The NY Times has a feature article about the first case of scientific fraud with NIH money that resulted in a jail sentence for the scientist involved. A young technician in the lab of Eric Poehlman risked his reputation and future career to expose years of fraudulent research in the Poehlman lab. The grad students and postdocs in the lab were willing to look the other way for years, even though they knew the data that was ending up in the lab's published paper's sometimes came straight out of Poehlman's imagination.
I'm glad Poehlman went to prison. Someone who commits massive fraud like that wrecks trust within the scientific community and with the greater public. Without trust, between colleagues, and between the public and the scientists paid by the public, the whole merit-based funding system is threatened.