding undermine the integrity of the government grant process,” said United States Attorney for the District of Maryland Robert K. Hur in a press release.

Filing a Lawsuit Over Government Fraud

Lawsuits like this SBIR fraud lawsuit are often brought to the attention of the government by whistleblowers—that is, individuals who have noticed fraud against the government and filed litigation on behalf of the government. The federal government may then choose to intervene in the lawsuit.

If the suit is successful, the whistleblower is rewarded for their part in alerting the government. Whistleblowers are often given 15 to 30 percent of the reward money. Many whistleblower lawsuits end up bringing in millions in settlement money, so a whistleblower monetary reward can be significant.

In many cases, whistleblowers are employees of the company committing government fraud. A person considering becoming a whistleblower on behalf of the government may worry about being fired or otherwise retaliated against at work. However, there are regulations in place to protect whistleblowers. Whistleblowers are also typically given a substantial reward for calling attention to the suit.

If you believe you have witnessed some kind of fraud against the government by your current or former employer, you may be able to file a whistleblower lawsuit (also known as a qui tam lawsuit) on behalf of the government. These kinds of lawsuits have been filed over SBIR fraud, Medicare billing fraud, fraud against other insurers, physician/hospital kickbacks, and many other types of government financial fraud.