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The United States Department of Justice (DOJ) just announced that United Airlines will pay $ 49 million to resolve criminal fraud charges and civil lawsuits related to postal service contract fraud for courier transport international.
United Airlines International Mail System
Under the Non-Prosecution Agreement and the Civil Settlement Agreement, United Airlines entered into International Commercial Air (ICAIR) contracts with the United States Postal Service (USPS), meaning that United carried American mail to the internationally on behalf of the USPS.
United was obligated to provide barcode scans of mail receptacles to USPS when United took possession of the mail and when United delivered the mail to intended recipients overseas. United were only entitled to full payment if accurate mail scans were provided and mail was delivered in a timely manner.
However, between 2012 and 2015, United engaged in a scheme to defraud the USPS by submitting bogus delivery scan data to make United appear to be complying with ICAIR requirements, when in fact. the airline was not. United submitted automated delivery scans that did not match the actual movement of mail.
Because the scans weren’t tied to actual mail delivery, United was overpaid – the airline got millions of dollars in payments from USPS it wasn’t entitled to.
United also admitted covering up issues with digitization and mail movement that would have imposed financial penalties on them under the ICAIR contracts. Some people at United go to great lengths to hide United’s automation efforts from USPS, knowing that the data transmitted was fabricated. Among other things, these people have tried to hide automation practices by revising spoofed delivery times to make automated scans less suspect.
United will pay $ 49 million to settle this case
United entered into a Non-Prosecution Agreement (NPA) and agreed to pay:
- $ 17,271,415 in criminal penalties and restitution to resolve the criminal investigation into the fraud scheme
- $ 32,186,687 in a False Claims Act settlement for related conduct
- United has also agreed to report any evidence or allegations of violation of US fraud laws and to strengthen its compliance program, particularly with reporting requirements.
As Acting Deputy Attorney General Nicholas McQuaid of the Criminal Division of the Department of Justice describes:
“United has been commissioned by the US Postal Service to perform a crucial government function – transporting US mail overseas. Instead of fulfilling this obligation transparently, United defrauded the U.S. Postal Service by providing falsified parcel delivery information over a period of several years and accepting millions of dollars in payments that the company had failed to claim. not right. Today’s resolution emphasizes that companies that defraud the government – regardless of the context, contract or federal program – will be held accountable. “
It should be noted that this all happened under Jeff Smisek’s tenure as CEO of United (he stepped down in late 2015). While he may not be aware of this in particular, it can’t be denied that it aligns with some of the other behaviors we’ve seen at the airline.
Smisek’s tenure as CEO of United is marked by a bit of corruption. Famously, Smisek was embroiled in a corruption scandal, as United flew weekly between Newark and Columbia, South Carolina, for the chairman of the New York and New Jersey Port Authority.
At the end of the line
Like most major airlines, United Airlines carries international mail on behalf of USPS. Between 2012 and 2015, the company falsified its delivery times in order to maximize the compensation it received for mail delivery – rather than reporting the actual schedule with which it delivered mail, the airline reported an ambitious schedule that did not reflect reality.
A DOJ investigation has now revealed full details about it, and United is up to $ 49 million linked to fraud charges in the case.
(Hat tip for living and flying)
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