Ex-CEO surrenders to face overbilling charges

AP News
Posted: Oct 21, 2011 12:27 AM
Ex-CEO surrenders to face overbilling charges

The former president and CEO of a New Jersey-based company surrendered Thursday to face charges of overcharging the U.S. government for overseas reconstruction projects, including in Afghanistan.

Derish Wolff appeared in federal court in Newark on Thursday and was released on $1 million bail secured by property. He faces a six-count indictment _ one count of conspiracy to defraud the government and five counts of making false statements. The conspiracy count carries a 10-year maximum prison sentence; the other counts each carry a maximum five-year term.

Wolff, handcuffed and wearing a navy blue blazer with an open-collar shirt, spoke during the brief appearance only to tell the judge that he understood the charges against him.

He declined to comment on the charges after his court hearing.

Prosecutors allege Wolff, 76, of Miami and Bernardsville, N.J., led a scheme to overbill the government in connection with hundreds of millions of dollars in overseas reconstruction projects over a nearly 20-year period.

"At a time when the U.S. government was attempting to build relationships and trust within the Middle East, Wolff sought profits over patriotism, and commercial gain over corporate duty," Michael Ward, head of the FBI's Newark division, said in a statement.

Wolff once led international engineering consulting firm Louis Berger Group, which is based in Morristown. The contractor managed more than $1 billion in reconstruction contracts in Afghanistan.

According to the indictment, LBG was awarded more than $800 million in reconstruction contracts, mostly in Afghanistan but some in Iraq, by the United States Agency for International Development, an independent federal agency that advances U.S. foreign policy by supporting economic growth and democracy in developing countries or countries destabilized by war.

The contracts were "cost-plus" contracts, which meant LBG could bill the government for overhead expenses such as rent and depreciation. Wolff and subordinates overbilled by padding employees' work hours to make it appear they had spent time working on the government contracts when they actually had not, according to the indictment.

They also allegedly billed overhead expenses from the company's Washington, D.C. office, even though that office worked on many unrelated projects. The indictment didn't specify how much money the overbilling cost the government.

Two former Berger Group employees, a controller and chief financial officer, pleaded guilty last fall to conspiracy to defraud the government and await sentencing.

Under terms of an agreement with prosecutors, the Berger Group has agreed to make full restitution to USAID and pay a total of about $70 million in civil and criminal penalties. The company will operate under the oversight of an independent monitor for two years.

In a statement issued Thursday, the company said it has "upgraded its administrative and accounting expertise while under U.S. Government oversight" and is fully eligible to perform work for federal, state and local government entities.


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