Feds Join Whistleblower False Claims Lawsuit Against Louis Berger Executives

The federal government has joined a whistleblower lawsuit against two former executives of the Louis Berger Group, a New Jersey-based construction company that was one of the largest US contractors in Afghanistan and Iraq.


The lawsuit accuses former CEO Derish M. Wolff and former CFO Salvatore J. Pepe of conspiring to perpetrate a massive accounting fraud involving contracts Louis Berger had with the US to build key infrastructure projects across the globe, including in Afghanistan and Iraq war-zones.

The whistleblower, Harold Salomon, is a former senior financial analyst/auditor for Louis Berger.

He witnessed Wolff and Pepe directing company employees to improperly bill the government for indirect and overhead costs.

The intervention represents one of the first times that the government has pursued high level executives in a False Claims Act case.

“This is unusual, but extremely welcome,” said Patrick Burns of Taxpayers Against Fraud.  “The Department of Justice is trying to change the way companies do business.  They realize that to change corporate culture they have to bring the pain to bring the change, and that the pain has to be personal.  It’s not enough to slap companies with big fines that are then paid by stock holders who barely notice.  We are starting to see more personal prosecutions, claw backs, exclusions, and fines.  We may see the era of the Big Wink finally coming to an end.”

Peter Chatfield, a partner at Phillips & Cohen who represents Salomon, agreed the case was unusual.

“The government attorneys are showing great tenacity in trying to recover for taxpayers financial gains that Wolff and, to a lesser extent, Pepe personally made from a fraudulent scheme they directed and carried out,” Chatfield said. “Although both men have resolved their criminal liability, this case is about their civil liability for stealing taxpayer money. Pursuing both criminal and civil liabilities against individuals who mastermind corporate fraud is the best deterrent to wrongdoing.”

Louis Berger paid $69.3 million to the government in 2010 to settle its criminal and civil liability in the whistleblower case.

At that time, Pepe pled guilty to a charge of conspiracy to defraud the government and was sentenced to one year of probation.

Four years later, Wolff pled guilty to the same charge and was sentenced to 12 months of home confinement and required to pay a $4.5 million fine.

“I am very pleased that the government is continuing to pursue my case,” said Salomon. “It is only right that those who stole from the government should have to repay the full extent of the losses taxpayers suffered as a result of their fraud.”

“The effect of fraud is profoundly personal – its victims are the men and women of our armed forces and the people of Iraq, Afghanistan, and the other countries where LBG was hired to build important infrastructure projects – the accountability should be similarly personal,” said Tim McCormack, a partner at Constantine Cannon, who also represents Salomon in the case. “The government’s decision to join Mr. Salomon’s case makes this point, and makes it emphatically.”

The False Claims Act allows whistleblowers to sue companies that are defrauding the government and receive a reward if the government recovers any funds as a result.

The US may intervene in the lawsuit, as it has done in this case. The False Claims Act is one of the government’s most effective weapons in combatting fraud, waste and abuse by government contractors.

War-zone fraud alone is estimated to cost US taxpayers billions of dollars.

But fraud cases can be difficult to pursue because of the chaos of war, the lack of a paper trail and other factors, the attorneys said.


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