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Defense Contractor Shifts Overhead Costs to Government, Settles False Claims Act Case for $69.3M

The Louis Berger Group settled a False Claims Act case for $69.3 million, after receiving contracts for reconstruction projects in both Iraq and Afghanistan with both the United States Agency for International Development (USAID) and the Department of Defense. The suit alleged that LBG intentionally overbilled the government through an elaborate accounting fraud scheme. Specifically, LBG executives conspired to charge falsely inflated overhead rates to the government by:

•    Classifying non-federal overhead as federal overhead
•    Reclassifying corporate employee work hours to deceptively appear as if they worked exclusively on federal projects, when this was not the case
•   Shifting a portion of their headquarters costs and Washington office costs to overhead accounts, to appear as if these charges had originated in LBG’s Government International Division Office

The settlement is the largest single settlement of a defense contractor fraud case. U.S. Attorney for the District of Maryland Rod J. Rosenstein stated, “This settlement demonstrates the importance of the False Claims Act, which allows us to recover damages for false or fraudulent claims that were paid by the taxpayers.” Fraud occurring during wartime contracts, in particular, can be difficult to detect and prove because of the chaos of war and the lack of a paper trail. As such, the government is especially reliant upon whistleblowers to expose fraud and ensure safety through False Claims Act suits.

To see the DOJ press release, click here.

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