A biotechnology company spun off from a Triad university has been ordered to repay nearly $900,000 in restitution for false statements.
Bio-Adhesive Alliance Inc., which produces eco-friendly adhesives from swine manure, was ordered to pay $881,669.69 in restitution for falsifying statements on grant applications, according to a news release from the U.S Department of Justice.
The grant applications were made to the Environmental Protection Agency (EPA), which provided Bio-Adhesive with $319,199.69 in funding, and the National Science Foundation (NSF), which granted the company $562,500.
The court also sentenced the company to serve a five-year probationary term. Bio-Adhesive Alliance pled guilty in March 2021 to two counts of false statements, according to the Justice Department.
According to a statement from the U.S. Attorney’s General Office for the Middle District of North Carolina, the company was founded by two former North Carolina A&T University professors and a graduate student at the university. The DOJ reports that two professors are married to each other.
According to the most recent business corporation annual report on the N.C. Secretary of State's website, Bio-Adhesive's principal office remains at 1601 E. Market St. in Greensboro, which is the mailing address for North Carolina A&T University.
The DOJ identifies one of the founders, Employee-1, as an assistant professor in the Applied Engineering and Technology Department, Employee-2 as an associate professor in the Civil, Architectural and Environmental Engineering Department and Employee-3 as a graduate student. All three individuals were at the university until the summer of 2019, according to the Department of Justice.
The order to pay restitution and the probationary term were imposed on the company, not on the employees involved.
Dr. Mahour Mellat-Parast is listed as the company’s president, according to filings with the N.C. Secretary of State, and is identified on a court docket as having appeared in person from his residence by video link to the courtroom "as duly authorized corporate representative for Defendant.”
According to business corporation annual reports on the N.C. Secretary of State’s website, Mellat-Parast, Elham Fini and Daniel Oldham have been company officers at various times since the business was created in 2013.
Mellat-Parast was a professor of technology management at A&T and is currently a faculty member at Arizona State University, according to the university's directory. Fini was a professor of civil/pavement engineering at A&T and is now an assistant professor of sustainable engineering at Arizona State University, according to ASU's faculty directory.
Oldham, whose name was misspelled Oldam in one of the Secretary of State filings, is a graduate research assistant at N.C. A&T after spending nearly two years at ASU as a graduate research assistant, according to LinkedIn.
In addition to the restitution for false statements, the company also owes $134,058 to North Carolina A&T University, according to the DOJ release.
N.C. A&T declined to comment about the matter, but the university's spinoff of the company and its principals' research have been reported previously by Triad Business Journal, dating back to 2012 as Fini and Mellat-Parast discussed the research and its potential for addressing the challenges of pig waste disposal. Triad Business Journal in 2013 reported on Bio-Adhesive's successes in winning awards, both locally and nationally. Among some $230,000 in prize money it had received then was $100,000 at the 2013 MegaWatt Ventures competition, an annual clean-technology business competition sponsored by the U.S. Department of Energy.
Multiple attempts to reach Mellat-Parast, Fini and Oldham, as well as the company's contact listing on its website,for comment were unsuccessful.
Bio-Adhesive applied for and received multiple Small Business Technology Transfer (STTR) and Small Business Innovative Research (SBIR) grant awards from NSF and EPA between 2013 and 2016. The awards totaled $1,375,000. However, not all of the awarded funds were disbursed.
In total, Bio-Adhesive received $881,669.69 in award funds from NSF and EPA. The Department of Justice states that, during this period, Bio-Adhesive submitted multiple proposals that contained misrepresentations regarding its eligibility to seek these grant awards from NSF and EPA, as well as other material aspects of their project, including employees, budget and recommenders.
Examples of those misrepresentations, as cited by the Department of Justice, are that in an NSF SBIR/Phase II award application, Bio-Adhesive represented that:
- Employee-3 was eligible to be the Principal Investigator (PI) for the project, knowing that he was not;
- A subcontract of $134,058 would be paid to A&T (it was not);
- An individual with the initials S.H. would act as the Chief Technology Officer of Bio-Adhesive, knowing that S.H. had not agreed to assume that role; and,
- An individual with the initials W.M. had written a letter in support of Bio-Adhesive’s application, knowing that he had not.
“Applicants that make false representations in order to access government grants are cheating taxpayers and taking resources from honest researchers and businesses,” said Sandra J. Hairston, acting United States Attorney.
