The Louis Berger Group’s president, Larry D. Walker, says his company will emerge better from changes made because of investigations that culminated in a $69-million settlement with the U.S. Dept. of Justice announced on Nov. 5. He maintains the company discovered the overbilling targeted by investigators before the company became aware of the federal investigation and that the company began refunding $4 million to federal agencies. New internal controls and compliance and ethics programs will prevent a recurrence, he says.
The overcharging “goes back into the 1990s before the Afghanistan and Iraq conflicts and was based on a methodology that was inappropriate,” says Walker. While about $19 million of the settlement is a criminal fine and about $50 million is a civil penalty, in excess of $10 million was actually overcharged to federal agencies, he points out.
That may be the case. However, there is a whistle-blower credited by the government for triggering the U.S. Justice Dept. investigation, in 2005, which overlapped for several years with Berger’s internal probe. Both the Justice Dept. and the whistle-blower portray the overcharging not just as inappropriate but as cheating taxpayers and as a war-zone abuse that depleted aid funds.
Not much has been said about the whistle-blower, Harold Salomon, a former senior financial analyst and auditor who worked at the company’s headquarters in Morristown, N.J., beginning in 2002. He stands to collect millions of dollars from the government for his role in uncovering the overcharges by filing a lawsuit in federal court under the False Claims Act. In such lawsuits, the plaintiff may be entitled to 15% to 30% of the government’s total recovery, which includes damages for the false bills, tripled, plus civil penalties from $5,000 to $10,000 per false claim.
Until Nov. 5 the lawsuit was sealed and Salomon’s identify was unknown. According to his LinkedIn page, Salomon is a government compliance specialist at Alliant Techsystems, a Minneapolis-based Dept. of Defense contractor.
“I want to express my gratitude to God for giving me the strength and the courage to expose the frauds against the taxpayers,” Salomon said in a statement released by his attorney. “Today I can affirm to those who told me The Louis Berger Group can get away with anything that they were wrong.”
At the time it announced the settlement, the Justice Dept. disclosed that it had obtained guilty pleas from the company’s former two highest financial executives. Former chief financial officer, Salvatore Pepe, 58, and the former controller, Precy Pellettieri, 54, pleaded guilty in federal court in Newark, N.J., to conspiring to defraud the U.S. government.
The government said nothing about Derish M. Wolff, 75, Louis Berger Group’s chairman until this summer. He is the target of civil and criminal investigations related to the scheme.
Salomon could not be reached for comment, but in his statement he credits his alma mater, Rensselaer Polytechnic Institute, where he studied business, for helping instill strong moral values. “I have upheld the notions of ethics I was taught there. It is through those ethical values I was able to come forward, cooperate and assist in this recovery for the taxpayers.”
Salomon also is founder and executive director of a charitable organization, American-Haitian Association for Medical Economic & Educational Support (www.ahames.org), a non-profit corporation that provides health care and funds for economic development.
Its mission is similar to the U.S. Agency for International Development’s work. USAID is one of the federal agencies Louis Berger Group overbilled.
Salomon’s duties at The Louis Berger Group included preparing, calculating and submitting year-end overhead rates and incurred cost submissions to the Defense Contract Audit Agency and to USAID, according to Salomon’s account. Federal prosecutors said Pepe and Pellettieri, working with an unnamed Louis Berger Group executive, reclassified domestic indirect costs as overseas indirect costs, resulting in the overbilling.
Walker says he never met Salomon and declined to comment on either the former financial managers who pleaded guilty or on Wolff, who the government has tied to the overcharges. Walker says his firm has replaced its executive leadership over the past few years and was free under the settlement to continue to seek and perform federal work.