Testimony Before the United States Senate Committee on Finance 
 
 
 
 
Foreign Threats to Taxpayer-Funded Medical Research:  
Oversight Opportunities and Policy Solutions  
 
Testimony of: 
Leslie W. Hollie 
Chief of Investigative Operations 
   
Office of Inspector General  
Department of Health and Human Services 
 
 
 
 
June 5, 2019 
9:45 a.m. 
Dirksen Senate Office Building, Room 215   
Testimony of: Leslie W. Hollie 
Chief of Investigative Operations 
   Office of Inspector General, U.S. Department of Health and Human Services 
 
Good morning, Chairman Grassley, Ranking Member Wyden, and distinguished members of 
the Committee.  I am Leslie W. Hollie, Chief of Investigative Operations with the 
Department of Health and Human Services (HHS) Office of Inspector General (OIG).  I 
appreciate the opportunity to appear before you to discuss how HHS-OIG is diligently 
working, in conjunction with our HHS and law enforcement partners, protect taxpayer-
funded medical research.   
 
OIG is charged with overseeing all HHS programs and operations.  We combat fraud, waste, 
and abuse in those programs; promote their efficiency, economy, and effectiveness; and 
protect the beneficiaries they serve.  To accomplish this, OIG employs tools such as data 
analysis, audits, evaluations, and investigations.  We are a multidisciplinary organization 
comprised of investigators, auditors, evaluators, analysts, clinicians, and attorneys.  We 
depend on our strong public and private partnerships to ensure coordinated enforcement 
success. 
The Office of Investigations is the law enforcement component of OIG that investigates 
fraud and abuse against HHS programs.  Our special agents have full law enforcement 
authority and effect a broad range of actions, including the execution of search warrants and 
arrests.  We use traditional as well as state-of-the art investigative techniques and innovative 
data analysis to fulfill our mission.   
INTRODUCTION 
Today, I will cover how OIG enhances the Federal Governments ability to detect, deter, and 
take enforcement action to ensure the integrity of taxpayer-funded medical research against 
foreign threats. 
 
The National Institutes of Health (NIH) has recently referred to OIG for investigation 161 
allegations of noncompliance with its terms and conditions for receiving a medical research 
grant.  The allegations primarily deal with the failure of principal investigators to disclose 
foreign government affiliations.  Because these referrals are all still active, to avoid 
compromising  ongoing investigations, I cannot provide further details at this time.  
However, I can cover how we generally handle grant fraud allegations related to taxpayer-
funded medical research.  
 
                                                           
1 This number includes four additional referrals from NIH since our 1/31/2019 letter of response to Chairman 
Grassleys 1/17/2019 letter on the topic in which we reported having a dozen such complaints on hand.    
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Although foreign theft of taxpayer-funded medical research is a high-profile complex issue, 
the cases under our purview all involve aspects of grant fraudsomething which OIG has 
extensive experience investigating.  HHS is the largest grant-making organization and third-
largest contracting agency in the Federal Government.  It is also the second-largest payer 
under the Small Business Innovation Research (SBIR) and Small Business Technology 
Transfer (STTR) programs.  Given this nexus, OIG has made oversight and enforcement of 
grant fraud and related grant program integrity a priority. 
 
PROACTIVE GRANT FRAUD EDUCATION, WITH ENFORCEMENT WHEN 
NEEDED 
We take a two-pronged approach to preventing and acting against grant fraud.  First, OIG 
works collaboratively to educate key stakeholdersincluding HHS operating divisions and 
Grant Recipient Organizationson ways to detect and prevent grant fraud through proactive 
training.  Second, we take action, when needed, against grant fraud by investigating 
allegations of criminal misconduct and making appropriate referrals for criminal, civil, or 
administrative action.   
 
OIG receives allegations of grant fraud or uncovers potential fraud in a variety of ways, 
including OIG hotline complaints, referrals from HHS operating divisions and law 
enforcement partners, whistleblower disclosures, and proactive data analysis.  In addition to 
our standard hotline, we also provide a grant and contract portal especially for HHS 
employees to  refer grant and contract matters to OIG.  
 
Upon receiving an allegation pertaining to grant fraud involving NIH or other HHS 
operating division, OIG evaluates the allegation and determines whether we will open an 
investigation; refer the matter to another agency with appropriate authorities; or, when 
appropriate, refer the matter back to the HHS operating division involved for administrative 
review and potential action.   
 
When evaluating referrals involving allegations of foreign threats to taxpayer-funded 
medical research, OIG is sensitive to the fact that academic and professional reputations 
could easily be damaged by erroneous allegations.  All complaints are treated with 
confidentiality and discretion and we only proceed with investigations when sufficient 
factual information supports such investigative activity.  When OIG identifies a violation of 
civil or criminal law during an investigation, OIG presents the facts to the Department of 
Justice (DOJ) for prosecutorial consideration.   
 
To protect the integrity of medical research, OIG coordinates with the HHS Office of 
National Security (ONS).  In some instances, OIG works on matters with the Federal Bureau 
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  of Investigations (FBIs) Joint Terrorism Task Forces and National Cyber Investigative 
Joint Task Force, the Department of Homeland Security, and components at FBI 
Headquarters and local field offices.  When appropriate, we work together with NIH and 
ONS to develop followup approaches and mitigation strategies for such cases. 
 
