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A United 777 on approach. (Photo: AirlineGeeks | Katie Bailey)

United Airlines Pays $49 Million for Mail Fraud

Many of the airlines in the United States got their start decades ago hauling mail across the country. It was only much later when enterprising individuals realized they could add some seats onto their planes and bring people along as well. This led to the birth of passenger airlines in the United States. These days we primarily think of the major U.S. airlines as movers of people. But they are still movers of mail domestically and overseas as well, a business strategy many have been in since inception.

This past Friday United Airlines got into some trouble due to this business. The airline has agreed to pay over $49 million to resolve criminal charges and civil claims relating to fraud on United States Postal Service contracts for the transportation of international mail.

The $49 million is split broadly into two. Of the $49 million, roughly $12.3 million is in criminal penalties and disgorgement to resolve a criminal investigation into a fraud scheme perpetrated by former employees of United’s Cargo Division in relation to contracts that United has won to deliver mail internationally on behalf of the U.S. Postal Service. The other $33.2 million is part of a settlement under the False Claims Act with the Civil Division’s Commercial Litigation Branch, Fraud Section for additional related conduct when executing those contracts.

As part of United’s contact with USPS it was required to provide barcode scans of mail receptacles to USPS when United took possession of the mail and when they were delivered to the recipient. United was entitled to full payment under these contracts only if accurate mail scans were provided and mail was delivered in a timely manner.

The Scheme

Between 2012 and 2015, United engaged in a scheme to defraud the USPS by submitting false delivery scan data to make it appear that the airline was fulfilling contractual obligations when in reality it was not. Instead of submitting accurate tracking data, the airline submitted data based on aspirational delivery times and these did not correspond to the actual delivery of mail. As a result of this fraud, United received millions of dollars in payments to which it was not entitled.

The airline further admitted that it concealed these problems to avoid financial penalties. There were certain individuals at United airlines that knew the data being sent was fabricated and knew that it was a violation of the contracts that United was obligated to execute. These individuals also make deliberated efforts to revise falsified delivery times to make them less suspicious to USPS.

Of the resolution with the government, United Airlines will continue to cooperate with the Criminal Division’s Fraud Section and report any evidence or allegation of violation of U.S. fraud laws. In addition, the airline will be strengthening its compliance program. This will require the airline to submit yearly reports to the Fraud Section regarding the status of its remediation and implementation of United’s compliance program and various internal measures aimed at deterring and detecting violations of U.S. fraud laws when it comes to government contracting.

The U.S. government sees this as another big win in their books as it continues to pursue those who seek to defraud the government.

Author

  • Hemal took his first flight at four years old and has been an avgeek since then. When he isn't working as an analyst he's frequently found outside watching planes fly overhead or flying in them. His favorite plane is the 747-8i which Lufthansa thankfully flies to EWR allowing for some great spotting. He firmly believes that the best way to fly between JFK and BOS is via DFW and is always willing to go for that extra elite qualifying mile.

Hemal Gosai
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