| Lafayette Journal & Courier
WEST LAFAYETTE – A former Purdue University professor and his wife, accused of funneling more that $1 million in National Science Foundation research money into a private company that served as a front to pay for their own personal expenses, were sentenced Monday to two years of probation and will have to pay a combined $1.6 million in restitution.
Qingyou Han, 62, a now-retired mechanical engineering technology professor and former director of Purdue’s Center for Materials Processing Research, and his wife, Lu Shao, 54, were sentenced Monday by U.S. District Court Judge Philip Simon.
The two pleaded guilty in 2019 to felony charges of wire fraud on behalf of themselves and Shao’s company, Hans Tech of Lakewood, Ohio.
The two were ordered jointly and severally liable to pay a total of $1.6 million in restitution, $1,351,996 of which goes to the National Science Foundation and $300,000 to the Indiana Economic Development Corp. The state agency had provided Han and Hans Tech with a matching grant in that amount, according to the U.S. Attorney’s Office.
Han was also ordered to perform 200 hours of community service and pay a $25,000 fine.
The case stems from a July 2018 indictment that outlined a scheme that defrauded the National Science Foundation into putting $1.3 million into Hans Tech through the federal government’s Small Business Innovation Research and Small Business Technology Transfer programs. Those are used by the NSF to promote the progress of science through innovative small businesses.
Instead, that money, the couple admitted, went toward a home in West Lafayette and payments toward their school-aged children between 2007 and 2014.
Among the allegations Han and Shao admitted to, according to the Department of Justice:
- Han wrote grant proposals on behalf of Hans Tech – which was created in 2006 as a front for the scheme – and submitted them and other documents to the National Science Foundation, using Shao’s name. The proposals didn’t make it clear that the two were married or that Han, “who was not affiliated as an owner or employee of the company, was actually running Hans Tech behind the scenes.”
- In some Hans Tech proposals to the National Science Foundation, the company recommended bringing on Han – in his role as a Purdue professor – as be a subcontractor to work on the research.
- Hans Tech told the National Science Foundation that it was paying two employees who wound up being Han and Shao’s children, who were younger than 16.
- Hans Tech claimed some of the research money was going toward $3,000-a-month rent on a laboratory, which actually was a single-family home they were buying in West Lafayette. More than $150,000 in “rent” went to Shao during that time, according to the Department of Justice.
- Han, using a company in his name, posed as a third party looking to invest $100,000 into Hans Tech. That turned out to be money form Hans Tech’s own money. After the $100,000 investment was made, $120,000 – at least $80,000 of it from federal grant money – wound up back in Han’s bank account, according to the plea. Of that, $75,000 was used to pay off Han and Shao’s home mortgage.
“The National Science Foundation’s Small Business Innovation Research program provides small businesses with funding to conduct research and development work that will lead to the commercialization of innovative new products and services,” Allison Lerner, NSF inspector general, said in a statement. “Today’s sentence serves as a reminder that fraud in the (Small Business Innovation Research) Program will not be tolerated.”
In July 2018, when the indictment was announced, Purdue distanced itself from the case, saying it “relates to a faculty member’s personal outside business activity.”
On Monday, Tim Doty, a Purdue spokesman, said Han retired from the university on Aug. 1, 2020.
In his pre-sentencing letter to the judge, Han wrote that he took full responsibility for his wrongdoing and pleaded for a light sentence so he could to continue his research.
“This legal case is my worst nightmare. For the past two years, life for me has been very dark. I have felt great humiliation and forced to leave the job that I have loved as a professor at Purdue,” Han wrote. “In my life, I have always worked very hard and tried to do the right thing, but I failed to do that with the NSF grants.
“Being a convicted felon, I am unable to teach students anymore,” Han wrote. “The only valuable thing that I can do fairly well for the community is serving the manufacturing industry, which I still have kept doing since I had been indicted. … I do believe that my experience is still urgently needed by the industry in developing new products and in pursuing reduced costs, improved energy efficiency and increase productivity.”
Contributing: Dave Bangert/J&C. Allie Kirkman is a news reporter for the Journal Courier. Contact her at 765-256-9613 or via email at firstname.lastname@example.org. Follow her on Twitter at @alliekirkman15.