The recent news of arrests of university professors for failing to disclose their participation in Chinese talent programs has hit the academic world like a thunderclap. But those surprised by these arrests have failed to notice that these actions are just the latest moves by the Department of Justice (“DOJ”) in its ongoing “China Initiative.” Formed in November 2018 by then-Attorney General Sessions, the China Initiative was created to prioritize investigations of alleged Chinese economic espionage within the United States.
While DOJ had historically focused on thefts of trade secrets and intellectual property from private U.S. companies or federal agencies, the China Initiative expanded the government’s focus to the alleged threat posed by individuals working within academic institutions. Specifically, DOJ stated that as part of the China Initiative, it would “[d]evelop an enforcement strategy concerning non-traditional collectors (e.g., researchers in labs, universities, and the defense industrial base) that are being coopted into transferring technology contrary to U.S. interests.” This new perceived threat has become one of the leading investigative priorities of the DOJ’s National Security Division and the FBI. As FBI Director Wray explained to Congress, “I would just say that the use of nontraditional collectors, especially in the academic setting, whether it’s professors, scientists, students, we see in almost every field office that the FBI has around the country.” Wray further testified, “[t]hey’re exploiting the very open research and development environment that we have, which we all revere, but they’re taking advantage of it.”
A particular focus of DOJ scrutiny is China’s use of “talent” programs. Historically, countries establish talent programs, such as National Science Foundation (“NSF”) awards in the United States, to recognize and support the nation’s leading researchers. While membership in a foreign talent program was once viewed as a hallmark of professional achievement, the federal government now views China’s talent programs as a means to obtain and steal U.S. knowledge and research for its own economic and military gain. The government’s view is likely informed by the intelligence information it possesses. China has more than 200 such talent recruitment programs, the most prominent of which is the Thousand Talents Plan. Established in 2008, the Thousand Talents Plan was an effort by the Chinese government to recruit international experts in various fields of scientific research in exchange for salaries, research funding, lab facilities, support staff, and other incentives. According to a report issued by Congress, China has recruited more than 7,000 overseas experts into the Thousand Talents Plan, including several Nobel laureates. John Demers, the Assistant Attorney General for National Security, has explained, “China continues to use its national programs, like the ‘Thousand Talents,’ to solicit and reward the theft of our nation’s trade secrets and intellectual property, but the Justice Department will continue to prioritize investigations like these, to ensure that China understands that this criminal conduct is not an acceptable business or economic development practice.”
Prosecutions of Individual Researchers
DOJ’s enhanced focus on Chinese influence in academic institutions can be seen in the notable criminal prosecutions of researchers that have been brought as part of its China Initiative:
- Yiheng Percival Zhang: Mr. Zhang worked as a professor at Virginia Tech specializing in biological systems engineering. Zhang founded Cell-Free Bioinnovations, Inc., a biological research firm located in Blacksburg, Virginia. To fund its research activities, Zhang applied for and received federal funds from the Small Business Innovation Research (“SBIR”) program run by the federal Small Business Administration. At the same time that he worked for Virginia Tech and Cell-Free Bioinnovations, Zhang was a paid researcher at a biotechnology institute in China. Zhang was convicted of federal grant fraud and making false statements for obtaining SBIR funds for research work that had already been performed in China. He was sentenced in September 2019.
- Feng “Franklin” Tao: Mr. Tao works as an associate professor at the University of Kansas’s Center for Environmentally Beneficial Catalysis. As part of his work at KU, Tao received federal grants from the Department of Energy (“DOE”) and NSF. According to the federal indictment, Tao failed to disclose to KU that he was also employed by a Chinese university at the same time and had been inducted into a Chinese government-sponsored talent program. As a result, KU allegedly did not report these conflicts of interest to the DOE or NSF which had awarded Tao federal grants. In January 2020, Tao was indicted for two counts of wire fraud and one count of program fraud.
