The U.S. Department of Defense has a high number of contracts in order to support work for the military – paid for by the American taxpayers. So, when fraud is suspected or reported by an employee, the federal government takes that seriously. From September 2005 to October 2013, the YRC Freight Inc, Roadway Express, and Yellow Transportation Inc (YRC defendants) contracted with the DoD to ship military freight across the country. According to the Department of Justice (DOJ release, the United States alleged that the YRC defendants fraudulently billed the DoD for the delivery charges.
Basis for Fraud Charges
Delivery charges are based on weight. When shipments get reweighed in the process, the charge should be adjusted based on the final weight. Sometimes, this number goes up, and sometimes it goes down. However, the YRC defendants allegedly charged the higher number for more than seven years – whichever one was more favorable for them. The YRC defendants also allegedly made false statements to the DoD to ensure compliance with rules that require discrepancies to be corrected during the reweighing process.
“We expect companies to do business with the government honestly and fairly,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “This settlement demonstrates the department’s continuing commitment to hold accountable those who defraud the government and, by extension, the American taxpayers.”
“The Defense Department entered into contracts with YRC, Roadway, and Yellow for shipping services,” said U.S. Attorney Trini E. Ross for the Western District of New York. “These companies, which purposely overcharged for these services and then made false statements to cover up their actions, are now being held accountable for their behavior.”
Whistleblower Leads to Settlement
YRC defendants have agreed to pay $6.85 million to resolve the allegations under the False Claims Act. An employee of Yellow Transportation will receive $1.3 million, plus interest as a share of the settlement, as part of the provisions for whistleblowers in the False Claims Act.
“Investigating schemes that undermine the integrity of Department of Defense (DoD) procurement is a top priority for the DoD Office of Inspector General’s Defense Criminal Investigative Service (DCIS),” said Special Agent in Charge Patrick J. Hegarty of the DCIS Northeast Field Office. “Today’s announcement demonstrates our commitment to work with the Department of Justice and our law enforcement partners to hold companies accountable for artificially inflating the cost of services provided to the DoD.”
