Grant Fraud and the Responsibilities of Award Recipients

The following information from the National Procurement Fraud Task Force, established by President Obama in 2009, are designed to help you protect your organization and the source of your federal funds by helping to detect and prevent fraud:

 

Why are federal grants awarded?

Each year, the United States Government awards more than $500 billion in Federal Assistance Agreements, most commonly in the form of grants that help to:

  • Support national infrastructure programs in transportation, homeland security, criminal justice, agriculture, human health, and the environment
  • Fund scientific research, studies, and analysis
  • Further the social sciences, art, literature, and promote cultural enrichment

Unfortunately, grant dollars are susceptible to fraud, waste, and abuse.

 

What are the responsibilities of award recipients?

Recipients of federal grants have been awarded funds to carry out the goals and objectives identified in the grant. These funds are subject to certain regulations, oversight, and audit.

  • Grant recipients are stewards of federal funds.
  • Grant dollars must be used for their intended purpose.
  • Grant recipients must account for costs and justify expenditures.

Using federal grant dollars for unjust enrichment, personal gain, or other than their intended use is a form of theft, subject to criminal and civil prosecution under the laws of the United States.

 

What actions are violations of grant fraud statutes?

Federal grant dollars are susceptible to several forms of financial theft, most commonly in the form of specific federal violations, including:

  • Embezzlement
  • Theft or bribery concerning programs receiving federal funds
  • False statements
  • False claims
  • Mail fraud and wire fraud

Each of these violations of law are subject to criminal prosecution, fines, restitution, and civil penalties.

 

What are some examples of grant fraud?

Grant fraud occurs in many ways, but some of the most common fraud scenarios include:

  • Charging personal expenses as business expenses against the grant
  • Charging for costs which have not been incurred or are not attributable to the grant
  • Charging for inflated labor costs or hours, or categories of labor which have not been incurred (for example, fictitious employees, contractors or consultants)
  • Falsifying information in grant applications or contract proposals
  • Billing more than one grant or contract for the same work
  • Falsifying test results or other data
  • Substituting approved materials with unauthorized products
  • Misrepresenting a project's status to continue receiving government funds
  • Charging higher rates than those stated or negotiated for in the bid or contract
  • Influencing government employees to award a grant or contract to a particular company, family member, or friend

 

How can grant fraud be detected and prevented?

As a grant recipient, you can protect your organization and the source of your federal funds by detecting and preventing fraud:

  • Establish an adequate and effective system of accounting, internal controls, records control, and records retention.
  • Implement an internal compliance and ethics program that encourages the recognition and reporting of fraud, waste, or abuse.
  • Report suspected fraud to the Inspector General of the government agency that distributed the federal grant funds.

Report Fraud


If you think you may have been a victim of a government grant scam, file a complaint with the Federal Trade Commission online, or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261.

You can also report grant-related scam attempts to the Health and Human Services (HHS) Fraud Hotline at 1-800-447-8477 and email support@grants.gov.


Fraud Information


Most government agencies have an Office of Inspector General (OIG) that is responsible for investigating allegations of fraud, waste, and abuse, and can be located at: www.ignet.gov

Specifically, allegations of fraud can and should be made directly to your awarding agency's OIG - Office of Investigations, or a designated Hotline Office within many of the OIG offices.

Click here to download the "Grant Fraud" slideshow – the primary source of the information in this section – from the National Procurement Fraud Task Force.

Additional information in this section was reproduced from a poster published by the U.S. Department of Health and Human Services, Office of Inspector General.