A local biopharmaceutical company will pay about $2 million to the government to resolve a criminal and civil investigation into the company's submission of false and fraudulent claims on grants and a contract with the National Institutes of Health, the U.S. Attorney's Office announced Thursday.
Ansun Biopharma Inc., formerly known as NexBio Inc., is a biotechnology company headquartered in San Diego that, from 2004 through 2011, received research grants and a contract from the NIH.
They included a grant for "Broad-Spectrum Therapeutics for Influenza," a grant for "Development of Fludase as an Anti-Influenza Agent," and, in September 2006, a $50 million contract to develop a drug to combat influenza (the "Fludase Contract"). Fludase was an experimental antiviral drug for the treatment of influenza.
According to the settlements, Ansun's Chief Executive Officer Mang Yu directed its then-Vice President of Finance and Administration, Dong Mei Wang, to fabricate timesheets for company employees to maximize billing on the NIH grants and the Fludase Contract.
The company admitted that in 2009, it created a time-keeping policy that required employees to accurately record the number of hours devoted to certain projects, including projects covered under the Fludase Contract and other NIH-funded grants. The company was served was search warrants in 2011.
Despite the time-keeping requirements, Yu directed accounting personnel to maximize reimbursements from NIH, regardless of the actual number of employee hours spent on the Fludase contract or other grants. Yu directed Wang to bill employee hours to the Fludase contract, even if the project the employee was working on did not fall within the scope of the project.
The company acknowledged that Yu informed Wang that NexBio should use the money for the Fludase contract whenever possible in case NIH terminated the deal before NexBio used all the money.
To comply with Yu's orders, Wang corrupted the time-keeping system by faking timesheets for some employees, altering the number of hours worked and moving employee hours from one category to another, according to the settlements.
The point of the alterations was to get money from NIH, even if the work was not covered under the terms of the Fludase contract or NIH grants, according to the settlements.
Wang, 49, pleaded guilty to executing a scheme to defraud the United States in a contract valued at more than $1 million. After he complied with the terms of a deferred agreement, the charge was dismissed in December.
Yu, 58, pleaded guilty to interfering with officers of the Department of Health and Human Services and was sentenced to a year of probation.
The company issued a statement that said Wang and Yu were removed from their positions in 2011, and a new Board of Directors was appointed that year.
"We continue to work with leaders in the medical community to develop therapies for unmet medical need," said chief executive Ronald Moss. "Our investigational drugs for influenza and parainfluenza are in late stage clinical development. It is very clear based on the current influenza epidemic that more therapies are urgently needed and Ansun is committed to developing these therapies for patients."
Scientists with the company have made progress on their research, Moss said.
