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Former Top Diplomats Make a Case For Sensible Funding of the State Department Budget

Posted: 2:21 am ET

 

In light of the Trump Administration’s proposed FY18 budget, the American Academy of Diplomacy and the Council of American Ambassadors wrote a joint letter to Senate Majority Leader Mitch McConnell (R-Kentucky) to make a case for sensible State Department funding in the federal budget.  The letter was signed by Ambassador Thomas R. Pickering, AAD Chairman; Ambassador Ronald E. Neumann, AAD President; Ambassador Bruce S. Gelb, CAA Chairman; and Ambassador William J. vanden Heuvel CAA Chairman Emeritus. We understand that identical letters were also sent to Senators Cardin, Corker, Graham, Leahy and Schumer in the Senate, and Representatives Engel, Lowey, McCarthy, Pelosi, Rogers, and Royce in the House.

Sept 14, 2012: Thousands of protestors attacked the U.S. Embassy in Khartoum, Sudan, setting fire to the Consular Section entrance, and causing extensive damage. (Source: U.S. State Department/DS)

Below is the text of the letter AAD/CAA sent to the Hill:

On behalf of the American Academy of Diplomacy (AAD) and the Council of American Ambassadors (CAA), we believe the proposed magnitude of the cuts to the State Department budget pose serious risks to American security. After the military defeat of the Islamic State, intensive diplomatic efforts in Iraq and Syria will be essential to stabilization, without which the radical movements that we now contest will reappear. Afghanistan requires the same attention.

As a general principle, diplomacy is far less costly than war to achieve our national purposes. Diplomacy is most often the first line of America’s defense. When the Islamic State suddenly appeared in Mali, it was our Embassy that was able to recommend action based on knowing the difference between terrorists and local political actors who needed support. When Ebola in West Africa threatened a worldwide pandemic, it was our Foreign Service that remained in place to establish the bases for and support the multi-agency health efforts deployed to stop the disease outbreak. It is to our embassies that American citizens turn for security and evacuation abroad.

Our embassies’ commercial work supports US companies and citizen entrepreneurs in selling abroad. This creates thousands of American jobs. Every dollar spent on this work returns hundreds in sales. Peacekeeping and political missions are mandated by the Security Council where our veto power can ensure when, where, how many, and what kind of peacekeepers used in a mission support US interests. Peacekeeping forces are deployed in fragile, sometimes prolonged, circumstances, where the US would not want to use US forces. UN organized troops cost the US taxpayer only about one-eighth the cost of sending US troops. Our contributions to refugees and development are critical to avoid humanitarian crises from spiraling into conflicts that would draw in the United States and promote violent extremism. Budget cuts of the amounts contemplated endanger basic US security interests.

US public diplomacy fights radicalism. Educational exchanges over the years have enabled hundreds of thousands of foreign students truly to understand Americans and American culture. This is far more effective in countering radical propaganda than social media. The American Immigration Law Foundation estimates that 46 current and 165 former heads of government are US graduates.

These few examples should show why so many American military leaders are deeply opposed to the current budget proposals. They recognize that when diplomacy is not permitted to do its job the chances of Americans dying in war increase. When the number of employees in military commissaries or military bands exceeds the number of US diplomats, the current budget proposal is indeed not a cost-effective way to protect America and its interests.

The Academy, representing the most experienced and distinguished former American diplomats, both career and non-career, and the Council have never opposed all cuts to the State Department budget. The Academy’s detailed study American Diplomacy at Risk (2015) proposed many reductions. We believe streamlining is possible, and we can make proposals to that end. However, the current budget proposals will damage American national security and should be rejected.

The original letter is here: Letter re Proposed DOS Budget Cuts – Senator McConnell.

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Related posts:

 

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WH/OMB Releases FY2018 Budget Blueprint – @StateDept/@USAID Hit With 28% Funding Cuts

Posted: 2:14 am ET

 

WaPo posted a copy of President Trump’s budget proposal for FY2018 which OMB calls “America First: A Budget Blueprint to Make America Great Again”. Important to note that this is a proposal and that Congress has ultimate control over government funding. We’ll have to wait and see what Congress will do with this request and which cabinet secretary will decline the funds if the Hill insists on the agency/agencies getting more money than the Trump request. We’ve extracted the 2-page relevant to the State Department below:

The Department of State, the U.S. Agency for International Development (USAID), and the Department of the Treasury’s International Programs help to advance the national security interests of the United States by building a more democratic, secure, and prosperous world. The Budget for the Department of State and USAID diplomatic and development activities is being refocused on priority strategic objectives and renewed attention is being placed on the appropriate U.S. share of international spending. In addition, the Budget seeks to reduce or end direct funding for international organizations whose missions do not substantially advance U.S. foreign policy interests, are duplicative, or are not well—managed. Additional steps will be taken to make the Department and USAID leaner, more efficient, and more effective. These steps to reduce foreign assistance free up funding for critical priorities here at home and put America first.

