Rebates aren’t really rebates when a seller is fixing prices behind your back to make it seem like you’re getting a deal when you’re actually paying more. The Postal Service fell victim to such a fraud some years ago with a diesel fuel and gasoline provider. And with a massive fleet of postal delivery vehicles, you can imagine the scope of the fraud.
The case came to our special agents in a lawsuit alleging government contract fraud, referred to as a “qui tam” complaint. The complaint said some of the company’s representatives were engaged in fraudulent schemes against the Postal Service and other government agencies to increase their profits across the nation. Specifically, it said some representatives devised a scheme to withhold rebate amounts owed to USPS as part of a fuel purchase agreement.
The complaint further revealed that some company representatives engaged in price gouging, potential price fixing, and other anticompetitive practices that may have cost USPS and other government agencies millions of dollars in illegally escalated prices for diesel fuel and gasoline. The complaint alleged that the rebate fraud alone was costing the Postal Service between $5.7 and $12.9 million dollars each year and had been allegedly ongoing since 2006 or 2007.
Our special agents found the company inflated transportation costs when calculating rebates owed to USPS, thus reducing the amounts of rebates owed. The Department of Justice ultimately reached resolutions in the civil and criminal cases against the company and several of its executives.
Ultimately, in December 2023, the company agreed to a $2 million settlement, of which $1 million is restitution for USPS.
If you suspect or know of contract fraud against the Postal Service, please report it to our Hotline.