Two biotechnology companies in Silicon Valley and their co-founder will pay more than $10 million to resolve allegations that they engaged in improper billing to federal grants, the Department of Justice announced on Dec..21.

Dr. Paul Andrew Rhodes is the co-founder of iSense, LLC and Specific Diagnostics Inc.  Specific Diagnostics designs antimicrobial susceptibility tests and iSense develops applications for colorimetric sensor arrays.

Both companies entered into an agreement with Justice Department officials to resolve allegations that they overcharged federal grants by billing for costs incurred by another business and by billing for compensation in amounts exceeding federal limits.

The settlement also resolves allegations that they backdated service and cost-sharing agreements and knowingly presented a backdated agreement to the U.S. government.

“Federal awards for biotech research are a critical aspect of this country's strategy to promote and support innovation and research,” said U.S. Attorney Stephanie M. Hinds. “Regrettably, some recipients mislead auditors and divert funds to enrich themselves.”

The total settlement amount is $10,068,875, with iSense and Specific both paying $4 million and Dr. Rhodes paying the remainder, Hinds said.