Birmingham, Alabama Postal Service Vehicle Maintenance Supervisor and Two Vendors Charged in Billing Fraud
April 12, 2011 BIRMINGHAM – A vehicle maintenance supervisor for the U.S. Postal Service and two maintenance vendors have been charged in federal court with conspiracy to defraud the Postal Service of more than $300,000 in a billing kick-back scheme, announced U.S. Attorney Joyce White Vance, Postal Service Office of Inspector General’s Major Fraud Investigations Division Special Agent in Charge Torri Piper, and IRS Criminal Investigation Special Agent in Charge Reginael McDaniel.
Charges were unsealed today charging CEDRIC NALLS, a supervisor at the Postal Service Vehicle Maintenance Facility in Birmingham, and vendors WILLIAM MARK PAYTON, 44, and ALLEN JOSEPH LAW, 38, with conspiring to submit fraudulent invoices and to conceal payment on the false invoices.
A federal grand jury in March returned a 56-count indictment against Nalls, 41, of Birmingham, charging him with mail and wire fraud, conspiracy to defraud the Postal Service through payment on false claims and conspiracy to conceal payments he received through the scheme.
Also in March, federal prosecutors charged Payton, 44, of Bessemer, and Law, 38, of Birmingham, with one count each of conspiring to both defraud the Postal Service and to conduct financial transactions designed to conceal proceeds of that fraud. Both Payton and Law have entered into plea agreements with the government on the conspiracy charge. The plea agreements were unsealed along with the charges.
“This case involves a supervisor with the U.S. Postal Service who was entrusted with the duty to select and pay vendors for work done, and he abused that trust,” Vance said. “This fraud strikes at all of us who support the Postal Service and depend on its swift and reliable performance,” Vance said.
“The Postal Service manages almost $42 billion in contracts, ranging from multi-million dollar national contracts to local vehicle maintenance service contracts. Although most contracts and payments are managed appropriately, the huge dollar value provides opportunities for contractors and employees to defraud the Postal Service,” Piper said. “The Office of Inspector General is constantly on watch for improprieties and fraud and, when uncovered, aggressively investigates, as occurred in this case.”
“Financial crimes such as those alleged in these indictments can thrive for a while, but eventually the web of deceit untangles, exposing the fraud,” McDaniel said. “IRS Criminal Investigation is committed to working with our law enforcement partners to uncover and investigate all forms of financial fraud.”
According to Nalls’ indictment and the charges against Payton and Law, the conspiracy was conducted as follows:
Payton owned Bill Payton Automotive, and Law owned The Paint House, both vendors who provided maintenance and repair work on Postal Service vehicles through its maintenance facility in Birmingham.
Nalls, as a supervisor at the maintenance facility, had access to credit card numbers assigned to postal vehicles and provided the numbers to venders so they could request payment from the Houston company that managed billing for the facility. The company, U.S. Bank Voyager Fleet Systems Inc., would pay the vendors by mailing them checks or making direct deposits into the vendors’ bank accounts. The Postal Service paid Voyager for money it sent to vendors.
Nalls arranged with Payton and Law to provide them with vehicle credit card numbers so they could seek payment for work never done. They would return a portion of those payments to Nalls after receiving them in their bank accounts.
The indictment against Nalls seeks forfeiture of $330,000. Nalls faces a maximum sentence of 20 years in prison on each fraud count, 20 years on the money laundering conspiracy count, and 10 years on the conspiracy to defraud count.
Payton and Law face a maximum sentence of five years in prison on their conspiracy charges.
The U.S. Postal Service, Office of Inspector General, and IRS, Criminal Investigation, investigated this case. Assistant U.S. Attorney George Martin is prosecuting it.
Members of the public are reminded that the indictment contains only charges. A defendant is presumed innocent of the charges and it will be the government’s burden to prove a defendant’s guilt beyond a reasonable doubt at trial.