The President’s 2018 Budget requests $25.6 billion in base funding for the Department of State and USAID, a $10.1 billion or 28 percent reduction from the 2017 annualized CR level. The Budget also requests $12.0 billion as Overseas Contingency Operations funding for extraordinary costs, primarily in war areas like Syria, Iraq, and Afghanistan, for an agency total of $37.6 billion. The 2018 Budget also requests $1.5 billion for Treasury International Programs, an $803 million or 35 percent reduction from the 2017 annualized CR level.

The President’s 2018 Budget:

➡ Maintains robust funding levels for embassy security and other core diplomatic activities while implementing efficiencies. Consistent with the Benghazi Accountability Review Board recommendation, the Budget applies $2.2 billion toward new embassy construction and maintenance in 2018. Maintaining adequate embassy security levels requires the efficient and effective use of available resources to keep embassy employees safe.

➡ Provides $3.1 billion to meet the security assistance commitment to Israel, currently at an all-time high; ensuring that Israel has the ability to defend itself from threats and maintain its Qualitative Military Edge.

➡ Eliminates the Global Climate Change Initiative and fulfills the President’s pledge to cease payments to the United Nations’ (UN) climate change programs by eliminating U.S. funding related to the Green Climate Fund and its two precursor Climate Investment Funds.

➡ Provides sufficient resources on a path to fulfill the $1 billion U.S. pledge to Gavi, the Vaccine Alliance. This commitment helps support Gavi to vaccinate hundreds of millions of children in low-resource countries and save millions of lives.

➡ Provides sufficient resources to maintain current commitments and all current patient levels on HIV/AIDS treatment under the President’s Emergency Plan for AIDS Relief (PEPFAR) and maintains funding for malaria programs. The Budget also meets U.S. commitments to the Global Fund for AIDS, Tuberculosis, and Malaria by providing 33 percent of projected contributions from all donors, consistent with the limit currently in law.

➡ Shifts some foreign military assistance from grants to loans in order to reduce costs for the U.S. taxpayer, while potentially allowing recipients to purchase more American-made weaponry with U.S. assistance, but on a repayable basis.

➡ Reduces funding to the UN and affiliated agencies, including UN peacekeeping and other international organizations, by setting the expectation that these organizations rein in costs and that the funding burden be shared more fairly among members. The amount the U.S. would contribute to the UN budget would be reduced and the U.S. would not contribute more than 25 percent for UN peacekeeping costs.

➡ Refocuses economic and development assistance to countries of greatest strategic importance to the U.S. and ensures the effectiveness of U.S. taxpayer investments by rightsizing funding across countries and sectors.

➡ Allows for significant funding of humanitarian assistance, including food aid, disaster, and refugee program funding. This would focus funding on the highest priority areas while asking the rest of the world to pay their fair share. The Budget eliminates the Emergency Refugee and Migration Assistance account, a duplicative and stovepiped account, and challenges international and non-governmental relief organizations to become more efficient and effective.

➡Reduces funding for the Department of State’s Educational and Cultural Exchange (ECE) Programs. ECE resources would focus on sustaining the flagship Fulbright Program, which forges lasting connections between Americans and emerging leaders around the globe.

➡ Improves efficiency by eliminating overlapping peacekeeping and security capacity building efforts and duplicative contingency programs, such as the Complex Crises Fund. The Budget also eliminates direct appropriations to small organizations that receive funding from other sources and can continue to operate without direct Federal funds, such as the East-West Center.

➡ Recognizes the need for State and USAID to pursue greater efficiencies through reorganization and consolidation in order to enable effective diplomacy and development.

➡ Reduces funding for multilateral development banks, including the World Bank, by approximately $650 million over three years compared to commitments made by the previous administration. Even with the proposed decreases, the U.S. would retain its current status as a top donor while saving taxpayer dollars.

