United States District Court, D. South Dakota, Western Division
JEFFREY L. VIKEN, CHIEF JUDGE.
United States government initiated this action against
defendant Scott Thompson. (Docket 1). The government's
complaint advances four causes of action: False Claims Act
(“FCA”) violations, common law fraud, unjust
enrichment and payment by mistake. Id. at pp. 6-8.
Defendant, proceeding pro se, filed an answer and
counterclaims. (Docket 20). The government filed a motion for
summary judgment and a motion to dismiss defendant's
counterclaims. (Dockets 12 & 23). Defendant filed several
other motions, including motions related to amending an
earlier brief, reconsideration of a prior motion, discovery
matters and staying the case. (Dockets 27, 30, 31, 33 &
following recitation consists of the material facts developed
from the government's complaint (Docket 1),
defendant's answer (Docket 20), the government's
statement of undisputed material facts (Docket 14) and
defendant's response. (Docket 22).
National Science Foundation (“NSF”) is a United
States agency Congress created “to initiate and support
basic scientific research and other scientific programs by
providing grants, loans and other forms of financial
assistance to individuals, businesses and academic and
nonprofit institutions.” (Docket 14 ¶ 1) (citing
42 U.S.C. § 1862). Individuals can “send grant
applications to the NSF, which disburses congressionally
appropriated funds” to approved projects. Id.
¶ 2. Dating back to 1996, defendant “submitted
many requests for grants from the NSF . . . .”
Id. ¶ 3.
met South Dakota State University (“SDSU”)
Professor Qiquan Qiao and “agreed to take [Dr.
Qiao's] project and place it under a limited liability
corporation (LLC) . . . named ‘Isosceles LLC.'
” Id. ¶¶ 4-5. Defendant formed
Isosceles LLC, which was a Virginia LLC and “whose
registered agent was Kelly Holye, [defendant's] sister,
” before the corporation dissolved. Id.
“On or about June 23, 2009, NSF awarded
[defendant's] LLC, Isosceles LLC, $150, 000 for the
project . . . .” Id. ¶ 9. “The
award funds were to be paid to Isosceles LLC in two
installments: two-thirds at the beginning of the award
performance period upon submission of a request for initial
payment, and one-third upon completion of the project and
NSF's approval of a final project report.”
the grant was approved, defendant “submitted a request
[to the NSF] via the internet for initial payment [of] the
money approved for the project . . . .” Id.
¶ 6. In this initial payment request, defendant claimed
to the NSF that Jing Li, an SDSU post-doctorate candidate,
was employed as the project's principal investigator.
Id. ¶ 7; (Docket 14-1 at p. 2). Defendant
claimed Mr. Li's primary employment was with Isosceles
LLC, Mr. Li would continue to conduct the research proposed
in the initial proposal to the NSF, and Mr. Li was available
at that time to perform the proposed work. (Docket 14-1 at p.
2). Relying on defendant's representations, the NSF
provided $100, 000 of the grant to Isosceles LLC. (Docket 14
¶ 10). Based on defendant's conduct in handling the
grant, he was indicted and a jury convicted him of making
false claims in violation of 18 U.S.C. § 287. (Dockets
14 ¶¶ 17-19 & 14-1 at pp. 2-3). Defendant made
these claims to the NSF in documents and on that basis the
jury convicted him of submitting false documents to an agency
of the United States in violation of 18 U.S.C. § 1001.
(Dockets 14 ¶¶ 17-19 & 14-1 at pp. 4-5).
submitted the project's final report to the NSF on or
about January 14, 2010. (Dockets 14 ¶ 12 & 14-1 at
p. 2). In the final report, defendant claimed Mr. Li was
employed as the principal investigator for Isosceles LLC and
Mr. Li worked more than 160 hours on the project. (Docket
14-1 at p. 3). Based on these claims in the final report, a
jury convicted defendant of making false claims in violation
of 18 U.S.C. § 287 and submitting false documents to an
agency of the United States in violation of 18 U.S.C. §
1001. (Docket 14 ¶¶ 17-19).
jury also convicted defendant of two counts of fraud by
wire-violations of 18 U.S.C. § 1343-for using the
internet when submitting his initial payment request and
final report to the NSF. Id.; (Docket 14-1 at pp.
6-7). Defendant's jury trial resulted in an additional
conviction for receiving stolen government money, namely the
$100, 000 in NSF grant money, which violates 18 U.S.C. §
641. (Dockets 14 ¶¶ 17-19 & 14-1 at p. 7).
court sentenced defendant to five years of probation on each
count of conviction, the probationary terms to run
concurrently. (Docket 1-1 at p. 2). The court ordered
defendant to pay $87, 637.89 in restitution-$32, 486.86 to
SDSU and $55, 151.03 to the NSF. Id. at p. 4.
government argues the court should grant summary judgment on
its FCA claim pursuant to Federal Rule of Civil Procedure
56(a). (Dockets 12 & 13). Under Fed.R.Civ.P. 56(a), a
movant is entitled to summary judgment if the movant can
“show that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a
matter of law.” Fed.R.Civ.P. 56(a). Once the moving
party meets its burden, the nonmoving party may not rest on
the allegations or denials in the pleadings, but rather must
produce affirmative evidence setting forth specific facts
showing that a genuine issue of material fact exists.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256
(1986). Only disputes over facts that might affect the
outcome of the case under the governing substantive law will
properly preclude summary judgment. Id. at p. 248.
