United will pay $49 million to settle air mail fraud case
United Airlines will pay more than $49 million to avoid
criminal prosecution and settle civil charges of defrauding the U.S. Postal
Service in the delivery of international mail.
The Justice Department said Friday that former employees of
United’s cargo division falsified parcel-delivery information between 2012 and
2015. Prosecutors said that as a result, United collected millions of dollars
in payments that it should not have received.
Chicago-based United agreed to pay nearly $17.3 million in
criminal penalties and forfeited revenue to end the criminal investigation,
according to the Justice Department. The airline will also pay $32.2 million in
related civil penalties.
United issued a one-sentence statement: “The U.S. Postal
Service is a valued customer for United, and we are glad to have remedied these
procedures and look forward to serving the Postal Service in the future.”
United’s contracts required it to scan mail when it was
received, loaded on a plane, and delivered to a foreign country’s postal
agency. The scans were transmitted back to the U.S. Postal Service. United
faced penalties if mail was delivered late, damaged, or sent to the wrong
destination.
According to settlement documents, two United managers and
two other employees fabricated automated data to make it look like mail was
delivered on time. Others, including employees of an IT contractor hired by
United, were aware of the scheme.
When post office representatives raised questions about the
automated data, the manager running the scheme emailed colleagues “we been
caught” and changed the group’s methods to make the phony information about
scans appear less suspicious, according to the documents.
The Justice Department said United cooperated after getting
requests from the department’s fraud section. Prosecutors gave United credit
for collecting “voluminous documents” and helping make employees available for interviews.
According to the documents, United removed the main manager
involved in the scheme, the cargo division’s postal-sales manager. The airline
also improved internal controls designed to detect misconduct, including
limiting access to data to guard against employees manipulating information
transmitted to the Postal Service.
In 2019, American Airlines agreed to pay $22.1 million to
settle similar allegations that it falsified information about international
mail deliveries.
United, American and other U.S. airlines trace their roots
to air mail delivery contracts in the early part of the last century, and mail
remains a source of revenue for them.
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