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 NIST Grantee Pleads Guilty to Misuse of Federal Funds

January 13, 2010
On January 13, 2010, Sridhar V. Iyer, president and chief technology officer of Whoola, Incorporated pled guilty to one felony violation of 18 USC ยง 666 "misapplication of federal program funds" related to a National Institute of Science and Technology (NIST) Advanced Technology Program (ATP) grant. The plea resulted from an investigation of the Dallas-based company by the U.S. Department of Commerce Office of Inspector General (OIG).

Iyer signed a waiver of indictment and pled guilty to misappropriating a portion of a $2 million ATP grant awarded to Whoola by NIST for the development of "peer to peer virtual reality learning environments"between May 2004 and October 2006. The misappropriation included diverting funds to a for-profit sister company, Socratic Learning, located in Plano, Texas. The misappropriated funds were used by Socratic Learning to pay for salaries, equipment, rent, utilities, and subcontractors having little or nothing to do with the NIST grant. During the course of the investigation, Commerce OIG recovered $100,000 in computer equipment from Iyer. OIG estimates the total financial loss to the government as a result of the fraud to be approximately $875,000.

In the plea agreement, Iyer admitted that he "did intentionally cause to be misapplied . . . $70,686 in cash, under the care, custody, and control of such organization, in that defendant intentionally caused grant money to be used to pay wages and benefits and purchase computers, among other things, knowing that said expenditures were not authorized under the terms of said grant."

Iyer is scheduled to be sentenced on May 10, 2010, in U.S. District Court, Northern District of Texas before Judge David C. Godbey. He faces a maximum sentence of 10 years' incarceration and a $250,000 fine, or twice any financial gain to the defendant or loss to the victim (NIST).

According to NIST's website, the "goal of the ATP is to benefit the U.S. economy by cost-sharing research with industry to foster new, innovative technologies." The program was abolished in 2007 by the America Competes Act (H.R. 2272) and replaced with the Technology Innovation Program, also administered by NIST.