Read the document in full:

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In Disaster News, Trump Budget Seeks 37% Funding Cut For @StateDept and @USAID

Posted: 2:25 am  ET

 

 

“America First” Budget Targets @StateDept Funding ( Just 1% of Total Federal Budget)

Posted: 3:13 am  ET

 

We recently posted about the Trump budget for FY2018 that will reportedly proposed funding cuts of up to 30% for the State Department (see  With @StateDept Facing a 30% Funding Cut, 121 Generals Urge Congress to Fully Fund Diplomacy and Foreign Aid@StateDept Budget Could Be Cut By As Much as 30% in Trump’s First Budget Proposal?@StateDeptbudge Special Envoy Positions Could Be in Trump’s Chopping Block — Which Ones?). We understand that this number could actually be closer to 40%, which is simply bananas, by the way.  It would be ‘must-see’ teevee if Secretary Tillerson appears before the House and Senate committees to justify the deep cuts in programs, foreign aid, diplomatic/consular posts, embassy security, staffing, training, or why we’re keeping just half the kitchen sink. Just a backgrounder, below is the budget request composition for FY2016:

fy2016-sfops-budget-request

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Previous posts on FS funding:

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On February 27, OMB Director Mick Mulvaney showed up at the WH Press Briefing to talk about President Trump’s budget.  Before you are all up in arms, he said that what we’re talking about right now is “not a full-blown budget” which apparently will not come until May.  So this “blueprint” does not include mandatory spending, entitlement reforms, tax policies, revenue projections, or the infrastructure plan and he called this a “topline number only.” Agencies are given 48 hours to respond to OMB (holy camarba!). Excerpt below from his talk at the James S. Brady Briefing Room:

As for what it is, these are the President’s policies, as reflected in topline discretionary spending.  To that end, it is a true America-first budget.  It will show the President is keeping his promises and doing exactly what he said he was going to do when he ran for office.  It prioritizes rebuilding the military, including restoring our nuclear capabilities; protecting the nation and securing the border; enforcing the laws currently on the books; taking care of vets; and increasing school choice.  And it does all of that without adding to the currently projected FY 2018 deficit.

The top line defense discretionary number is $603 billion.  That’s a $54-billion increase — it’s one of the largest increases in history.  It’s also the number that allows the President to keep his promise to undo the military sequester.  The topline nondefense number will be $462 billion.  That’s a $54-billion savings.  It’s the largest-proposed reduction since the early years of the Reagan administration.

The reductions in nondefense spending follow the same model — it’s the President keeping his promises and doing exactly what he said he was going to do.  It reduces money that we give to other nations, it reduces duplicative programs, and it eliminates programs that simply don’t work.

The bottom line is this:  The President is going to protect the country and do so in exactly the same way that every American family has had to do over the last couple years, and that’s prioritize spending.

The schedule from here — these numbers will go out to the agencies today in a process that we describe as passback.  Review from agencies are due back to OMB over the course of the next couple days, and we’ll spend the next week or so working on a final budget blueprint.  We expect to have that number to Congress by March 16th.  That puts us on schedule for a full budget — including all the things I mentioned, this one does not include — with all the larger policy issues in the first part of May.

[…]

Q    But we’re not talking about 2 or 3 percent — we’re talking about double-digit reductions, and that’s a lot.

DIRECTOR MULVANEY:  There’s going to be a lot of programs that — again, you can expect to see exactly what the President said he was going to do.  Foreign aid, for example — the President said we’re going to spend less money overseas and spend more of it here.  That’s going to be reflected in the number we send to the State Department.

Q    Thank you very much.  One quick follow on foreign aid.  That accounts for less than 1 percent of overall spending.  And I just spoke with an analyst who said even if you zero that out, it wouldn’t pay for one year of the budget increases that are being proposed right now.  So how do you square that amount?  So why not tackle entitlements, which are the biggest driver, especially when a lot of Republicans over the years have said that they need to be taxed?

DIRECTOR MULVANEY:  Sure.  On your foreign aid, it’s the same answer I just gave, which is, yes, it’s a fairly part of the discretionary budget, but it’s still consistent with what the President said.  When you see these reductions, you’ll be able to tie it back to a speech the President gave or something the President has said previously.  He’s simply going to — we are taking his words and turning them into policies and dollars.  So we will be spending less overseas and spending more back home.

 

See three separate threads on Twitter with some discussion of the proposed cuts.

