Derish Wolff, former CEO of Louis Berger Group, is scheduled to be arraigned on Nov. 9 on federal charges that he led a plan to intentionally inflate overhead charges on hundreds of millions of dollars in federal contracts over nearly 20 years. A tentative trial date is likely to be set at that appearance.
An indictment unsealed on Oct. 20 in U.S. District Court in Newark, N.J., says Wolff intentionally conspired to bill the U.S. Agency for International Development "at knowingly inflated rates" for contracts in Iraq and Afghanistan. They include "cost-plus" or cost-reimbursable contacts totaling more than $818 million from 2002 through 2006.
Attorneys for Wolff, president and CEO of Louis Berger Group from 1982 until 2002 and chairman of parent Berger Group Holdings Inc. from 2002 until Aug. 13, 2010, did not return ENR's calls, but one of his attorneys has been quoted as saying Wolff is not guilty.
The indictment says that, at the company's September 2001 annual meeting, then-Controller Salvatore Pepe presented an overhead rate well below the target Wolff had set. The indictment says Wolff called Pepe an "assassin" of the rate and ordered him to target a rate exceeding 140% of the actual labor costs. The government says that in response to Wolff's directive, Pepe and Precy Pellettieri, another Berger official, developed a "fraudulent scheme" to reclassify some employees' hours to indicate they had worked on the federal projects when they did not. It says the reclassifying went on from about 2003 through 2007 without the workers' knowledge.
The company said those associated with the charges "are no longer with the company" and that it has changed accounting controls and "remains fully eligible" to work for federal, state and local governments. On Nov. 5, 2010, Pepe and Pellettieri pleaded guilty to charges of conspiracy, and the company agreed to pay $69.3 million to settle criminal and civil charges related to activity by Wolff and others.