Earlier quoted context omitted.
That's not true. Grant funding is a heavily bureaucratic process, with committees scoring proposals on matrices. The bureaucrats don't really care about your previous results (they have no personal investment), and even if they did, they don't really have a mechanism to hold them against you.
Is it common for these committees to award grants to profs who (happen to) have a track record using grant funds to open doughnut shops rather than to research the topics mentioned in their previously-funded grant proposals?
If you open a donut shop with it, you're probably commuting an act of fraud.