United Airlines will pay the government $49 million after entering into a non-prosecution agreement (NPA) with the United States Department of Justice, a deal that will resolve criminal charges and civil claims relating to fraud on postal service contracts for transportation of international mail.
The DOJ made the announcement today. Of the $49 million, $17 million will go toward criminal charges and $32 toward the civil penalties.
The feds launched a criminal investigation into a fraud scheme perpetrated by former employees of United’s Cargo Division in connection with United’s execution of contracts to deliver mail internationally on behalf of the U.S. Postal Service (USPS).
“United was entrusted by the U.S. Postal Service with fulfilling a critical government function – the transportation of U.S. mail abroad,” Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division said in a statement. “Instead of performing this duty with transparency, United defrauded the U.S. Postal Service by providing falsified parcel delivery information over a period of years and accepting millions of dollars of payments to which the company was not entitled. Today’s resolution emphasizes that companies that defraud the government – no matter the context, contract, or federal program – will be held accountable.”
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“Companies that do business with the United States must adhere to their contractual obligations,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “The Department of Justice will pursue those who knowingly fail to provide the government with the goods or services for which it has paid and that it is entitled to receive.”
According to the criminal NPA and civil settlement agreement, United entered into International Commercial Air (ICAIR) contracts with USPS, by which United transported U.S. mail internationally on behalf of USPS.
Pursuant to these ICAIR contracts, United was obligated to provide bar code scans of mail receptacles to USPS when United took possession of the mail receptacles and when the receptacles were delivered to the foreign postal administration or other intended recipient. United was entitled to full payment under these ICAIR contracts only if accurate mail scans were provided and mail was timely delivered to the foreign postal administration or intended recipient.
But according to the DOJ, between 2012 and 2015 United engaged in a scheme to defraud USPS by submitting false delivery scan data to make it appear that United and partner airlines with which it worked were complying with the ICAIR requirements, when in fact they were not.
Instead of providing USPS accurate delivery scans based on the movement of the mail, United submitted automated delivery scans based on aspirational delivery times. These automated scans did not correspond to the actual movement of the mail, as mandated by the contracts. Because this scan data was not tethered to the actual delivery of mail to the foreign recipients, payment was inappropriate under the ICAIR contracts. Through this data automation scheme, United secured millions of dollars in payments from the USPS to which United was not entitled under the ICAIR contacts.
