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I assume the award was to pay for development. As long as it wasn't grossly in excess of prevailing dev wages, why shouldn't they be able to use their salary as they see fit...?

That's exactly right -- along with the money I had to introduce the app to a few schools, collect feedback, make improvements, etc., which is what the money was for and which I did. It just worked out nicely that I was in grad school at the time and it matched to what my outstanding balance was!

Usually the recruitment org will use the grant money to hire someone to work on the grant project, at which point the money is successfully laundered for any legal use by the employee.

Or you can simply attribute X% of an existing salary to the grant, and not even bother hiring someone new.

It's relatively easy to spend grant money on anything, as long as it's not in unreasonable amounts.

That’s what I was gonna say lol, pretty sure that’s not legal at all.

It's a grant from a private organization. It's at worst a breach of contract. And if he simply called it a salary paid to himself to continue development and marketing of the app, that probably successfully clears any hurdles.