WEST LAFAYETTE – A Purdue University professor and his wife, accused of funneling more that $1 million in National Science Foundation research money into a private company that served as a front to pay for their own personal expenses, pleaded guilty Friday, according to the U.S. Department of Justice.

Qingyou Han, a mechanical engineering technology professor at Purdue since 2007 and director of Purdue’s Center for Materials Processing Research, and his wife, Lu Shao, pleaded guilty to felony charge of wire fraud on behalf of themselves and Shao’s company, Hans Tech of Lakewood, Ohio.

They had been scheduled to go to trial in U.S. District Court next week.

The case stems from a July 2018 indictment that outlined a scheme that defrauded the National Science Foundation into putting $1.3 million into Hans Tech through the federal government’s Small Business Innovation Research and Small Business Technology Transfer programs, which are used by the NSF to promote the progress of science through innovative small businesses.

Instead, that money, the couple admitted, went toward a home in West Lafayette and payments toward their school-aged children between 2007 and 2014.

Han, whose research deals casting and processing of metals and alloys, was still listed with office hours and research honors on a page on Purdue’s site.

When contacted Saturday morning, Han referred all questions to his attorneys, David Schertler and Lisa Manning. They were not immediately available for comment Saturday.

In July 2018, when the indictment was announced, the university distanced itself from the case, saying it “relates to a faculty member’s personal outside business activity.” On Saturday, Tim Doty, a Purdue spokesman, said the university was aware of the plea agreement.

“We have not yet reviewed the agreement or discussed the matter with the professor,” Doty said. “Once all information is available to us, the university will carefully consider the matter in light of its policies and make decisions in a manner consistent with those policies and the professor’s right to due process under university procedures.”

According to the plea agreement filed in federal court, Han could have faced 20 years in prison and a fine of up to $250,000 on conviction of wire fraud. The plea agreement does not lay out specific terms for prison, fines or restitution to the National Science Foundation.

Among the allegations Han and Shao admitted to, according to the Department of Justice:

► Han wrote grant proposals on behalf of Hans Tech – which was created in 2006 as a front for the scheme – and submitted them and other documents to the National Science Foundation, using Shao’s name. The proposals didn’t make it clear that the two were married or that Han, “who was not affiliated as an owner or employee of the company, was actually running Hans Tech behind the scenes.”

► In some Hans Tech proposals to the National Science Foundation, the company recommended bringing on Han – in his role as a Purdue professor – as be a subcontractor to work on the research.

► Hans Tech told the National Science Foundation that it was paying two employees who wound up being Han and Shao’s children, who were younger than 16.

► Hans Tech claimed some of the research money was going toward $3,000-a-month rent on a laboratory which actually a single-family home they were buying in West Lafayette. More than $150,000 in “rent” went to Shao during that time, according to the Department of Justice.

► Han, using a company in his name, posed as a third party looking to invest $100,000 into Hans Tech. That turned out to be money form Hans Tech’s own money. After the $100,000 investment was made, $120,000 – at least $80,000 of it from federal grant money – wound up back in Han’s bank account, according to the plea. Of that, $75,000 was used to pay off Han and Shao’s home mortgage.

"Schemes such as this, carried out by an otherwise well-respected member of the scientific community, are an affront to NSF and the hard-working employees who administer its grants, and they also deprive other more deserving small businesses from bringing their innovations and advancements to the U.S. marketplace,” U.S. Attorney Thomas Kirsch said in a Department of Justice release Friday.

“This kind of taxpayer funded program fraud will be aggressively prosecuted by my office going forward,” Kirsch said, “just as it was in this case.”

Sentencing is scheduled for Jan. 21, according to the Department of Justice.

Reach Dave Bangert at 765-420-5258 or at dbangert@jconline.com. Follow on Twitter: @davebangert.