United States ex rel. Masoud Samandi v. Materials
and Electrochemical Research Corporation;
J.C. Withers; R.O. Loutfy; W. Kowbel; and R. Storm.
CV 05-124-TUC-DCB District of Arizona (Tucson)

US Partially Joins Qui Tam Whistleblower Suit Against
Nanotechnology Research Firm That Received $50 Million
in Small Business Innovation Research ("SBIR") Grants Since 1985;

In 2005; Materials and Electrochemical Research Corporation ("MER"),
Its Principals And Officers Defrauded Departments of Defense, Energy
and NASA By Illegally Duplicating Projects, Falsifying Progress Reports,
and Billing Government For Work On Private Projects, Complaint Filed
By Whistleblower's Attorney Timothy J. McInnis, Esq. Alleges

TUCSON, Ariz. - This qui tam case was filed under seal in 2005, charging Tucson-based Materials and Electrochemical Research Corporation ("MER"), a nanotechnology company that has received more than $50 million in Government research grants since 1985, and four individual defendants with violating the federal False Claims Act between 2002 and 2005 in connection with MER's receipt of Small Business Innovation Research ("SBIR") grants, according to the whistleblower's attorney, Timothy J. McInnis, Esq.

The U. S. Department of Justice and the U.S. Attorney's Office for the District of Arizona, in a March 31, 2008, U.S. District Court-filed notice, announced that the federal Government was partially intervening in the qui tam whistleblower lawsuit.

The United States then unsealed its Complaint against MER. It included new allegations that MER submitted forged venture capital agreements from a non-existent entity it called "Southwest Investment Partners" in 13 applications totaling approximately $9 million. Commercialization contracts are required to be in force in order to secure continuing SBIR grants, McInnis explained.

In March 2010, U.S. District Judge David C. Bury, in Tucson, denied the MER Defendants' motion to dismiss Relator Samandi's Small Business Innovation Research (SBIR) grant fraud case on summary judgment and ordered the matter to go to trial.

Judge Bury also permitted Samandi to file an amended Complaint, as the judge earlier had allowed the United States to do with respect to its Complaint in partial intervention. The Court further denied the Government's motion for summary judgment on its Complaint. The SBIR grant program is run under the auspices of the Small Business Administration (SBA).

Related filed court documents:

Samandi Intervention News Release (PDF)

United States' Second Amended Complaint in Intervention (PDF)

Government Summary Judgment Motion Denied (PDF)

Defendants' Summary Judgment Motion Denied (PDF)

First Amended Complaint and Demand for Jury Trial (PDF)

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