United Airlines to pay $49.5mn to resolve mail fraud case

United Airlines (UA, Chicago O’Hare) has agreed to pay USD49.46 million to resolve criminal charges and civil claims relating to fraud on postal service contracts for the transportation of international mail, the United States Department of Justice (DOJ) outlined in a statement. United entered into a non-prosecution agreement (NPA) with the fraud section of the DOJ’s Criminal Division and agreed to pay USD17,271,415 in penalties and repayment of funds to resolve an investigation into an alleged fraud scheme perpetrated by former employees of United’s Cargo Division in connection with the execution of contracts to deliver mail on behalf of the United States Postal Service. Separately, the airline entered into a False Claims Act settlement with the fraud section of the DOJ’s Commercial Litigation Branch, under which it is obligated to pay USD32,186,687. As part of the resolution, the DOJ agreed not to prosecute the case. “United defrauded the US Postal Service by providing falsified parcel delivery information over a period of years and accepting millions of dollars in payments to which the company was not entitled,” the department’s acting criminal division chief, Nicholas L McQuaid, said in the announcement, dated February 26. “Today’s resolution emphasizes that companies that defraud the government – no matter the context, contract, or federal program – will be held accountable,” he added. United released a one-sentence statement: “The US 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.” Between 2012 and 2015, former staff at the carrier’s cargo division submitted false delivery scan data, based on aspirational delivery times, and as a result the company collected millions of dollars in payments that it should not have received, the DOJ explained. United would have faced penalties if mail was delivered late. The Department of Justice considered that United had taken steps to remedy the situation, such as removing and replacing the principal manager of the criminal scheme and hiring outside legal and accounting advisors to review its government contracting compliance. In addition, United agreed to strengthen its compliance efforts and submit yearly reports to the DOJ on the status of the remediation. However, according to the DOJ, United had failed to quickly and voluntarily self‑disclose the offence. The government also cited the carrier’s prior history, including a 2016 non-prosecution agreement relating to potential bribery and corruption violations arising out of United’s operation of a direct route between New York Newark and Columbia, SC. As previously reported, American Airlines (AA, Dallas/Fort Worth) similarly agreed, in August 2020, to pay USD22.1 million to settle claims that it falsely reported the times it carried mail to non-US postal administrations and other recipients under contracts with the postal service. United Airlines was not immediately available for comment to ch-aviation.