UPDATE 3-NJ firm pays $69 mln in int'l billing fraud probe
* US says Louis Berger paying more than $69 mln
* Criminal penalty totals $18.7 mln
* Two guilty pleas entered
* Louis Berger says has strengthened policies (Adds expected prison sentences, paragraph 4)
By Jonathan Stempel
NEW YORK, Nov 5 (Reuters) - Louis Berger Group Inc, a New Jersey-based engineering consultant with contracts in Afghanistan and Iraq, agreed to pay more than $69 million to the U.S. government to settle charges related to overbilling, the Department of Justice said.
The payment includes an $18.7 million criminal penalty as part of a deferred prosecution agreement with the government for the privately held company. This agreement calls for Louis Berger to reform its practices under a federal monitor, papers filed with the U.S. District Court in Newark, New Jersey show.
In a related development, two former Louis Berger employees pleaded guilty on Friday to conspiring to defraud the United States through overbilling from 2001 to 2007, according to prosecutors and court papers.
Former chief financial officer Salvatore Pepe, 58, of Tuckahoe, New York, and former controller Precy Pellettieri, 54, of Rahway, New Jersey, entered their pleas in the Newark federal court. They face possible 30- to 37-month prison terms under federal sentencing guidelines, which are advisory. Their lawyers did not immediately return requests for comment.
The government alleged that Louis Berger over a 17-year period inflated rates it used on contracts performed overseas on behalf of federal agencies such as the U.S. Agency for International Development (USAID), the Army and the Air Force.
"Taxpayers have a right to expect those who do business with the government to act in accordance with the law," Tony West, a U.S. assistant attorney general, said in a statement.
Friday's three-part settlement also calls for Louis Berger, which is based in Morristown, New Jersey, to pay more than $46 million to resolve a whistleblower lawsuit.
In that case, former company accounting analyst Harold Salomon alleged billing improprieties and violations of the federal False Claims Act.
The settlement also includes an administrative agreement with USAID, which administers foreign aid, and incorporates more than $4 million already paid on contracts performed for that agency, prosecutors said.
"This is the largest settlement involving fraud with regard to U.S. contractors working in Afghanistan and Iraq," Salomon's lawyer Peter Chatfield, a partner at Phillips & Cohen LLP, said in an interview. "Frauds like this increase the cost of providing aid, and undermine efforts to rebuild countries."
Larry Walker, president of Louis Berger, in a statement said the company has strengthened its systems and policies.
The company said it began probing its own accounting in 2006, has refunded sums to the government, and has cooperated with the government since learning of its investigation.
Louis Berger had $694 million of revenue last year. employs nearly 3,000 people in 35 countries, and does business in 80 countries, according to the company's Website.
A deferred prosecution agreement allows for the dismissal of charges if the defendant complies with the agreement's terms.
The case is U.S. v. Louis Berger Group Inc, U.S. District Court, District of New Jersey, No. 10-mag-03198. (Reporting by Jonathan Stempel in New York; editing by John Wallace, Bernard Orr)