Beware of Making ‘False Claims’ When Asking for a Federal Grant
Media coverage is replete with stories about organizations that have gotten into trouble because they’ve submitted a false, fictitious or inaccurate financial claim to the federal government in connection with expenditures they made on a federal grant or subgrant. But it’s a real “man bites dog” story when the false claim involves something that was submitted before the grant was ever awarded — such as on the grant application. That’s why it was news when a Virginia school district recently entered into a settlement agreement with the U.S. Justice Department over falsified signatures and information on its application for a $2.7 million award from the Department of Education. As part of the settlement, the school district repaid $1 million to the federal government. The discrepancies reportedly came to light during an audit conducted by the district itself.
The case illustrates that the certification signature block on the Standard Form 424, Application for Federal Assistance, can have just as many teeth as the one on the Standard Form 425, Federal Financial Report, which receives the bulk of audit and cost disallowance attention in the federal grant arena. The block on the SF 424 states, “By signing this application, I certify (1) to the statements contained in the list of certifications and (2) that the statements herein are true, complete and accurate to the best of my knowledge. I also provide the required assurances and agree to comply with any resulting terms if I accept an award. I am aware that any false, fictitious or fraudulent statements or claims may subject me to criminal, civil or administrative penalties.”
To reinforce the statement, a somewhat ominous citation to the False Claims Act (18 U.S.C. 1001), a federal criminal statute, follows. The closely related signature block in the application is to be signed by a person who is an “authorized representative.” Taken together, the features in the document are the federal government’s effort to assure that there are no misrepresentations in an attempt to get a federal agency to make a positive award decision and that the person signing the application has been duly authorized to commit the organization to this course of action (i.e., that he or she is legally competent to do so).
An illustrative case involving adverse consequences for the grantee arose some years back when the person who signed an application was determined not to be “duly authorized.” The mayor of a large midwestern city filed an application for a substantial grant from the U.S. Department of Housing and Urban Development; the grant was subsequently awarded, based on his representations. However, under that city’s charter and ordinances, the city council was required to approve all grant applications — a step that had not occurred. The grant had to be voided. Adding to the human interest of the story, the overreaching mayor is now a member of the U.S. House of Representatives.
While situations like these don’t arise all that often, when they do, they can leave the principals embarrassed and a lot of others shaking their heads and asking how that could have happened.