Maryland Biotech Company Pays $934,000 to Settle False Claims Act Lawsuit

Advanced BioNutrition Corporation, of Columbia, Maryland, and its former chief executive officer, David Kyle, paid the federal government $934,000, stemming from violations of the False Claims Act, federal prosecutors said Thursday. Advanced BioNutrition Corporation was awarded the first phase of a National Science Foundation Small Business Innovation Research grant in February 2005 to develop technology to micro-encapsulate probiotic bacteria into particles. In January 2006, the company submitted a grant proposal to receive a second phase of funding. In March 2006, the foundation awarded the Columbia company the second phase of the grant based upon representations in the company’s proposal about the results obtained during the first phase of research. But Advanced BioNutrition Corporation made “material misrepresentations and omitted critical information” in a second phase proposal about the results obtained during the first phase, prosecutors said. Additionally, after the second phase of money was awarded, the company made misrepresentations in interim and final reports about the progress it obtained in its second phase work, prosecutors said. Both the company and Kyle have denied the allegations. But as part of the settlement, the company agreed to a five-year “Compliance Integrity Agreement,” which includes auditing and the hiring of a compliance officer, while Kyle agreed to be excluded for a period of five years from all federal procurement programs.

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