The former CEO of Louis Berger Group, Derish Wolff, has been charged with leading a plan to intentionally inflate overhead charges on hundreds of millions of dollars in federal contracts over a period of nearly 20 years, federal officials said.
According to an indictment returned by a grand jury in federal district court in Newark, N.J. , on Oct. 19 and unsealed on Oct. 19, Wolff intentionally conspired to bill the U.S. Agency for International Development (USAID) "at knowingly inflated rates" for reconstruction contracts in Iraq and Afghanistan.
Among the contracts at issue are USAID "cost-plus" or cost-reimbursable contacts totaling more than $818 million awarded to Berger Group from 2002 through 2006.
Wolff was president and CEO of Louis Berger Group from 1982 until 2002 and Chairman of its parent company, Berger Group Holdings Inc., from 2002 until Aug. 13 of last year.
He was expected to appear in federal court in Newark on Oct. 19.
The indictment states that at the company's September 2001 annual meeting, Salvatore Pepe, its then-controller and later chief financial officer, presented an overhead rate that was well below the target Wolff had set. The indictment says Wolff called Pepe an "assassin" of the overhead rate, and ordered him to target a rate exceeding 140% of actual labor costs.
The government also says that in response to Wolff's directive, Pepe and Precy Pellettieri, another Berger Group official, developed a "fraudulent scheme" to reclassify some company employees’ work hours to indicate that they had worked on the federal projects when they in fact did not.
The government says this reclassifying went on from about 2003 through 2007 without the workers' knowledge and also over one employee’s objection.
The indictment also says that Wolff instructed the other company officials to charge all shared overhead expenses for the company’s Washington, D.C., office to an account for USAID-related items, although that office also worked on many non-USAID contracts.
