Sentient Science has agreed to pay $2.7 million to settle allegations by the U.S. Justice Department that the company made false claims in order to receive federal funding.
The Justice Department's allegations center on three Small Business Innovation Research awards issued to the Buffalo-based company by the National Science Foundation and the U.S. Department of Energy.
Sentient Science president and CEO Ward Thomas denied his company violated the False Claims Act, but said it agreed to the settlement because "the cost of continued litigation was becoming too great for our small business."
The materials science research company has about 80 full-time employees.
The Justice Department claimed Sentient Science made false statements about key personnel it claimed it would use to perform federally funded research projects.
"The corporation did not use such personnel and in some instances substituted significantly less-qualified employees to perform work," the Justice Department said.
Government officials also alleged Sentient falsely claimed "to have received third-party contracts as a result of work performed for the government in order to obtain additional government funding."
The government also charged that Sentient Science also claimed, in information included in grant milestones reports, that it had spent grant money that it actually had not spent.
The Justice Department said the settlement was the result of an investigation by the National Science Foundation's Office of Inspector General and the Department of Energy's Office of Inspector General. Sentient Science did not admit liability as part of the settlement.
Thomas contended the National Science Foundation's Office of Inspector General "continued the investigation even though none of the allegations were determined to have violated the False Claims Act."
Thomas said the investigation had gone on for four years, and the prospect of another four years of costs to continue the process "was becoming too expensive."
"I feel it's better to give our great country the $2,675,000 back after the huge investment the U.S. government has given us, rather than give more than that amount in lawyer fees to continue the investigation to fully clear our name of any liability," he said.
Sentient Science said the federal government has been a customer of the company since 2001 and has awarded more than $30 million to the company through the Small Business Innovative Research and Small Technology Transfer Research funding program.
Sentient Science was recruited to move its headquarters to Buffalo from Idaho in 2013. The company's software predicts the short- and long-term failure rates of mechanical systems, including wind turbines and rotorcraft.