Somerset County Man Pleads Guilty to Conspiracy to Defraud Government Charge

A Bernardsville man, and former president, chief executive officer and chairman of Louis Berger Group Inc., was sentenced last week after previously pleading guilty to charges of conspiracy to defraud the government, authorities said.

Derish Wolff, 79, of Bernardsville, was sentenced to 12 months of home confinement and fined $4.5 million for conspiring to defraud the United States Agency for International Development (USAID) with respect to billions of dollars in contracts over the course of nearly 20 years, according to United States Attorney Paul J. Fishman. Wolff was sentenced in federal court on Friday, May 8, in Trenton.

Wolff conspired to defraud USAID by overbilling the agency with “cost-reimbursable” contracts -- including hundreds of millions of dollars of contracts for reconstructive work in Iraq and Afghanistan -- for Louis Berger Group’s (LBG) overhead and other indirect costs at falsely inflated rates, the U.S. Attorney’s Office said.

USAID, a federal agency that works to end global poverty and administers civilian foreign aid, granted LBG hundreds of millions of dollars in reconstruction contracts in the Middle East. LBG then calculated specific overhead rates and charged the agency and other U.S. government agencies these rates on cost-reimbursable contracts. This allowed Louis Berger Group to pass on its overhead costs to the agency in general proportion to how much labor LBG devoted to the government contracts, according to the U.S. Attorney’s Office.

Wolff and other executives at LBG engaged in the practice of intentionally overbilling USAID in connection with the cost-reimbursable contracts for nearly 20 years, from at least 1990 through July 2009. The fraud scheme was performed at the behest of Wolff.

The 79-year-old targeted particular overhead rates and ordered LBG employees to achieve that rate through fraudulent means. Dating back as early as 1990 through 2000, Wolff ordered the company’s assistant controller to instruct the accounting department to pad time sheets with hours devoted to federal government projects, when LBG had never worked on such projects, authorities said.

Under Wolff’s supervision, former LBG controllers Salvatore Pepe and Precy Pellettieri created a scheme from 2003 to 2007 to reclassify work hours of company employees to make it look as though employees worked on federal projects when they had not, the U.S. Attorney’s Office said.

Additionally, authorities said Wolff told employees to charge other overhead expenses at LBG’s Washington, D.C., office, including rent, to an account created to capture USAID-related expenses.

In 2014, Wolff admitted, at his direction, that Pepe and Pellettieri reclassified hours without the employees’ knowledge and without investigating whether the employees had correctly accounted for their time, authorities said.

Pepe and Pellettieri both pleaded guilty in November 2010 to separate informations charging them with conspiring to defraud the government with respect to claims.