Ali Kashani, the owner of Atlas Scientific, and scientist Yang Zhao conducted research on adhesive tape based on carbon nanotubes that was funded by the National Science Foundation and National Aeronautics and Space Administration.
Kashani, 52, lives in San Jose and Zhao, 40, formerly lived in El Cerrito and is now residing in China, according to U.S. Attorney Melinda Haag.
Kashani and Zhao were indicted by a federal grand jury in San Jose on Wednesday on charges of conspiring to commit wire fraud and carrying out wire fraud in grant proposals they submitted electronically to the two agencies.
According to the indictment, they received two grants totaling $550,000 from the NSF for research on carbon adhesives between 2007 and 2010, and two additional grants from NASA for $700,000 for similar research conducted between 2008 and 2011.
The indictment alleges they falsely certified on the grant proposals that they had not applied for and/or had not already received funding from other federal agencies for overlapping research.
Haag said Kashani was arrested on Thursday and made an initial appearance before a federal magistrate in San Jose.
Kashani was ordered detained until another hearing before U.S. Magistrate Paul Grewal on Tuesday for identification of his defense attorney and a determination of whether he should be released on bail.
The maximum penalty for the conspiracy charge is 20 years in prison and the maximum for the fraud charges is 10 years in prison, if the defendants are convicted.
