NLight agrees to False Claims Act settlement of $420,000

No admission of legal liability, proof allegations against company are true

By Gordon Oliver, Columbian Business Editor

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Vancouver-based industrial laser manufacturer nLight Photonics has agreed to pay $420,000 to resolve allegations that it violated the federal False Claims Act between 2004 and 2013, allowing it to receive multiple government grants and contracts for which it did not legitimately qualify.

The settlement is the result of a joint investigation by inspectors general for several government agencies and other federal law enforcement agencies, according to a statement issued Monday by Annette L. Hayes, Acting U.S. Attorney for the Western District of Washington.

The investigation found that nLight improperly obtained grants from the Army, Navy, Air Force, NASA and Department of Energy under a Small Business Innovation Research program to further develop its laser technology, which has military and other applications of interest to government agencies.

Only companies that are under majority ownership of individuals, or of companies that are majority owned by individuals, are eligible for the research program funding, the U.S. Attorney’s Office said in a news release.

Despite numerous certifications to government agencies that it was eligible for the research funding, “nLight was more than 51 percent owned by multiple businesses, including several venture capital firms” during the 2004 to 2013 period, the news release stated.

“There is no tolerance for false certifications when asserting eligibility to participate in SBA programs,” said Inspector General Peggy E. Gustafson of the U.S. Small Business Administration, in the news release. “I want to thank the U.S. Department of Justice for its dedication to reaching a settlement in this case.”

The government said that the settlement is in response to allegations that had not been proven, and said nLight’s legal liability, if any, had not been determined. The statement also said there is no indication that nLight did not adequately perform the work required under the contracts and grants.

The U.S. Attorney’s office said that nLight initially flagged its ineligibility for the research funding program in response to a request for information by a Department of Energy contracting officer. The officer was overseeing both an nLight grant and another grant awarded to a company that nLight had acquired.

David Schaezler, nLight’s chief financial officer, issued the following statement:

“We typically do not comment on matters such as this. As noted in DOJ’s press release, nLIGHT brought this matter to the government’s attention, the settlement is not an admission of any legal liability, and nLIGHT’s performance of the work was not called into question.”

The investigation was conducted by the SBA’s Office of Inspector General, the Department of Energy Office of Inspector General, the Department of Defense Office of Inspector General, Defense Criminal Investigative Service, the Air Force Office of Special Investigations, the Army Criminal Investigation Command, the Naval Criminal Investigative Service and the NASA Office of Inspector General, with the assistance of the Defense Contract Audit Agency.

NLight was founded in Seattle in 2000 and moved to Vancouver in 2002.

By 2011 the privately-held company it had secured $110 million in equity financing from Silicon Valley investors and was on a steady growth trajectory that led to speculation that it would initiate a public stock offering.

The company acquired Arbor Photonics Inc. of Ann Arbor, Mich., in 2013 for an undisclosed price. nLight said in a regulatory filing that it was raising $3.8 million for the purchase.

NLight employees are based in Vancouver; Hillsboro, Ore.; Lohja, Finland, and Shanghai, China.