Last year, two Massachusetts Professors at MIT and Harvard were accused of lying to the federal government about their ties to China. One was convicted, the other had all charges dropped. The prosecutions of the professors are part of “The China Initiative,” a controversial program instituted by President Donald Trump. The program has faced criticism for being ineffective and amounting to racial profiling. The case of Gang Chen, the professor at MIT, is the eighth case in which charges were dropped.

What Is The China Initiative And Who Does It Target?

The China Initiative was started under President Donald Trump and continued under President Biden. Most of the cases against professors have focused on white collar crimes like making false statements or fraud, including grant fraud. Critics have said it has drifted far from its original purpose of targeting economic espionage. The program has been accused of singling out Chinese academics out for racial profiling, and the MIT Technology Review found that the initiative has disproportionately affected scientists of Chinese heritage, who make up 88% of the 148 individuals charged under the initiative.

The Justice Department has been conducting a review of the effectiveness of the “China Initiative.” Ninety members of congress requested that Attorney General Merrick Garland investigate concerns of racial profiling.

What is Grant Fraud?

Grant fraud can involve a number of serious crimes, including deception, bribery, wire fraud, forgery, extortion, theft, conspiracy, misappropriating funds for personal purposes and false representations or statements. Gang Chen was accused of wire fraud for failing to disclose seven Chinese affiliations to the Department of Energy in an application for a $2.7 million grant.

Conversations with the Department of Energy later revealed that the affiliations that Dr. Chen had failed to disclose would not have prevented the Department from releasing the funds. Dr. Chen was under no obligation to disclose these affiliations, and the affiliations were not material to the Department of Energy. He pleaded not guilty to all charges.

To prove any kind of fraud, including grant fraud, you have to prove intent. Dr. Gang Chen’s defense were able to argue that he was innocent, because he acted in good faith as he believed he had no obligation to disclose his Chinese affiliations on the Department of Energy form.

To be convicted of criminal charges your guilt has to be proven beyond all reasonable doubt. Prosecutors in Dr. Chen’s case filed a motion to dismiss the case for not meeting the burden of proof.

The charge of wire fraud without any other related charges of grant fraud can result in up to 20 years in prison and/or a $250,000 fine.

What Is the Crime of Making False Statements?

Dr. Gang Chen was also charged with failing to declare a Chinese bank account containing more than $10,000 and with making false statements to government officials in his grant disclosures. Making false statements to federal officials is a crime that is similar to perjury. It involves making false statements that materially affect the business of a government department. It must be proved that the defendant acted willfully. The crime of making false statements can result in a prison sentence of up to 5 years or a fine of up to $250,000.

Many people who face charges related to white collar crimes do not meet the burden of proof for the crimes themselves, but are convicted of making false statements. Lying to federal officials is a serious offense. It is also easy for prosecutors to convict.

Some high profile cases brought under The China Initiative have resulted in convictions. Dr. Lieber, former Chair of Harvard University’s Chemistry and Chemical Biology Department was the other Massachusetts academic accused of lying about ties to China. Dr. Lieber was convicted by a jury of two counts of making false statements to federal authorities, two counts of making and subscribing a false income tax return and two counts of failing to file reports of foreign bank and financial accounts (FBAR) with the Internal Revenue Service.

As the Principal Investigator of the Lieber Research Group at Harvard University, Lieber was fielding more than $15 million in federal research grants between 2008 and 2019. The financial remuneration for Lieber’s contract with China’s Thousand Talents program and his role as “strategic scientist” was also substantial. Lieber was earning more than $50,000 a month with living expenses of up to $150,000 and was awarded more than $1.5 million to establish a lab in Wuhan. Lieber failed to disclose the Chinese bank account that Wuhan University of Technology was depositing payments into.

The prosecution was able to prove that Lieber didn’t disclose his bank account, filed a false tax return and lied to federal investigators. Unlike Dr. Chen, it was proved in court that Lieber lied to federal investigators who were looking into accusations of not disclosing Chinese affiliations and funds. The crime of making false statements often occurs during the course of an investigation by federal authorities. That’s why it’s important that you should contact an experienced criminal attorney immediately if you are being investigated for crimes involving disclosure of foreign assets or foreign research affiliations.

What’s Next for the China Initiative?

The China Initiative originally set out to prosecute crimes of economic espionage and intellectual property theft, but it has not been successful. According to MIT Technology Review, only 19 of 77 cases (25%) identified by MIT Technology Review alleged violations of the Economic Espionage Act. 23 cases (30%) alleged grant or visa fraud.

The China Initiative will be renamed and its caseload will be absorbed into the Justice Department’s National Security Division. Experts have recommended an amnesty for academics who may have made errors in financial disclosure. For now these cases will be tried individually.

If you are an academic who is facing charges or an investigation for alleged grant disclosure violations, grant fraud, visa fraud, or tax disclosure violations you should contact an experienced Boston white collar crime attorney immediately. At Dhar Law, LLP, we are a hard-hitting Boston criminal defense firm who have defended some of the most complex criminal cases. We put everything we have into ensuring that defendants get a fair trial, even when faced with formidable federal prosecutors who are used to winning their cases. Please contact us to today at (617)-880-6155 so we can help you avoid unnecessary and life-changing convictions for research integrity accusations.