“[T]he mere existence of some alleged factual
dispute between the parties will not defeat an otherwise
properly supported motion for summary judgment; the
requirement is that there be no genuine issue of
material fact.” Id. at 247-48
(emphasis in original).
dispute about a material fact is genuine, that is, if the
evidence is such that a reasonable jury could return a
verdict for the nonmoving party, then summary judgment is not
appropriate. Id. However, the moving party is
entitled to judgment as a matter of law if the nonmoving
party failed to “make a sufficient showing on an
essential element of [his] case with respect to which [he]
has the burden of proof.” Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986). In such a case,
“there can be ‘no genuine issue as to any
material fact, ' since a complete failure of proof
concerning an essential element of the nonmoving party's
case necessarily renders all other facts immaterial.”
Id. at p. 323.
determining whether summary judgment should issue, the facts
and inferences from those facts must be viewed in the light
most favorable to the nonmoving party. Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88
(1986). The key inquiry is “whether the evidence
presents a sufficient disagreement to require submission to a
jury or whether it is so one-sided that one party must
prevail as a matter of law.” Anderson, 477
U.S. at pp. 251-52.
government bases its first cause of action on the FCA.
(Docket 1 at p. 6). The FCA imposes liability on a person who
“knowingly presents, or causes to be presented, a false
or fraudulent claim for payment or approval . . . .” 31
U.S.C. § 3729(a)(1). At § 3731(e) the FCA codifies
the principle of collateral estoppel:
Notwithstanding any other provision of law, the Federal Rules
of Criminal Procedure, or the Federal Rules of Evidence, a
final judgment rendered in favor of the United States in any
criminal proceeding charging fraud or false statements,
whether upon a verdict after trial or upon a plea of guilty
or nolo contendere, shall estop the defendant from denying
the essential elements of the offense in any action which
involves the same transaction as in the criminal proceeding
and which is brought under subsection (a) or (b) of section
31 U.S.C. § 3731(e). The government brought this case
under § 3730(a), which directs the federal government to
initiate civil actions for violations of § 3729.
defendant's conviction establishes the essential elements
of a FCA claim, § 3731(e) precludes him from denying
those elements. See United States v.
Munoz-Escalante, No. 5:14-CV-05085, 2015 WL 6158021, at
*1-3 (D.S.D. Oct. 20, 2015). A prima facie case under §
3729(a)(1) requires the government to prove “that (1)
the defendant made a claim against the United States; (2) the
claim was false or fraudulent; and (3) the defendant knew the
claim was false or fraudulent.” United States ex
rel. Quirk v. Madonna Towers, Inc., 278 F.3d 765, 767
(8th Cir. 2002). “To act ‘knowingly' under
the [FCA], a person must (1) have actual knowledge of the
information, (2) act in deliberate ignorance of the truth or
falsity of the information, or (3) act in reckless disregard
of the truth or falsity of the information.”
Munoz-Escalante, 2015 WL 6158021, at *2 (citing 31
U.S.C. § 3729(b)). “No proof of specific intent to
defraud the government is required.” Quirk,
278 F.3d at 767 (citing 31 U.S.C. § 3729(b)). “The
requisite intent is the knowing presentation of what is known
to be false. In short, the claim must be a lie.”
Munoz-Escalante, 2015 WL 6158021, at *2 (citing
Hindo v. Univ. of Health Sci./Chi. Med. Sch., 65
F.3d 608, 613 (7th Cir. 1995) (internal quotation marks
for different offenses can estop a party from denying the
elements of a FCA claim. In United States v. Aleff, the
United States Court of Appeals for the Eighth Circuit
affirmed a district court's determination that a
conviction for “submitting false applications for
loan-deficiency payments in violation of 18 U.S.C. §
286” precluded the defendant from denying the
essential elements of the FCA claim the government brought
following the conviction. United States v. Aleff,
772 F.3d 508, 510-11 (8th Cir. 2014). In United States v.
Karron, a jury convicted Ms. Karron of misapplying
federal grant funds in violation of 18 U.S.C. § 666.
United States v. Karron, 750 F.Supp.2d 480, 484-86
(S.D.N.Y. 2011). The court determined Ms. Karron's
“prior criminal conviction precludes her from denying
the essential elements” of the government's FCA
claim. Id. at 488. The defendants in