UPS coughs up $5.3M over alleged Postal Service fraud

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 and $22 million from American Airlines (NASDAQ: AAL).

“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. 

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Source: freightwaves - UPS coughs up $5.3M over alleged Postal Service fraud
Editor: Eric Kulisch, Supply Chain and Air Cargo Editor