Reconstruction contract in Afghanistan and Iraq gives rise to False Claims allegations

posted on:
August 24, 2016

author:
Lance Gould

Last month the Department of Justice (DOJ) announced that the United States is filing claims against Derish Wolf and Salvatore Pepe for violating the False Claims Act (FCA). Derish Wolf and Salvatore Pepe are the former CEO and CFO for Louis Berger Group, Inc. (LBG), a company that specializes in rehabilitating critical infrastructures in fragile states and developing countries. The complaint alleges that LBG conspired to overbill the U.S. Agency for International Development (USAID) for costs acquired while performing reconstruction projects in Afghanistan and Iraq.

The False Claims Act prohibits anyone, corporate entities and individuals, from defrauding the government. Overbilling is a type of fraud. When companies overbill the government, they are stealing money from the tax pool and diverting funds away from the task the funds were purposed to accomplish. Money had been set aside to help with the reconstruction project in Afghanistan and Iraq; however, some of that money was being diverted in order to pay inflated overhead salaries instead of funding the reconstruction.

The United States alleges that the executives of LBG used accounting schemes in order to bill the government for overhead cost at inflated rates. These schemes were originally brought to the United States’ attention though whistleblower Harold Salomon. Salomon, an LBG accountant, filed the complaint against LBG under the qui tam provision of the FCA. The qui tam provision of the FCA permits private individuals to sue on behalf of the government when they have knowledge of one defrauding the government.

The United States resolved criminal and civil claims against LBG, where LBG agreed to pay $50.6 million to resolve FCA allegations and entered into a Deferred Prosecution Agreement. Pepe and Wolff plead guilty to the criminal charge of conspiracy to defraud the government. The complaint, announced last month, asserts civil claims against Wolf and Pepe for violating the FCA.

Are you aware of fraud being committed against the federal government, or a state government? If so, the FCA can protect and reward you for doing the right thing by reporting the fraud. If you have any questions about whether you qualify as a whistleblower, please contact an attorney at Beasley Allen for a free and confidential evaluation of your claim. There is a contact form on this website, or you may email one of the lawyers on our whistleblower litigation team: Archie Grubb, Larry Golston, Lance Gould or Andrew Brashier.

Source: U.S. Department of Justice

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