United Airlines Inc. (united), the world’s third-largest airline, has agreed to pay more than $49 million to settle criminal charges and civil lawsuits related to fraud in postal service contracts for the 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 restitution to resolve a criminal investigation into a fraud scheme perpetrated by former cargo division employees from united in connection with the performance of contracts by united to deliver mail internationally on behalf of the us. postal service (usps). United has separately entered into a false claims law settlement with the Commercial Litigation Branch of the Civil Division, Fraud Section, for related conduct, under which it is obligated to pay $32,186,687.
“united was commissioned by the us. postal service with the fulfillment of a critical government function: the transportation of the us. uu. foreign mail,” said acting assistant attorney general nicholas l. mcquaid of the criminal division of the justice department. “instead of fulfilling this duty with transparency, united defrauded the us. postal service by providing falsified package delivery information over a period of years and accepting millions of dollars in payments to which the company was not entitled. today’s resolution emphasizes that companies that defraud the government, regardless of the context, contract or federal program, will be held accountable.”
“Companies that do business with the United States must meet their contractual obligations,” said Acting Deputy Attorney General Brian M. boynton of the civil division of the justice department. “The Department of Justice will prosecute those who knowingly fail to provide the government with goods or services for which it has paid and is entitled to receive.”
“the usps contracts with commercial airlines for safekeeping and timely delivery from the us. mail to foreign posts, including mail sent to our Soldiers deployed to foreign operating bases,” said U.S. Director Steven Stuller. uu. postal service (usps) office of the inspector general. “The Inspector General’s Office supports the Postal Service by aggressively investigating allegations of contractual breaches within the mail delivery process, including falsification of delivery information. our special agents worked hand-in-hand with the justice department to help ensure a reasonable resolution, and we applaud the exceptional work done by the investigative and legal teams.”
Under the npa civil and criminal settlement agreement, united entered into international commercial air contracts (icair) with usps, whereby united transported u.s. international mail on behalf of usps. Under these ICAir contracts, United was required to provide barcode scans of the mail containers to USPS when United took possession of the mail containers and when the containers 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 the mail was delivered to the foreign postal administration or intended recipient on time.
Between 2012 and 2015, United participated in a scheme to defraud the USPS by submitting false delivery scan data to make it appear that United and its partner airlines were compliant with ICAIR, when in fact they were not. they fulfilled Instead of providing accurate USPS delivery scans based on mail movement, United sent automated delivery scans based on aspirated delivery times. these automated scans did not correspond to the actual movement of mail, as required by contracts. Because this scan data was not linked to the actual delivery of the mail to the foreign recipients, the payment was not appropriate under the icair contracts. Through this data automation scheme, United obtained millions of dollars in payments from the USPS that United was not entitled to according to ICAIR contacts.
united further admitted that it concealed problems related to scanning and mail movement which, if known, would have subject united to financial penalties under the icair contracts. Certain people at United worked to hide United’s automation efforts from the USPS, as they knew the data being transmitted was false. these people also knew that the transmission of false data violated the terms of the icair contracts. Attempts to hide automation practices included efforts to review falsified delivery times to make automated scans appear less suspicious to the USPS.
As part of the criminal resolution, united has agreed to continue to cooperate with the criminal division’s fraud section and report any evidence or allegation of a us violation. uu. fraud laws united has further agreed to strengthen its compliance program and specific reporting requirements, which require united to submit annual reports to the fraud section on the status of its remediation and the implementation of united’s compliance program and controls, policies and internal procedures designed to deter and detect us violations. anti-fraud laws relating to government contracting.
The Fraud Section of the Criminal Division reached this determination based on a number of factors, including the nature and severity of the criminal conduct; united’s failure to timely and voluntarily self-disclose criminal conduct to the department; and united’s prior history, including a 2016 non-prosecution agreement related to potential criminal bribery or corruption violations arising from united’s establishment and operation of a nonstop route between newark liberty international airport in new jersey and the metropolitan airport of columbia in south carolina. In addition, United, responding to requests from the Fraud Section, cooperated with the Fraud Section’s investigation by collecting, organizing, and producing voluminous documents, helping to make employees available for interviews, and making a factual presentation to the Fraud Section. fraud. The Fraud Section did not require United to make a victim compensation payment as part of the NPA because United agreed to a global resolution of its criminal and civil liability, entering into a separate civil settlement agreement with the Department’s Civil Division.
the fraud section of the criminal chamber also considered that the union took corrective measures after the criminal conduct, including: (i) removing and replacing the main director of the criminal scheme detailed in the statement of facts; (ii) engaging outside legal and accounting advisors to review and consult on the performance of joint government contracts and related policies and procedures; (iii) establish an independent government contracting organization to manage and enforce the contractual performance of united government contracts that reports directly to united’s legal department; (iv) establish a training curriculum and conduct a monthly training call for employees who have functions and responsibilities related to public procurement; (v) prohibit automation and limit access to flight configuration data to ensure employees cannot tamper with data transmitted to the USPS; (vi) carry out reviews of international mail operations processes; and (vii) improve its policies and procedures related to obtaining and performing government contracts, including assignment of roles and responsibilities, ensuring accurate representations to the us. uu. government and outsourcing.
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 authorities or other intended recipients. This is the fourth civil settlement involving air carrier liability for false delivery scans under USPS ICAIR contracts. Including the civil settlement announced today, the United States recovered nearly $65 million in connection with its investigation of delivery scanning practices under ICAIR contracts through these civil settlements.
The criminal case was investigated by the USPS Office of the Inspector General. chief assistant timothy a. duree of the criminal division’s fraud section prosecuted this case. the civil matter was handled by the commercial litigation branch of the civil division, fraud section, with the assistance of the usps office of the inspector general and the usps office of the attorney general. Senior Trial Attorney Don Williamson of the Civil Division’s Commercial Litigation Branch, Fraud Section, represented the government in the civil case.