To illustrate the types of grant fraud investigations OIG conducts, I will offer two summaries 
of recently resolved research integrity investigative cases. 
 
A doctor who worked in a laboratory at Iowa State University, which received 
research grants for an experimental HIV/AIDS vaccine, falsified scientific data to 
make it appear an experimental HIV/AIDS vaccine neutralized, or controlled, the 
HIV/AIDS virus in rabbits, and contaminated rabbit blood samples with human 
antibodies to make it appear the rabbits produced neutralizing antibodies against the 
HIV/AIDS virus.  The data from these actions were used in a grant application and 
progress reports to NIH.  The doctor was sentenced to 57 months in Federal 
prison, 3 years of supervised release, and $7.2 million restitution. 
 
Another doctor founded two companies, GenPhar and Vaxima, to perform research 
and produce a vaccine for diseases such as Ebola, Marburg Virus, and Dengue Virus. 
GenPhar and Vaxima obtained Federal grant money (including NIH SBIR funds) for 
biodefense research and vaccine development, but actually used the funds for other 
purposes, including construction of a commercial office building and to pay lobbyists 
and others who were seeking to secure more Federal funding on the doctors behalf.  
The doctor was sentenced to 70 months in Federal prison and ordered to pay over $3 
million in restitution.  
 
As mentioned earlier, OIGs approach to preventing and enforcing grant fraud includes 
working collaboratively with stakeholders to increase their ability to detect and prevent grant 
fraud through proactive training.  OIG works with representatives of the intelligence 
community and HHSs Office of Research Integrity (ORI) to promote awareness of research 
misconduct and helps with efforts to improve protections.  For instance, before I received the 
invitation to  testify here today, I was scheduled to deliver a joint presentation along with an 
ORI colleague entitled When Research Misconduct Involves Potential Criminal Behavior: 
New Collaboration Strengthens Protection of U.S. Biomedical Research Funding.  In 
addition to such joint training efforts, ORI notifies OIG when conduct that might be criminal 
activity arises in the course of a research misconduct investigation.  OIGs work is 
independent of ORIs, and ORI must refer all credible allegations of criminal conduct they 
uncover to OIG.  In short, OIGs enhanced collaboration with ORI adds a layer of scrutiny to 
ensure that both ORI and OIG can take appropriate actions to protect U.S. biomedical 
research investments. 
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OIG increases HHS employee, contractor, and grantee awareness of how to identify and 
report allegations pertaining to grant fraud as well as foreign threats to taxpayer-funded 
medical research through training and presentations.  For instance, OIG has provided 
numerous grant fraud training sessions at NIH Regional Seminars and NIH SBIR and STTR 
Town Hall meetings.  
 
To educate grant recipient organizations, OIG has partnered with several academic entities to 
address best practices to ensure Research Integrity Officers and Compliance Officers are 
informed on the roles, responsibilities, and authorities of OIG.  We tailor our efforts for  
each grant recipient organization to address what best practices are most helpful to serve its 
unique needs.  
 
RISK MITIGATION THROUGH MINIMIZING VULNERABILITIES 
OIG conducts oversight of NIH through audits and evaluations, some of which relate to 
protecting the integrity of NIH-funded research.  In fiscal year 2019, OIG received $5 
million in appropriations for oversight of grant programs and operations of NIH, including 
NIH efforts to ensure the integrity of its grant application evaluation and selection 
processes.2  We have evaluations underway to assess NIHs vetting and oversight of its peer 
reviewers, including its efforts to prevent or identify inappropriate disclosure of information 
by peer reviewers, and an evaluation of how NIH monitors the financial conflicts of interest 
(including foreign financial interests) reported by grantee institutions.  In addition, we are 
examining NIHs adherence to its policies for evaluating and selecting grant applications.   
 
OIG is also initiating audits that will assess NIHs Institutes and Centers to review their (1) 
pre-award process for assessing risk of potential recipients of Federal funds; (2) policies, 
procedures, and controls in place for ensuring that both foreign and domestic grantees 
disclose all relevant affiliations, sources of support, and financial interests, including 
intellectual property interests; (3) internal controls for identifying and addressing potentially 
duplicative grant funding and overlap; (4) testing of select cybersecurity controls within the 
NIH Electronic Health Records system; and (5) controls to ensure that NIH has an accurate 
inventory of hardware, software, and Internet Protocol resources. 
 
CONCLUSION 
OIG is committed to working collaboratively to address foreign threats to taxpayer-funded 
medical research through preventive efforts to mitigate risk and minimize vulnerabilities in 
                                                           
2 The Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 
and Continuing Appropriations Act, 2019 (Public Law No. 115-245).  As required by this law, OIG submitted a 
comprehensive NIH oversight plan to the Committee on Appropriations of the House of Representatives and 
the Senate; the Senate Committee on Health, Education, Labor and Pensions; and the House Committee on 
Energy and Commerce.  
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  HHS programs and conducting enforcement actions whenever necessary.  In cooperation 
with our HHS and law enforcement partners, OIG will continue to leverage our grant fraud 
investigative work and capabilities to maximize our efforts in this area as authorities, 
resources, and funding allow.  
 
Thank you for your ongoing leadership in this area and for affording me the opportunity to 
discuss this important topic with you. 
 
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