* 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 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
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)