- Charles Lieber: Mr. Lieber is a professor at Harvard University and served as the chair of the Chemistry and Chemical Biology Department. Professor Lieber also serves as chair of the Lieber Research Group, which specialized in nanoscience research. According to the criminal complaint, the Lieber Research Group allegedly received more than $15 million in grant funding from the National Institutes of Health (“NIH”) and the Department of Defense (“DOD”). According to the government, as part of those grants, Lieber was required to disclose foreign financial conflicts of interest, including support from foreign governments or foreign entities. It is alleged that, unbeknownst to Harvard University, in 2012, Lieber became a “strategic scientist” for a Chinese university, and a member of China’s Thousand Talents Plan. Lieber allegedly signed a three-year contract with the Thousand Talents Plan that paid him $50,000 per month and living expenses up to $158,000, as well as providing $1.5 million to establish a lab at the Chinese university. The criminal complaint first states that in April 2018, DOD investigators asked Lieber about his Chinese affiliations and he stated he was never asked to be a member of the Thousand Talents Plan. Furthermore, it is alleged that in November 2018, in response to an NIH inquiry about Professor Lieber’s foreign affiliations, Harvard similarly asked Professor Lieber about his Chinese affiliations, and he once again denied them. Harvard allegedly relayed Professor Lieber’s answer to NIH that he “is not and has never been a participant in” China’s Thousand Talents Plan. Professor Lieber was arrested in January 2020 on two counts of making material false statements.
- Anming Hu: Mr. Hu is an associate professor in the Mechanical, Aerospace, and Biomedical Engineering Department at the University of Tennessee, Knoxville (“UTK”). Hu’s research focus is on nanomanufacturing and laser-based processing, including 3D printing. As part of his research work, Hu allegedly was receiving funding from the National Aeronautics and Space Administration (“NASA”). Federal law prohibits NASA from using funds on projects in collaboration with China or Chinese universities. In February 2020, Hu was indicted on three counts of wire fraud and three counts of making false statements. The indictment alleges that Hu failed to disclose to UTK in conflict-of-interest forms that he also held a faculty appointment at a Chinese university in Beijing. It is alleged that as a result of Hu’s misrepresentations and omissions, UTK falsely certified to NASA that it was in compliance with federal law.
- James Patrick Lewis: Mr. Lewis was a tenured professor in the Physics Department at West Virginia University (“WVU”). Lewis specialized in molecular reactions used in coal conversion technologies. The government alleges that in July 2017, Lewis signed a three-year contract with the Thousand Talents Plan that paid him a salary of $86,000 and living expenses up to $143,000, as well as provided a research subsidy of $573,000. In return, Lewis was required to perform research work at the Chinese Academy of Sciences beginning in August 2018. To do that, Lewis requested that WVU release him from his teaching requirements in the fall semester so he could care for his newborn child. In the fall of 2018, Lewis worked at the Chinese Academy of Sciences while collecting his WVU salary. In March 2020, Lewis pled guilty to one count of federal program fraud.
The five cases highlighted above represent just the known criminal enforcement actions taken against academic researchers in the last two years. These will not be the last. According to the New York Times, the FBI has nearly 200 similar investigations at academic institutions around the country. In addition, DOJ recently made clear that its enforcement actions are not just limited to the individual researchers, but also academic institutions will face scrutiny as well.
DOJ’s Scrutiny of Academic Institutions
In December 2019, DOJ for the first time targeted an academic institution as part of its China Initiative efforts. Van Andel Research Institute (“VARI”), located in Grand Rapids, Michigan, is an independent research institute specializing in biomedical research. VARI employed two researchers, Huaqiang Eric Xu and Jiyan Ma, both of whom had received financial support from NIH. At the same time as they were receiving government funding, the researchers were also receiving grants and research support from a variety of Chinese sources, including the Thousand Talents Plan. For its part, VARI was aware of the researchers’ Chinese affiliations and even some of their Chinese funding. Nonetheless, VARI’s submissions to NIH omitted any foreign affiliations or foreign financial support.
DOJ investigated VARI for violations of the False Claims Act, 31 U.S.C. § 3729 et seq., which makes it unlawful to knowingly present a false or fraudulent claim to the government for payment. The statute defines the term “knowingly” as someone who “(1) [has] actual knowledge of the information; (2) acts in deliberate ignorance of the truth or falsity of the information; or (3) acts in reckless disregard of the truth or falsity of the information.” 31 U.S.C. § 3729(b). Courts have explained that “[t]he first element of ‘knowingly’ goes after subjective knowledge, while the second seeks out the kind of willful blindness from which subjective intent can be inferred. As for reckless disregard, it is an extension of gross negligence, or gross negligence plus, and is not merely a proxy for subjective intent.” United States ex rel. Folliard v. Govplace, 930 F. Supp.2d 123, 130 (D.D.C. 2013).
