The federal government is investigating the Western Research Institute, a Laramie-based nonprofit, for making false claims to win more than $500,000 in research funding between 2015 and 2018, according to a document obtained by the Boomerang.
WRI used a “paper company,” Thermosolv, to obtain four grants that it would have otherwise been ineligible for, according to federal prosecutors. Prosecutors claimed that WRI had Thermosolv make false claims about its independence in order to win the grants.
Mark Klaassen, the U.S. Attorney in Wyoming, is handling the case, according to a May 8 letter that he sent to the leadership of WRI. This came out of a joint investigation by three federal inspectors general offices — at the Department of Energy, Department of Health and Human Services, and NASA.
The letter was sent to Jean-Pascal Planche and Frank Guffey, the CEO and vice president of WRI, respectively. As of press time, neither had responded to requests for comment. Thermosolv did not respond to a request for comment.
WRI and Thermosolv violated federal rules when Thermosolv received four grants from the Small Business Innovation Research program, Klaassen’s letter said. This program directs federal research funding to small businesses.
For a company to qualify for the program, it must be an independent small business, the principal investigator for the research must be an employee of the company, and the work must be done in the company’s facilities, among other requirements.
Thermosolv did not meet these requirements, and “it appears WRI caused Thermosolv to falsely certify” that it was eligible, Klaassen claimed in the letter. WRI knew that it was not eligible for the grants, so it used Thermosolv to skirt the law.
Thermosolv was not an independent small business when it won the federal contracts, Klaassen’s letter said. Vijay Sethi, the company’s CEO, was a WRI executive at the time, and WRI held a majority ownership share of Thermosolv.
“Thermosolv was merely an instrumentality controlled by WRI and used to obtain the SBIR program funding,” Klaassen’s letter said.
Because Thermosolv was controlled by WRI, and WRI was in turn an affiliate of the University of Wyoming, it did not qualify as a small business, Klaassen’s letter said. Small businesses may not have more than 500 employees, including at any affiliated organizations, according to federal rules.
Another violation of the small business program’s rules occurred when Thermosolv claimed that the principal investigator on the project would be a company employee, Klaassen’s letter said.
In fact, Thermosolv did not have any employees of its own when it won the first three grants. The principal investigator was a WRI employee for those contracts.
A third violation of federal rules occurred when Thermosolv claimed it would use its own facilities to perform the research, Klaassen’s letter said. Thermosolv did not own any facilities when it completed the first three contracts, and it did not pay rent to WRI for its use of WRI facilities.
WRI’s formal name is the University of Wyoming Research Corporation, but it operates as a separate organization from the University of Wyoming, said Chad Baldwin, a university spokesperson.
“UW and WRI are separate entities, but attached by name,” Baldwin wrote in an email. “The organization rents space in UW’s Bureau of Mines Building, and UW and WRI collaborate on research projects.”
University employees did not provide any assistance to Thermosolv when it applied for the federal small business grants, Baldwin wrote. He added that UW does not supervise or review grant applications made by WRI.
Although WRI is distinct from the University of Wyoming, it lists the university as a related organization on public tax records, and the same records say that the university’s board of trustees appoints WRI’s board of directors. WRI employees list university email addresses on their webpage listing contact information.
Even when the leaders of Thermosolv and WRI were aware that their actions might not be allowed, they continued to skirt and violate the rules, Klaassen’s letter said. After winning the fourth contract, Sethi suggested that WRI spin off Thermosolv as a fully separate company, with its own employees, to follow the contract’s rules.
For the fourth contract, the principal investigator was a Thermosolv employee, and Thermosolv used its own facilities. This change demonstrates that Thermosolv and WRI were aware of the program’s rules, Klaassen claimed in the letter.
But a WRI employee still completed a majority of the work on Thermosolv’s fourth contract, in violation of program rules, the letter claimed. Klaassen claimed that the WRI employee was only hired by Thermosolv as a contractor, and that Thermosolv wrongly listed him as their employee.
The four contracts at issue in this investigation are the only four that Thermosolv has received from the Small Business Innovation Research program. All were worth between $125,000 and $150,000.
The first, awarded in 2015, came from the Department of Energy. It allowed Thermosolv to research cost-effective uses of natural gas from low-producing wells, which might otherwise be abandoned or burned off as flares.
The Department of Health and Human Services awarded Thermosolv’s second award, also in 2015. Thermosolv would perform research into creating a more efficient way to fabricate certain small molecules for pharmaceutical compounds.
Thermosolv’s third award came from NASA in 2016. The company was paid to work with researchers from Arizona State University to develop a new structure for some capacitors. This would be particularly valuable in space, according to the funding application.
The company’s fourth, and final, award was granted by the Department of Energy in 2018. Thermosolv sought to research a new, more cost-effective method of carbon capture, technology that could reduce carbon emissions from power generation and limit the environmental damage caused by coal power plants.