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UPS coughs up $5.3M over alleged Postal Service fraud

5 airlines have settled with US government for covering up late deliveries

UPS and American Airlines have both settled with the U.S. government over allegations they fudged records to make it look like mail deliveries were on time. (Photo: Jim Allen/FreightWaves)

UPS has agreed to pay nearly $5.3 million to resolve an investigation into allegations it defrauded the U.S. Postal Service for transport of international mail, the Department of Justice announced Monday.

The express delivery company falsified bar code scans of mail containers delivered to Postal Service facilities or federal facilities to make it appear it was meeting requirements for on-time delivery, and ensure full payment, according to the federal allegations. 

The Postal Service hired UPS (NYSE: UPS) to pick up mail at six U.S. locations and various Defense and State department locations overseas, and deliver that mail to numerous destinations. The contract specified penalties for mail that was delivered late or to the wrong location. 

The settlement resolves allegations that scans submitted by UPS falsely reported the time and the fact that it transferred possession of the mail to another provider.

“Companies doing business with the government must meet their contractual obligations,” said Brian Boynton, principal deputy assistant attorney general and head of the Civil Division. “The Department of Justice will pursue those who knowingly fail to live up to their bargain and falsely bill the government for goods or services they did not provide.”

This is the fifth civil settlement involving air carrier liability for false delivery scans under the Postal Service’s program for international commercial air contracts. Collectively, the U.S. government has collected more than $70 million as a result of its investigation of international mail delivery, including $49 million from United Airlines (NASDAQ: UAL) a year ago, $22 million from American Airlines (NASDAQ: AAL), $4.7 million from Northern Air Cargo and $5.8 million from partners British Airways and Iberia Airlines.

“UPS has not admitted any liability and UPS continues to be a high-quality, cost effective, and valued supplier to the USPS and U.S. government. The parties have agreed to resolve this matter to avoid the expense and uncertainties that would accompany any litigation,” the company said in a statement provided to FreightWaves

The USPS Office of Inspector General initially investigated the allegations and referred the probe to the Justice Department. No charges were filed. 

Click here for more FreightWaves/American Shipper stories by Eric Kulisch.

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Eric Kulisch

Eric is the Supply Chain and Air Cargo Editor at FreightWaves. An award-winning business journalist with extensive experience covering the logistics sector, Eric spent nearly two years as the Washington, D.C., correspondent for Automotive News, where he focused on regulatory and policy issues surrounding autonomous vehicles, mobility, fuel economy and safety. He has won two regional Gold Medals and a Silver Medal from the American Society of Business Publication Editors for government and trade coverage, and news analysis. He was voted best for feature writing and commentary in the Trade/Newsletter category by the D.C. Chapter of the Society of Professional Journalists. In December 2022, he was voted runner up for Air Cargo Journalist by the Seahorse Freight Association. As associate editor at American Shipper Magazine for more than a decade, he wrote about trade, freight transportation and supply chains. Eric is based in Portland, Oregon. He can be reached for comments and tips at [email protected]