In the civil settlement resolving the FCA claims, DOJ alleged that VARI “should have known about these foreign grants and disclosed them to NIH.” While the government noted that VARI had institutional policies and procedures in place to address conflicts of interest, “VARI did not take adequate additional steps to investigate the researchers’ foreign funding sources despite receiving specific information about Chinese affiliations.” For example, the government cited an August 2010 letter from a Chinese institution to VARI noting that Xu was receiving “generous support” from the Thousand Talents Plan. Moreover, VARI had a strategic collaboration with a Chinese institute to form a center for drug discovery, with Xu as the director and principal investigator. As part of that role, VARI knew that Xu would be applying for grants for work to be done at the new center. In addition, VARI deleted references to Chinese sources of funding in a press release announcing one of Xu’s publications.
DOJ further alleged that VARI was on notice of the potential misrepresentations to NIH because it had received an August 2018 letter from NIH generally reminding it to disclose all foreign sources of funding on behalf of its researchers. In addition, VARI received an email in November 2018 from NIH inquiring specifically about Professor Xu. VARI did not disclose the Chinese grants even after receiving the NIH email, because in its view, “there was no undisclosed overlap of any budgetary resources, commitments, or scientific endeavor” between the Chinese grants and the NIH grant. The government rejected that argument, noting that NIH requires disclosure of “all financial resources available in support of an individual’s research.” Moreover, DOJ alleged that because it did not investigate further, VARI “does not know whether that statement was, or is, accurate, and acted with deliberate or reckless disregard for the truth in making that representation to NIH.”
With respect to Professor Ma, DOJ similarly alleged that VARI acted with “deliberate ignorance or reckless disregard for the truth” by submitting contemporaneous progress reports to NIH that omitted the Chinese grant information as either foreign or other sources of support. In addition, DOJ alleged that VARI “did not take adequate steps to investigate whether Dr. Ma was performing significant elements or segments of NIH-funded research outside the United States” and did not “take steps to further investigate Dr. Ma’s foreign funding sources despite being aware of one of Dr. Ma’s Chinese affiliations.”
On December 19, 2019, DOJ announced a settlement with VARI whereby the institute would pay $5.5 million to resolve allegations that it violated the False Claims Act by submitting federal grant applications and progress reports to NIH that omitted the Chinese government grants and affiliations. In announcing the settlement, the United States Attorney for the Western District of Michigan stated, “I sincerely hope that the word gets out on the importance of full disclosure with the government.”
Other U.S. Government Scrutiny of China’s Influence in Academia
DOJ is not the only U.S. government entity to target Chinese influence in academia. In July 2019, the Department of Education publicly announced investigations into whether universities were properly reporting foreign gifts and contracts under Section 117 of the Higher Education Act. The Department opened additional investigations in September 2019 and February 2020. In a November 2019 letter to Congress, the Education Department made clear its focus was combating Chinese influence at American universities.1
Similarly, the U.S. Senate Permanent Subcommittee on Investigations published two reports in 2019 based on investigations it had conducted to address the threat to academia posed by China. And, NIH and NSF have independently stepped up their scrutiny of individual researchers and institutions as well. For example, in 2018, the NIH reportedly wrote to more than 10,000 institutions to highlight the threat of foreign influence to U.S. research and followed up in early 2019 with letters to dozens of institutions questioning specific researchers’ potential failure to properly disclose foreign research support.
Lessons to be Learned from DOJ’s New China Initiative Environment and Other U.S. Government Investigations
The enforcement events of the past fifteen months make abundantly clear that DOJ and other federal entities are taking a very close look at academic researchers with foreign affiliations as well as the institutions that employ them. The following are some suggested steps that academic institutions that employ foreign-affiliated researchers can take to avoid DOJ’s enhanced scrutiny.
- Investigate Known Conflicts, Disclosure Failures, and Other Concerns: The VARI settlement at the end of last year demonstrates that academic institutions cannot just claim ignorance or blind reliance on its researchers’ representations. DOJ will seek to hold liable those academic institutions that fail to “take adequate additional steps to investigate the researchers’ foreign funding sources” when it is aware of potential foreign affiliations. DOJ considers an institution’s failure to do so as “acting with deliberate or reckless disregard for the truth.”
- Educate and Train the Community: Academic institutions should focus on educating and training their research community about the grant process, revised NIH and NSF guidelines, and the need to be fully transparent with all foreign conflicts and affiliations. Institutions should also consider educating the community about research security and foreign influence, as well as the government’s enhanced scrutiny.
