GULFPORT, Miss. (CN) – The United States claims a Florida development zone spent nearly $4 million in federal money to build itself a new headquarters and lied to the government about it.
The USA sued the Technological Research and Development Authority (TRDA) in Federal Court, under the False Claims Act.
Uncle Sam claims the TRDA falsified grant applications submitted to NASA and the Department of Commerce’s Economic Development Administration, made false statements to get federal funds, and improperly spent grant money.
The TRDA is a special district chartered by Florida to support small businesses “through the development and administration of small business ‘incubator’ facilities intended to provide office space and other resources to small businesses,” according to the complaint.
Partly funded by Florida, the TRDA maintains “incubator facilities” in Florida and New York, and gets some of its money from NASA research grants. It headquarters are in Melbourne, Fla., and it has other Florida offices in Homestead and Brevard County.
“From 2002-2007, NASA awarded TRDA over $20 million in research grants,” the complaint states. “These grants funded a substantial portion of TRDA’s operating expenses.
“In 2004, TRDA and the Melbourne Airport Authority and the City of Melbourne International Airport (collectively referred to as the ‘airport’) agreed to construct a new headquarters and incubator facility for TRDA using NASA research grant funds, with additional funds coming from a grant from EDA.
“The United States alleges that TRDA made false statements and false claims in connection with the award and use of these NASA research grants and the EDA grant, and that TRDA and the airport conspired in this misconduct.” (Parentheses in complaint).
The Melbourne airport is not named as a defendant.
The government claims TRDA used NASA and EDA money to build its headquarters, though the Economic Development Administration requires applicants to co-finance their projects, and federal law prohibits commingling of federal grant funds. And it claims TRDA lied to both agencies about the scope of the grants.
“In or around 2003, TRDA decided to build a new, state-of-the-art incubator and headquarters facility on land owned by the airport (hereinafter the ‘Melbourne building’),” the complaint states. “However, TRDA had no money for the project, and the airport had no interest in providing money, so TRDA and the airport agreed to use NASA and EDA grants to pay for it.
“By January of 2004, though, TRDA knew that neither NASA nor EDA could approve grants for construction of the Melbourne building, for several reasons. First, new construction was outside the scope of TRDA’s only existing NASA grant, as well as the earmark legislation that restricted how the particular NASA funds were to be used. Second, TRDA had no basis to expect that upcoming earmark legislation or the corresponding NASA grants would cover such a project. Third, federal law prohibited the commingling of federal grant funds.
“TRDA attempted to avoid these hurdles by entering into a plan with the airport to redirect as much money as needed for the Melbourne building from TRDA’s existing and anticipated NASA grants, and securing additional grant funds from EDA. Neither TRDA nor the airport notified NASA or EDA, or sought their approval, for this plan.
“Thus, on Jan. 13, 2004, TRDA and the airport entered into an agreement in which TRDA agreed to pay the airport 100 percent of the construction costs for the Melbourne building.
“Under this agreement, which was styled as a prepaid ground lease, TRDA agreed to obtain funds sufficient to cover the construction costs of the Melbourne building through grants from NASA and EDA, and from other sources as necessary, and to remit these funds to the airport. The airport agreed to pay these funds to the construction firm. TRDA, however, maintained control of the construction process.
“Upon completion, the airport would take title to the building, with TRDA simultaneously occupying the building for a term of 40-60 years.” (Parentheses in complaint).
The government claims that “TRDA and the airport knew that the prepaid ground lease was a means of paying NASA and EDA funds to the airport for the purpose of paying unallowable costs.”
The project was completed in April 2007, at a cost of $5,254,727, according to the complaint.
“TRDA paid these costs using $2,883,961.50 in NASA research grant funds and $1,000,000.00 in EDA grant funds,” the complaint states. “TRDA paid the balance using its own funds, as well as grants it received from the city of Melbourne and Brevard County.”
The government claims TRDA received close to $3 million under four NASA research grants which were meant to cover operational expenses, interior renovations of TRDA’s Syracuse, N.Y. facility and the expansion of TRDA programs in Florida.
It claims TRDA made false statements to NASA to get the grants, used the money for its new building, which was outside the scope of the grants, and to cover anticipated costs of its headquarters, outside the term of the grants.
“In fact, TRDA had no intention of using the grant funds to expand its existing programs in Florida by paying a long-term building lease with the airport,” the complaint states. “No such agreement existed. To the contrary, TRDA intended to use these funds under the prepaid ground lease to pay for the construction of the Melbourne building and then make periodic ground rent payments to the airport.”
The government claims TRDA omitted from its applications its plans to use the money for its new headquarters and for ground rent payments to the airport.
It claims that TRDA earned interest on NASA grant money that exceeded a specified threshold, and failed to refund the interest to NASA.
TRDA received $1 million in federal money from the Economic Development Administration after it falsely claimed that no other federal dollars would be used to build its headquarters, the government says.
“EDA relied on these representations in deciding to award this grant. For example:
“a. In its analysis of the grant proposal, EDA relied on the apparent lack of availability of other federal assistance as a basis for its conclusion that EDA’s award of the grant was essential to the successful financing of the project.
“b. Based on TRDA and the airport’s representations regarding the ‘applicant’ funding commitment, EDA determined that there was ‘significant’ local commitment to the project, and based in part on this assessment concluded that the Melbourne building project had a high probability of success.
“c. TRDA and the airport’s representations in their application formed an ongoing basis for EDA’s decision to pay the $1,000,000 under the EDA award.”
The government claims TRDA knew the scope of each grant and knew its claims for funds to pay for its building under the prepaid ground lease were false.
It adds: “Both the airport and TRDA knew that pursuant to the prepaid ground lease, and the parties’ understanding of the deal, the Melbourne building project was both premised on and contingent upon the prohibited commingling of federal funds. Consequently, TRDA and the airport knew that their agreement to build the Melbourne building was an agreement wrongfully to apply for, obtain, and expend NASA and EDA funds.”
The government seeks treble damages for violations of the False Claims Act, payment by mistake and unjust enrichment.