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Violations of the False Claims Act in Connection with Reconstruction Contracts in Afghanistan and Iraq

Often cases of alleged fraud against the government reaches far beyond US borders.  This is the case as just last month the Justice Department announced that it had filed suit under the False Claims Act against two former executives of government contractor Louis Berger Group Inc. (LBG) for conspiring to overbill the U.S. Agency for International Development (USAID) and other companies for costs incurred in performing reconstruction contracts in Afghanistan, Iraq, and other countries.  The executives named in the lawsuit are Derish M. Wolff and Salvatore J. Pepe, respectively the former CEO and CFO of LBG.  “Those who do business with the U.S. government should expect appropriate consequences if they do not deal fairly,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.

The government is alleging that Wolff and Pepe directed and designed schemes that resulted in their company billing the government for indirect overhead costs at inflated rates.  For example, Wolff and Pepe are alleged to have shifted portions of salaries for LBG executives from contracts paid for by foreign contracts and state governments and private entities to contracts paid for by the US.  The two men are then alleged to have certified the false rates and submitted them to the government.

This is not the first time the two men have been prosecuted by the government.  Previously the US resolved criminal and civil claims against LBG on November 5, 2010.  The charges arose from the same kinds of acts that are alleged to have occurred in this complaint.  In 2010 LBG entered into a Deferred Prosecution Agreement and paid $50.6 million to resolve False Claims Act allegations.  Pepe pleaded guilty to conspiracy to defraud the government as was sentenced to one year probation.  Wolff pleaded guilty to the same charge in Dec of 2014 and was sentenced to 12 months of home confinement and was required to pay a $4.5 million fine.

The government’s complaint arises from a lawsuit brought about under the qui tam, or whistleblower, provisions of the False Claims Act, by Harold Salomon, a former accountant of LBG.  Under the False Claims Act, private citizens are allowed to sue on behalf of the US government in cases involving False Claims Act violations and are also entitled to share in any subsequent recovery.  “I applaud the dedication of USAID-OIG special agents, along with special agents of the FBI and the Defense Criminal Investigative Service,” said USAID Inspector General Ann Calvaresi Barr.  If you believe you have knowledge of False Claims Act violations being committed against the government you are encouraged to contact a qui tam law firm.  Whistleblower lawyers will help you understand your rights in such cases.  This case is United States ex rel. Harold Salomon v. Derish M. Wolff & Salvatore J. Pepe, Civ. No. RWT-06-1970 (D. Md.).