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Snapshot: @StateDept Aid Allocation by Region and Top Recipients, FY2016 Request

Posted: 3:06 am  ET

 

Via CRS

Under the FY2016 request, top foreign assistance recipients would not differ significantly from FY2014 (FY2015 country data are not yet available). Israel would continue to be the top recipient, with a requested $3.1 billion (level with FY2014) in Foreign Military Financing (FMF) funds, followed by Afghanistan, for which $1.5 billion was requested (a 28% increase from FY2014). Egypt would receive $1.5 billion (-3% from FY2014), largely in FMF to support shared security interests, and Jordan would get $1.0 billion (-1% from FY2014) to promote security and stability in the region as well as address economic and security strains related to the crisis in Syria. Pakistan would get $804 million (a 10% cut from FY2014), to continue ongoing efforts to increase stability and prosperity in the region. Other top recipients include Kenya ($630 million), Nigeria ($608 million), Tanzania ($591 million), and other African nations that are focus countries for HIV/AIDS programs. A new addition to the top recipient list under the request would be Ukraine, for which $514 million was requested (snip).

Below is the proposed FY2016 foreign operations budget allocations by region and country.

top-recipients-fy2016-request

Funding allocation among regions would change slightly under the FY2016 request compared with FY2014 (FY2015 regional data are not yet available), with Europe/Eurasia and the Western Hemisphere increasing their share by 2% each as a result of proposed funding for Ukraine and Central America. Africa’s share of aid funding would decline by about 5% from FY2014 estimates.

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@StateDept v. @USAID: Reconciling Interagency Priorities Remains a Top Management Challenge

Posted: 2:14 am ET

 

USAID/OIG reported on its Top Management Challenges for FY2017.  The following is an excerpt on one of its challenges, reconciling interagency priorities with examples from the Arab Spring and operations in Pakistan:

Contingency operations and other efforts require coordination with multiple U.S. Government agencies, yet USAID’s development priorities do not always align with other agencies’ priorities, making it difficult for USAID to achieve its core development mission. In particular, coordination with the State Department, which leads multiagency operations that respond to political and security crises, has presented challenges to USAID’s project planning and execution. Despite broad interagency guidance on State’s role in politically sensitive environments, USAID employees are sometimes unclear as to how to manage additional layers of review, respond to changing priorities, and balance short-term and long-term priorities. Lack of knowledge about other agencies’ processes exacerbates these challenges.

Arab Spring

To identify the challenges USAID faced during the early part of the protest movement that came to be known as the Arab Spring (December 2010-June 2014), we surveyed 70 USAID employees working on programs for Egypt, Tunisia, Libya, and Yemen.1 According to USAID staff, the State Department’s influence over USAID programs increased after the Arab Spring began, creating additional challenges. For example, a USAID employee in Egypt noted that State’s control “severely constrains USAID’s ability to design and execute technically sound development projects,” stating that agreed-upon steps to design activities and select implementation mechanisms abruptly change. USAID staff pointed out that State’s added layer of review slowed operations, and USAID employees had to dedicate additional time to building consensus and gaining external parties’ approval. USAID employees also said State officials, unfamiliar with the Agency and its different types of procurement, made requests that were difficult to accommodate under USAID procedures.

In a more recent audit in Pakistan, we also found challenges in reconciling short-term political goals with long-term development goals.

Pakistan

Our audit of the $7.5 billion aid package authorized under the Enhanced Partnership for Pakistan Act (EPPA) found that USAID’s programs there have not achieved intended development objectives, in part because of competing priorities between State and USAID. The State Department has the lead role for assistance activities in Pakistan, making it responsible for budget and project decisions.2 At the outset, USAID/Pakistan followed State’s initial strategy, which lacked long-term development outcomes and goals. In 2013, USAID/Pakistan implemented a formal strategy that linked activities to a long-term development goal but lacked indicators to measure progress. The strategy also focused on repairing and upgrading Pakistan’s energy infrastructure—mirroring State’s focus on energy as key to long-term growth—but not on other priority areas, such as health, education, and economic growth. According to USAID staff, implementing a development strategy under State Department control was challenging.

As a result of our EPPA audit, we made recommendations to improve USAID’s development implementation in an interagency environment, including that USAID revise its policies to (1) clearly define USAID’s roles and responsibilities for designing and implementing development when it is subject to State Department control and (2) provide alternate development strategies when a country development cooperation strategy3 or a transitional country strategy is not an option. We also recommended that the Agency institute an interagency forum where USAID can better present its development per- spective in countries where the State Department takes the lead. In response, USAID’s Administrator has engaged the State Department leadership to discuss solutions, including better reconciling interests at the beginning of planning and programming, so that USAID and State leadership can help staff pursue both agencies’ objectives simultaneously.