- Adopt Guidelines Governing Foreign Affiliations: Academic institutions would be well served in adopting clear guidelines governing whether its researchers can affiliate with or hold teaching positions at foreign institutions or join foreign talent programs. Institutions should consider vetting these foreign entities or programs beforehand to ensure such affiliations do not raise national security concerns, or potentially lead to government scrutiny. Institutions should also consider requiring prior approval before any of its faculty contract with foreign entities.
- Require Disclosure of Foreign Gifts, Grants, and Employment: Academic institutions should consider examining existing conflict-of-interest policies and related procedures to ensure all foreign gifts, grants, employment, or other affiliations are required to be disclosed to the institution. For example, membership in a foreign talent program, if not accompanied by a grant or other funding, may not fall within an existing policy requiring disclosure. Institutions should seek to ensure that its disclosure policies capture all types of foreign affiliations.
- Vetting of Visiting Scholars, Post-Doctoral Students, Lab Personnel: Academic institutions should consider vetting visiting scholars, post-doctoral students, and lab personnel to understand potential foreign affiliations, including membership in foreign talent programs. In the research context, academic institutions have traditionally deferred to principal investigators in the hiring of staff for labs without much, if any, vetting of those individuals. Institutions would be well served to know whether any of its faculty, staff, or research personnel raise national security concerns, or could potentially lead to government scrutiny.
- Coordinate Compliance Across Campus: Academic institutions should coordinate across campus to prevent information silos concerning researchers’ activities. For example, grants office personnel would be well served to have access to conflict-of-interest disclosures or foreign collaboration agreements to ensure grant submissions are accurate. As the VARI case demonstrated, DOJ will look skeptically at incomplete or misleading disclosures when other departments or offices of the institution possessed accurate information.
- Establish Interdisciplinary Working Group: Academic institutions should consider establishing an interdisciplinary working group across departments and offices to review the institution’s current policies, discuss new developments from federal grantmaking agencies and higher education trade associations, oversee ongoing compliance efforts, and plan new initiatives as issues and threats are identified and need to be addressed.
- Standardize Grant Process: Traditionally, academic institutions have relied on principal investigators to complete the grant applications, thereby allowing for individualized determination of what information needs to be included. Institutions would be well served to adopt uniform standards for how to answer questions to eliminate any ambiguity regarding the required disclosures and ensure that its researchers are accurately completing the applications. Institutions should also consider requiring principal investigators to review every application with a grant officer, which may prompt the recollection of responsive information that otherwise would have been omitted.
- Audit Grant Submissions: Academic institutions should consider auditing grant applications and progress reports to ensure accuracy, particularly those of researchers with known foreign affiliations. Comparing grant submissions with completed conflict-of-interest disclosures is a straightforward way to begin. Even simple Internet searches, or other public source diligence, could reveal researchers’ undisclosed foreign affiliations. More advanced diligence could include private investigation firms researching foreign-language websites and sources. For example, Anming Hu, the indicted UTK researcher, allegedly was publicly listed on the Chinese university’s website as a faculty member, as well as was listed as the inventor on twelve patent applications in China.
- Submit Corrected Submissions: If discrepancies or omissions are uncovered, institutions should consider submitting corrected applications or progress reports to the granting agencies. Failure to do so – particularly on programs that continue to receive federal funding – could lead to potential exposure for the institution for knowingly submitting a false claim.
- Appoint Director of Research Compliance: Academic institutions should consider creating a new position that will be responsible for overseeing research compliance issues.
- Engage with Peer Institutions and Trade Associations: Academic institutions would be well served to remain in regular contact with peer institutions and higher education trade associations to stay abreast of new developments and best practices in this evolving area.
The above recommendations are not intended to be an exclusive or exhaustive list of actions, but instead represent steps that academic institutions can take to reduce any potential legal exposure. Outside counsel can assist institutions in thinking through these issues, conducting audits of grants and disclosures, and redesigning policies and procedures. What is abundantly clear however, is that DOJ’s investigations are ongoing, and additional enforcement actions like Zhang, Tao, Lieber, Hu, Lewis, and VARI, will be forthcoming shortly. Steps that institutions take now to protect themselves can reduce the likelihood that the China Initiative comes to their school or will ensure that they are well-prepared in the event it does.