NY Psychiatry Researcher Charged With Embezzlement, Faces Jail Time

retraction watch
Nov 29, 2017

A researcher specializing in post-traumatic stress disorder is facing jail time for allegedly embezzling tens of thousands of dollars of federal grant money.

Yesterday, the US Attorney’s Office for the Southern District of New York and the U.S. Department of Health and Human Services’s Office of Inspector General (OIG) announced criminal charges against Alexander Neumeister, alleging he used the grant funds on trips and meals for family and friends. As the New York Times reported last year, Neumeister was dismissed from his position at New York University (NYU); NYU shut down eight of his studies following an investigation by the U.S. Food and Drug Administration, which found evidence of lax oversight, falsified records, and inaccurate case histories. 

The U.S. Attorney has also filed a civil lawsuit against Neumeister under the False Claims Act, also for misuse of grant funding. The complaint does not specify the total amount of funds he allegedly misused.

In a statement, Acting U.S. Attorney Joon Kim said Neumeister:

fraudulently charged tens of thousands of dollars in personal expenses as research or school-related expenses. For allegedly betraying the trust of the medical school that employed him and the government institute that funded his research, Neumeister now faces serious federal charges.

Those charges include one count of theft of government funds, which carries a maximum prison sentence of 10 years, and one count of wire fraud, which carries a maximum sentence of 20 years. In the civil suit, the government can recover three times the alleged damages plus financial penalties for each false claim.
A spokesperson for the OIG told us:

The U.S. Attorney’s Office received an allegation that they looked into. Based on interviews with current and former employees, it was uncovered that some of the test results were skewed and, based on that, the USAO decided to bring charges. Our office is conducting an ongoing investigation in coordination with the USAO.

We asked if this means there is an investigation into research misconduct involving Neumeister; the OIG spokesperson referred us to the US Attorney’s Office. A spokesperson for the US Attorney’s Office said they couldn’t comment further. 

Neumeister was arrested Nov. 21 in Ogdensburg, a New York town on the border with Canada. He’s an Austrian citizen and has surrendered his passport, according to court documents. He has since been released, but his travel is restricted to New York and Connecticut. We contacted the attorney who represented Neumeister in the FDA investigation, but haven’t heard back. 

John Thomas, an attorney at Gentry Locke who is bringing a False Claims Act case against Duke University, told us the Neumeister case is:

…a little bit more than just an embezzlement case. It’s a reminder that universities and principal investigators are stewards of taxpayer dollars.

Neumeister, 51, was principal investigator on several grants issued by the National Institute of Mental Health (NIMH). He has published dozens of papers, one of which was corrected in 2014.
The statement from the US Attorney’s office said that, from 2012 to 2014, Neumeister allegedly used funds from NYU or the NIMH to buy things for his family and a “Friend,” a professional ballet dancer he met in New York in 2012. Items included: 

• airline tickets so that the Friend could travel from Charlotte, North Carolina, or Salt Lake City, Utah, depending on where the Friend was then living, to New York City, where NEUMEISTER was then living;
• airline tickets so that NEUMEISTER could travel from New York City to Charlotte and Salt Lake City to visit the Friend, as well as lodging, bar tabs, meals and other travel-related expenses associated with this travel;
• an all-expense paid trip to Miami Beach for the Friend, during which the Friend was given authorization by NEUMEISTER to use NEUMEISTER’s [credit card] to pay for food, beverages, and beach facilities;
• an iPhone for the friend; and
• airline tickets so that NEUMEISTER’s spouse could travel from Newark, New Jersey, to Vienna, Austria, to attend a family event.

The statement alleges:

In addition, NEUMEISTER falsely claimed that the Friend was a research study participant in studies that NEUMEISTER was overseeing for the School, and caused the School to pay over $10,000 of the School’s own funds directly to the Friend.  

The civil complaint said that NYU confronted Neumeister in 2015 about the credit card expenditures after it had conducted an audit. Whether the audit was routine or triggered by something else isn’t clear. 

The complaints — also covered by the New York Daily News — note that Neumeister offered to pay back the allegedly misappropriated funds, but never did.

The FCA suit includes many of the same allegations.
Neumeister’s LinkedIn page says that he’s currently a program director for research supported by the World Health Organization in the Democratic Republic of Congo.

A spokesperson for the NYU School of Medicine told us:

As soon as the potential issues specific to this research were identified and reviewed, findings were shared with the appropriate oversight agencies. The researcher is no longer employed at the School of Medicine.

NYU added:

As a victim of Dr. Neumeister’s actions, as to which NYU School of Medicine may be called to give testimony or further information, it would be inappropriate to provide additional comment while the federal investigation is ongoing.

Thomas said that this case, and the FCA case that Columbia University settled last year for $9.5 million over problematic costs arising out of grant, could be the beginning of a trend:

It shows the Southern District of New York is paying close attention to grant fraud.

Hat tip: Theresa Defino

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