USAID/OIG notes that USAID has begun actions to address OIG’s recommendations to address this challenge. However, until corrective actions are fully implemented and realized, reconciling interagency priorities to advance inter- national development will remain a top management challenge.

USAID/OIG indicates that it interviewed 31 USAID officials who worked on activities in these countries, and administered a questionnaire. In all, 70 employees from USAID either had interviews or responded to the questionnaire.

 

Related OIG items:

  • “Competing Priorities Have Complicated USAID/Pakistan’s Efforts to Achieve Long-Term Development Under EPPA” (G-391-16-003-P), September 8, 2016
  • “Most Serious Management and Performance Challenges for the U.S. Agency for International Development,” October 15, 2015
  • “Survey of USAID’s Arab Spring Challenges in Egypt, Tunisia, Libya, and Yemen” (8-000-15-001-S), April 30, 2015

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Around the Foreign Service: Merry Christmas and Happy Holidays 2016 (Videos)

Posted: 1:41 am ET

 

US Embassy Tokyo, Japan

It looks like we have our first viral embassy holiday video at over 3.5 million views in the last two days. Ambassador Kennedy and U.S. Mission Japan staff in Tokyo, Sapporo, Nagoya, Osaka, Fukuoka, and Naha got into the holiday spirit and showed off their dance moves. Below is their rendition of the “Koi Dance” (Love Dance) from one of the most popular TV shows in Japan this season.

Here is a bonus clip with Santa going down the chimney:

 USAID

US Embassy Warsaw; USCG Krakow, Poland

US Embassy Bangkok, Thailand

US Embassy Manila, Philippines

 

US Embassy Prague, The Czech Republic

US Embassy Seoul, South Korea

US Embassy Ottawa, Canada

US Embassy Oslo, Norway

“It’s Ambassador Heins’ first Christmas in Norway, but will he find julestemning? In this year’s Embassy holiday video, the Ambassador, Tone Damli and Ole Torp drive around Oslo singing Christmas carols and practice Norwegian in their quest to find true holiday spirit.”

 US Embassy Zagreb, Croatia

US Embassy Zagreb also launched their celebration of the holiday season with their new Mannequin Challenge video.

US Embassy Quito, Ecuador

USCG Toronto, Canada

U.S. Consulate General Toronto’s multilingual and diverse team wishes Happy Holidays on this Mannequin Challenge video in 19 languages.

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Contractors Settle False Claims Allegations Related to USAID Food Aid Storage/Redelivery For $1.075M

Posted: 3:55 am ET

Via USDOJ:

Jacintoport International LLC and Seaboard Marine Ltd Agree to Settle False Claims Allegations Related to Delivery of Humanitarian Food Aid

The Justice Department announced today that Jacintoport International LLC (Jacintoport) and Seaboard Marine Ltd. (Seaboard Marine) have agreed to pay $1.075 million to settle a lawsuit alleging that the companies violated the False Claims Act in connection with a warehousing and logistics contract for the storage and redelivery of humanitarian food aid. Jacintoport is a cargo handling and stevedoring firm headquartered in Houston, Texas, and Seaboard Marine, an affiliate of Jacintoport, is an ocean transportation company headquartered in Miami, Florida.

In its lawsuit, the United States alleged that Jacintoport executed in 2007 a warehousing and logistics contract with the United States Agency for International Development (USAID) for the storage and redelivery of emergency humanitarian food aid. This contract contained explicit caps on the rates Jacintoport could charge ocean carriers to load humanitarian food aid onto ships (referred to as “stevedoring” charges) bound for crisis areas around the world. The complaint alleges that beginning around January 2008 and continuing through at least October 2009, Jacintoport, under the supervision and control of Seaboard, charged ocean carriers more for stevedoring than permitted to load over 50,000 tons of humanitarian food aid. These inflated stevedoring charges were subsequently lumped into other costs for delivering humanitarian food aid and passed on to the United States.

“USAID’s humanitarian food aid program provides critical assistance to starving people all over the world,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division. “The Justice Department will hold accountable those who seek to abuse this important program.” ‪

“It is unacceptable for companies that do business with the federal government to inflate their costs,” said U.S. Attorney Channing D. Phillips for the District of Columbia. “This settlement demonstrates our determination to protect the taxpayers’ dollars – and humanitarian programs – from abuse.”

