Wrist Slap for CEO Who Defrauded USAID out of Hundreds of Millions

Wrist Slap for CEO Who Defrauded USAID out of Hundreds of Millions

iStockphoto/The Fiscal Times
By Brianna Ehley, The Fiscal Times

Former CEO Derish Wolff of Louis Berger Group, one of the country’s largest engineer contracting firms will be confined to his home for a year and have to pay a $4.5 million fine for helping to defraud the federal government out of hundreds of millions of dollars over 20 years. The fine represents a tiny fraction of the amount the company collected from the government. 

Wolff, 70, was sentenced by U.S. District Court Judge Anne Thompson for leading a “conspiracy to defraud USAID by billing the agency on so-called ‘cost-reimbursable’ contracts—including hundreds of millions of dollars of contracts for reconstructive work in Iraq and Afghanistan” and for inflating overhead costs. 

Related: U.S. Blew $500k on Melting Afghan Buildings 

Federal prosecutors said the company, tasked with building roads and bridges in Afghanistan and Iraq, charged the government 140 percent of the actual cost for every project it did. That means that for every one dollar of work the contractor did, it received $1.40 extra. Louis Berger was paid more than $2 billon by the U.S. government for its infrastructure work in war zones. 

Prosecutors said that between 1990 and 2009, Wolff and his colleagues inflated the costs of their work for USAID by telling accountants to “pad time sheets with hours ostensibly devoted to federal government projects when it had not actually worked on such projects.” 

Related: Pentagon Won’t Verify $300 Million a Year in Afghanistan is Spent Properly

Beyond logging false work hours, the prosecutor said Wolff routinely instructed his subordinates to bill USAID for all of their overhead expenses—like rent at Louis Berger’s Washington office even though the D.C. office worked on other projects that had nothing to do with the federal government.

After two other company executives pleaded guilty to conspiring to defraud the federal government in 2010, Louis Berger Group agreed to make full restitution to USAID. It settled civil and criminal charges and had to pay $18.7 million in criminal fines and an additional $50.6 million to resolve allegations that it violated the False Claims Act by significantly overbilling USAID.

Big Ad Buys to Push Tax Reform

By The Fiscal Times Staff

Two conservative groups are spending millions to promote an overhaul of the tax code.

The American Action Network announced Thursday that it will spend $2 million on a new TV ad featuring a Midwestern mom who says her family is “living paycheck to paycheck” and that a middle class tax cut would give them “piece of mind.” The ad will air in 28 congressional districts currently held by Republicans. Americans for Prosperity, backed by the Koch brothers, will spend $4.5 million on ads that promote tax reform while criticizing three red-state Democratic senators -- Claire McCaskill (MO), Tammy Baldwin (WI) and Joe Donnelly (IN).

Some States Will See Dramatic Obamacare Price Hikes in 2018

The federal government forms for applying for health coverage are seen at a rally held by supporters of the Affordable Care Act, widely referred to as "Obamacare", outside the Jackson-Hinds Comprehensive Health Center in Jackson, Mississippi, U.S. on Octo
Jonathan Bachman
By Yuval Rosenberg

Premiums for Affordable Care Act policies are set to rocket higher in many places in 2018. Many of the rates for next year won't be made public until November, but The New York Times found that Georgia has already approved increases of up to 57.5 percent, while the average rate in Florida will jump by about 45 percent and the average in New Mexico will climb by 30 percent. Minnesota, on the other hand, announced this week that a new state reinsurance program has helped stabilize rates and price changes for individual plans in the state will range from a decrease of 38 percent to an increase of 3 percent.

Confusion stemming from the White House and Congress, including uncertainty about whether the Trump administration will continue to make cost-sharing payments to insurers, is largely driving the increases. Keep in mind, though, that about 85 percent of people who buy insurance through Obamacare exchanges won’t feel the price hikes because their plans are subsidized — but the federal government will have to shell out more for those subsidies.

A Tax Reform 'Game Changer'?

By Yuval Rosenberg

The National Association of Home Builders says it's open to changes to the mortgage-interest deduction — a major policy shift that could have significant implications for the Trump administration's proposed tax reform, Politico's Lorraine Woellert reports. The break benefiting homebuyers was preserved as part of the tax framework released last week, but the reform plan also calls for increasing the standard deduction, a shift that would make the mortgage interest deduction less valuable. The National Association of Realtors last week criticized the administration's plan, even though it left the mortgage tax break in place. "This proposal recommends a backdoor elimination of the mortgage interest deduction for all but the top 5 percent who would still itemize their deductions," the group's president said.

Warren Buffett: Eliminating the Estate Tax Would Be a ‘Terrible Mistake’

Berkshire Hathaway chairman and CEO Warren Buffett talks with a reporter before the Berkshire Hathaway annual meeting in Omaha, Nebraska, U.S. May 6, 2017. REUTERS/Rick Wilking
Rick Wilking
By Michael Rainey

The world’s second-wealthiest man is worth about $75 billion, but he isn’t worried about the government taking a bite out of his estate after he’s gone. In fact, Buffett thinks the estate tax, which applies to just a few thousand estates a year, is a reasonable way to allocate resources, especially in a society in which the rich have gotten much richer over the last few decades. Buffett’s main concern is the emergence of “dynastic wealth” that “goes totally against what built this country, what this country stands for.” In an interview Tuesday, Buffett criticized the latest GOP proposal to get rid of the estate tax: "If they pass the bill they're talking about, I could leave $75 billion to a bunch of children and grandchildren and great-grandchildren. And if I left it to 35 of them, they'd each have a couple billion dollars ... Is that a great way to allocate resources in the United States?” (CNBC)

Treasury Pulls a Paper That Contradicts Mnuchin’s Corporate Tax Argument

By Yuval Rosenberg

The Treasury Department has taken down from its website a 2012 analysis that found that business owners and shareholders — not workers — bear most of the burden of corporate taxes. The findings of the report run counter to the argument Treasury Secretary Steven Mnuchin has been making in selling the benefits of a reduction in the corporate tax rate. The Trump administration’s tax reform framework calls for dropping the corporate rate from 35 percent to 20 percent.

The 2012 report from the Office of Tax Analysis found that “workers pay 18 percent of the corporate tax while owners of capital pay 82 percent” — figures that are “in line with many economists’ views and close to estimates from the nonpartisan Joint Committee on Taxation and Congressional Budget Office,” according to The Wall Street Journal.

A Treasury spokeswoman told the Journal: “The paper was a dated staff analysis from the previous administration. It does not represent our current thinking and analysis.”

Jason Furman, who was chairman of President Obama’s Council of Economic Advisors, tweeted that the goal of the technical paper series that included the removed study “was to be more transparent about the methodology Treasury used for its modeling and analysis.”