WSU professor charged with fraud in federal court
PULLMAN – A Washington State University engineering professor, along with his brother and sister-in-law, have been charged with defrauding the federal government of about $8 million in research grants.
Haifang “Harry” Wen, 41, was arrested at his Pullman home for his alleged role in the fraud scheme, which involved a series of limited liability companies and fabricated statements from investors who did not exist. At the helm of the companies were Haifang Wen’s brother, 44-year-old Bin “Ben” Wen, and Bin’s wife, 43-year-old Peng “Jessica” Zhang, both of Great Falls, Virginia.
The three were charged Wednesday in federal court in Rochester, New York, with wire fraud, lying to federal agencies and transacting illicit funds. The charges carry a maximum penalty of 30 years in prison and a $1 million fine.
“As charged, the defendants took money intended to foster innovative research by small businesses, and instead used for their own personal use,” U.S. Attorney William Hochul said in a news release.
Court records say the trio used about a half-dozen sham companies to collect about $8 million from the National Science Foundation, the Department of Energy, the Department of Transportation and the Department of Agriculture.
The money was doled out in about 30 separate grants through a federal program designed to help small businesses with science and engineering initiatives. The grants were supposed to be used for research on “asphalt composition technologies,” the U.S. attorney’s office said.
Haifang Wen, a naturalized American citizen originally from China, was hired as an associate professor in WSU’s Department of Civil and Environmental Engineering in 2008. Much of his research centers on “bio-asphalt,” a kind of pavement made from recycled cooking oil.
The companies – whose names include “United Environment and Energy” and “Advanced Engineering Research” – were incorporated in Wisconsin and Horseheads, New York, where Bin Wen and Zhang lived before moving to Virginia.
Court records say the defendants misrepresented their relationships with several people who were listed as consultants and employees, in an attempt to collect additional grant money to pay their salaries.
The companies, for example, budgeted a Unilever employee in Chicago to receive more than $100,000 in federal money since 2010, but labor records showed she received only $13,200. A professor at Cornell University was budgeted to receive $163,000 over the same period, but records showed he received only $11,000. And an energy company manager was budgeted to receive $71,000 over that period, although he received nothing.
Investigators noted that those people’s LinkedIn profiles made no mention of working for the defendants’ companies.
In pitching their scientific ventures to the federal agencies, the defendants also fabricated letters from “investors,” court records say. Several lines in Haifang Wen’s criminal complaint read, “Based upon a review of (records) there is no indication that (this person) exists or has any affiliation with (this company).”
WSU spokesman Robert Strenge said he had little information about the case and couldn’t comment.
“We’re aware of the arrest and the initial allegations,” he said. “But we don’t have any additional information at this time.”
The defendants are scheduled to appear in court next month.