The allegations resolved by this settlement were initially brought in a lawsuit filed under the qui tam or whistleblower provisions of the False Claims Act by John Raggio, a shipping contractor who allegedly received an invoice from Jacintoport that contained the excessive stevedoring charge. Under the Act’s qui tam provisions, a private citizen, known as a “relator,” can sue on behalf of the United States and share in any recovery. The United States is permitted to intervene in the lawsuit, as it did here. Raggio will receive $215,000. Earlier today, the government requested that the case be dismissed.

This matter was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of Columbia, with assistance from the USAID Office of the Inspector General. The claims resolved by this settlement are allegations only and there has been no determination of liability. The case is United States ex. rel. Raggio v. Jacintoport International, LLC, et al. Case No. 1:10-cv-01908 (D.D.C.).

 

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USAID Reconstruction Contracts in Afghanistan and Iraq Bites Former Louis Berger Executives

Posted: 4:05 am ET

 

In May 2015,  the former president, chief executive officer, and chairman of the board of USAID contractor Louis Berger Group Inc. (LBG) was  sentenced to 12 months of home confinement and fined $4.5 million for conspiring to defraud the U.S. Agency for International Development (USAID) with respect to billions of dollars in contracts over a nearly 20-year period.  See Conspired to Defraud Uncle Sam? Be Very Afraid. We’re Gonna Put You in Home Confinement! Last week, USDOJ announced that it has filed a lawsuit under the False Claims Act against the former LBG CEO Derish M. Wolff  and former CFO Salvatore J. Pepe “for conspiring to overbill the U.S. Agency for International Development (USAID) and other government agencies for costs incurred performing reconstruction contracts in Afghanistan, Iraq, and other countries.”

Via USDOJ: United States Sues Former Executives of Government Contractor for Making False Claims in Connection with Reconstruction Contracts in Afghanistan and Iraq

The Justice Department announced today that the government has filed suit under the False Claims Act against Derish M. Wolff and Salvatore J. Pepe, respectively the former CEO and CFO of Louis Berger Group Inc. (LBG), for conspiring to overbill the U.S. Agency for International Development (USAID) and other government agencies for costs incurred performing reconstruction contracts in Afghanistan, Iraq, and other countries, the Justice Department announced today.  LBG is based in East Orange, New Jersey.

“Those who do business with the U.S. government should expect appropriate consequences if they do not deal fairly,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division.  “As this case demonstrates, the government will hold both corporate entities and individuals accountable if they misuse taxpayer funds.”

The government’s complaint alleges that Wolff and Pepe designed and directed various accounting schemes that resulted in LBG billing the government for indirect overhead costs at inflated rates.  According to the complaint, for example, Wolff and Pepe shifted portions of salaries of LBG executives and accounting personnel from contracts paid for by foreign and state governments and private entities to contracts paid for by the United States.  Wolff and Pepe allegedly certified the false rates and submitted them to the government in annual financial reports.

The United States resolved criminal and civil claims against LBG arising from this conduct on Nov. 5, 2010.  At that time, LBG entered into a Deferred Prosecution Agreement and paid $50.6 million to resolve False Claims Act allegations.  Pepe pleaded guilty on that date to a charge of conspiracy to defraud the government and was later sentenced to one year probation.  Wolff pleaded guilty to the same charge on Dec. 12, 2014, and was later sentencedto 12 months of home confinement and required to pay a $4.5 million fine for his role in the scheme.  The complaint filed today asserts civil claims against Wolff and Pepe.

The United States filed its complaint in a lawsuit originally brought under the qui tam, or whistleblower, provisions of the False Claims Act, by Harold Salomon, an LBG accountant from March 2002 to October 2005.  Under the Act, a private citizen can sue on behalf of the United States and share in any recovery.  The United States is also entitled to intervene in the lawsuit, as it has done in this case.

This matter is being handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the District of Maryland, with investigative support from the FBI, USAID’s Office of Inspector General, the Defense Criminal Investigative Service and the Defense Contract Audit Agency.

“I applaud the dedication of USAID-OIG special agents, along with special agents of the FBI and the Defense Criminal Investigative Service,” said USAID Inspector General Ann Calvaresi Barr.  “Their joint investigative work has helped the Justice Department take action against those responsible and signals our continuing commitment to protecting public funds from fraud, waste, and abuse.”

The case is United States ex rel. Harold Salomon v. Derish M. Wolff & Salvatore J. Pepe, Civ. No. RWT-06-1970 (D. Md.).  The claims asserted against Wolff and Pepe are allegations only to the extent not admitted in their criminal pleas, and there has been no determination of civil liability.

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