You are correct that article I read dealt with clinical studies. But I also recall some news recently of basic researchers being caught in falsifying research.
But I will have to stick to my guns and say that it would be better for science if the government was out of the business of selecting what research gets funded and what does not. Government could give tax breaks to industry to fund basic research at universities.
Government funded basic research gave us Anthropomorphic Global Warming and I would rather not have another round of that kind of science.
This happens, like any criminal activity. Often it is the result of someone being a little too eager for attention, for publications, for tenure, and seeing an "easy" way of getting it--kind of like high-tech bank robbers.
Check out the Office of Research Integrity. Yes, there is a government agency dedicated to stamping out fraud in research. This is a subject near and dear to my heart--a couple of years ago, I removed myself from a research project because the project was quickly heading in a fraudulent direction and I want nothing to do with that.