United Airlines Inc. (United), the world’s third largest airline, has agreed to pay over $49 million to resolve criminal charges and civil claims relating to fraud on postal service contracts for transportation of international mail.
United entered into a non-prosecution agreement (NPA) with the Criminal Division’s Fraud Section and agreed to pay $17,271,415 in criminal penalties and disgorgement to resolve 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). Separately, United has entered into a False Claims Act settlement with the Civil Division’s Commercial Litigation Branch, Fraud Section, for related conduct, under which it is obligated to pay $32,186,687.
“The USPS contracts with commercial airlines for the safeguarding and timely delivery of U.S. Mail to foreign posts, including the mail sent to our soldiers deployed to foreign operating bases,” said Director Steven Stuller of the U.S. Postal Service (USPS) Office of Inspector General. “The Office of Inspector General supports the Postal Service by aggressively investigating allegations of contractual non-compliance within the mail delivery process, including the falsification of delivery information. Our special agents worked hand-in-hand with the Department of Justice to help ensure a reasonable resolution and we applaud the exceptional work done by the investigative and legal teams.”
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.
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.
The civil settlement resolves allegations under the False Claims Act that United falsely reported the times it transferred possession of United States mail to foreign postal administrations or other intended recipients. This is the fourth civil settlement involving air carrier liability for false delivery scans under the USPS ICAIR Contracts. Including the civil settlement announced today, the United States has recovered nearly $65 million in connection with its investigation of delivery scan practices under the ICAIR Contracts through these civil settlements.
The criminal case was investigated by the USPS Office of the Inspector General. Assistant Chief Timothy A. Duree of the Criminal Division’s Fraud Section prosecuted this case. The civil matter was handled by the Civil Division’s Commercial Litigation Branch, Fraud Section, with assistance from the USPS Office of the Inspector General and the USPS Office of General Counsel. Senior Trial Counsel Don Williamson of the Civil Division’s Commercial Litigation Branch, Fraud Section, represented the government in the civil case.