COLUMBIA, SC – United States Attorney Beth Drake announced Tuesday that a doctor was sentenced to 70 months in prison for multiple counts of fraud and ordered to pay over $3 million in restitution. Dr. Jian Yun Dong, or John Dong, funded GenPhar Inc. and Vaxima Inc, which were also fined more than $12.8 million dollars.
Dr. Dong, GenPhar Inc., and Vaxima Inc. went to federal court in June of 2015 and all three were convicted on charges of conspiracy to commit grant fraud, wire fraud, theft of government property and providing false statements, theft of government funds, as well as twenty-two counts of wire fraud.
The press release says federal grant money was obtained by GenPhar and Vaxima for purposes of biodefense research and vaccine development, but was used for other purposes, including building a commercial office building and paying lobbyists and others who were seeking to secure federal funding for the company. Approximately $6 million was spent on the construction, which included approximately at least $3 million of improperly diverted grant money.
“Diverting funds meant for critical vaccine research is reprehensible and illegal,” said Special Agent in Charge Derrick L. Jackson of the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta in the press release. “We will continue to work with our law enforcement partners to root out all forms of waste, fraud, and abuse in federal grant programs.”
“The real tragedy in this case is that millions of dollars intended for desperately needed vaccine research was diverted into a commercial real estate project. Most of the dedicated and accomplished scientists receiving these grants can be trusted to spend the funds on research, but those that seek to divert the funds to their own benefit need to know that we will pursue charges against them like any other fraudster,” said US Attorney Beth Drake in the release.
The conviction and sentence are the result of an investigation conducted by the Department of Health and Human Services Office of Inspector General, the Defense Criminal Investigative Service, the FBI, the U.S. Army Criminal Investigation Command, and the Naval Criminal Investigative Service.
Assistant United States Attorneys Eric Klumb and Nathan Williams of the Charleston office prosecuted the case.