Chicago Dev Velev Jailed for $200K Grant Fraud

CHICAGO – A Chicago software developer is trading algorithms for ankle bracelets after being sentenced to three months in federal prison for a brazen scheme to defraud NASA and the National Science Foundation. MIROSLAV VELEV, 50, of Chicago, learned his fate Wednesday after pleading guilty to one count of conversion of government funds.

Velev, operating under the banner of Aries Design Automation LLC, pitched a sophisticated operation – developing methods for electronic design automation – to snag funds from the Small Business Innovation Research program. The program is designed to funnel resources to promising small businesses. Velev secured a total of $200,000 in grants, but the foundation of his success was built on lies, prosecutors argued. He misrepresented Aries’s financial standing to qualify for the funds.

The scheme wasn’t about legitimate investment; it was about illusion. Velev fabricated proof of independent investment, submitting doctored bank screenshots and a bogus “investment letter” to NASA and the NSF. The supposed investor? Nonexistent. The CFO listed on the letter? An acquaintance of Velev’s wife with zero involvement in the company. Velev simply shuffled his own money around to create the *appearance* of outside funding, a tactic Assistant U.S. Attorney William R. Hogan, Jr. slammed as a direct theft from legitimate small businesses and taxpayers.

“Absent Velev’s fraud and false statements, his proposals would not have been approved and he would not have been awarded federal funds,” Hogan wrote in a sentencing memorandum. The government wasn’t buying Velev’s claims of innovation; they saw a calculated attempt to exploit a program designed to foster genuine advancement. Velev previously paid $150,000 in restitution to NASA and $50,000 to the NSF, but the financial penalty wasn’t enough to avoid jail time.

Federal investigators weren’t letting Velev off easy. Curtis Vaughn, Special Agent-in-Charge of NASA’s Office of Inspector General, Eastern Field Office, stated, “This investigation exposed an individual that used federal funds to advance his own personal gain.” Jennifer Springmann, Special Agent-in-Charge of the NSF’s Office of Inspector General’s Civil, Criminal and Program Integrity Division, emphasized the importance of protecting the SBIR program’s integrity, calling it “a valuable tool” for scientific progress.

The sentencing was announced by U.S. Attorney for the Northern District of Illinois, John R. Lausch, Jr. The case serves as a stark reminder that even in the world of high-tech innovation, old-fashioned fraud still carries a hefty price. Velev’s ambition, fueled by deception, landed him exactly where he deserves: behind bars. The SBIR program, and the taxpayers who fund it, deserve better.