USPS OIG Summary Of Financial Crimes In Semiannual Report to Congress

A portion of the $66 billion in revenue generated by the Postal Service last year is handled at the 32,000 postal retail locations. Employees who allegedly embezzle funds, kite or otherwise misuse money orders, or steal and misuse postal-issued credit cards receive investigative attention from our special agents.

A former New York lead sales and service associate was sentenced in November 2011 after pleading guilty in federal court to misappropriation of funds and obstruction of justice. The sales associate was sentenced to serve 12 months of home confinement and ordered to pay about $187,000 in restitution to the Postal Service. In January 2009, OIG agents investigated irregularities in stamp stock shortages in a New York Post Office and concluded that the sales associate performed fraudulent refunds on legitimate register transactions for stamp purchases. The associate also falsified and destroyed documents to disguise the thefts from the Postal Service register. During an interview, the associate admitted to stealing approximately $100,000 in Postal Service funds by performing fictitious stamp refunds. As a result of the investigation, the Postal Service terminated the sales associate in April 2009.

ƒƒ The OIG initiated an investigation into suspicious Postal Service Voyager credit card transactions at a Pennsylvania Post Office location, after being advised that excessive charges were discovered while reconciling Voyager card expenses. The reconciliation showed that the suspicious charges occurred at one particular service station that performed routine maintenance on the Postal Service vehicles. The investigation revealed that a Postal Service supervisor allowed the service station to physically retain the Voyager card for over a year and during that time at least two station employees conducted 48 fraudulent transactions totaling $21,171. Both service station employees admitted to the fraudulent use of the Voyager card and in October 2011 and November 2011, respectively, the two service station employees pled guilty to one count of theft by deception and one count of criminal conspiracy to theft by deception. The employees were sentenced to a maximum of 23 months home confinement, 2 years’ probation, and $21,912 in restitution. In February 2011, the Postal Service Vehicle operations management assistant received a 7-day suspension for failing to properly reconcile Voyager card statements. In May 2011, the supervisor was issued a 7-day suspension for leaving a Postal Service Voyager Card at the service station.

ƒƒ A highway contract route (HCR) supervisor in New Jersey was sentenced to 5 years of probation and ordered to pay $365,416 in restitution to the Postal Service for theft of government property and aiding and abetting in October 2011. Another HCR employee involved in the same scheme was previously sentenced in August 2011 to 5 years of probation and ordered to pay $335,972 in restitution. The OIG launched the investigation predicated on information it received on the contractor purchasing 17,251 gallons of fuel above the authorized amount in the contract. The OIG conducted surveillance and determined that one of the contractors used several Voyager cards at gas stations near his home to purchase fuel for his personal benefit. The employee admitted to using Voyager cards to make numerous unauthorized purchases of fuel for his personal use, sale to other persons at a discounted price, and for a towing business. As part of the scheme, the employee installed a large rubber bladder in his personal truck which held about 100 gallons of fuel. The employee informed the OIG that he had an agreement with his supervisor to purchase and resell large amounts of fuel utilizing the Voyager cards. The employee recorded consensually monitored conversations he had with the supervisor for the OIG. The supervisor eventually admitted to using Voyager cards to make numerous unauthorized purchases of fuel and purchases of cartons of cigarettes for his personal use, as well as affirming that he allowed the employee to use the Voyager cards for personal gain. The supervisor received thousands of dollars in cash payments and services from the employee.

ƒƒ A New Jersey postmaster devised a scheme to embezzle Postal Service funds by offsetting the daily bank deposit with erroneous invoices for local transportation and office and custodial supplies. The postmaster used the funds to purchase money orders, which were used to pay personal expenses. On September 30, 2010, the postmaster resigned from the Postal Service, while under investigation. A year later, the former New Jersey postmaster pled guilty in federal court to misappropriation of Postal Service funds and was sentenced to 6 months of home confinement, 4 years of probation and ordered to pay about $69,000 in restitution to the Postal Service.

A former California sales and service associate (SSA) was convicted in October 2011, on one count of theft of public money and seven counts of passing
counterfeit U.S. obligations, following a 3-day federal jury trial. During the investigation, which was conducted jointly with the U.S. Secret Service, the sales associate was observed on several occasions sorting, separating, and switching what appeared to be $100 bills from his cash drawer. Additionally, the associate was observed on several occasions placing a “window closed” sign on his counter, then proceeding to print Postal Service money orders without any customers present. The SSA issued and cashed the money orders in his name. In June 2011, the Postal Service issued the sales associate letters of demand (an invoice for the amount owed) totaling about $45,200, which was followed by an issuance of a Notice of Removal in August 2011. After the associate’s arrest in April 2011, the U.S. Secret Service seized and forfeited two of his luxury sports utility vehicles.

ƒƒ An OIG investigation determined that a postal manager in New York created fraudulent cleaning service invoices and submitted them to the Postal Service, resulting in check disbursements that the postal manager intercepted and cashed. The postal manager also stole third-party customer checks from the mail and inappropriately cashed them for personal use. OIG agents determined that the postal manager stole about $227,000, over a 3-year period. The postal manager admitted he intercepted and cashed Postal Service customer checks and also created fraudulent custodial cleaning services invoices, submitted them to the Postal Service for payment, then cashing the checks to use on personal expenses. As a result of the investigation, the postal manager resigned from the Postal Service in November 2010. A year later, the former New York postal manager pled guilty in federal court to misappropriation of Postal Service funds. Sentencing is pending.

ƒƒ OIG agents investigated the source of irregularities in a Postal Service money order reconciliation report for a Maine Post Office and determined the sales and service associate embezzled $35,518, by inappropriately altering and cashing Postal Service money orders for personal use. During an interview with the OIG, the sales associate admitted he used a Postal Service money order scheme to steal Postal Service funds to pay off his personal credit cards and a car loan. As a result of the investigation, the Postal Service terminated the sales associate in August 2010. In November 2011, the former associate pled guilty in federal court to one count of misappropriation of funds and was sentenced in February 2012, to serve 45 days in prison, a year of probation, and pay approximately $18,130 in restitution.

ƒƒ An investigation by the OIG into an Oregon postmaster relief led to a guilty plea in December 2011. The former Oregon employee pled guilty in the Circuit Court of the State of Oregon to two counts of theft in the first degree. The former employee was sentenced to 24 months supervised probation, 3 days incarceration, and $6,379 in restitution to the Postal Service for kiting Postal Service money orders to conceal her embezzlement of Postal Service funds through the issuance of money orders without remittance. The former employee admitted to embezzling Postal Service funds and kiting money orders. She resigned in lieu of removal due to the OIG investigation.

ƒƒ In December 2011, a former Missouri officer in charge pled guilty to four counts of embezzlement of money orders and was sentenced to 5 years of probation and ordered to pay about $11,200 in restitution to the Postal Service. The investigation revealed the employee kited 155 postal money orders in the amount of about $52,500. The employee admitted using postal funds to pay vendors at a restaurant she operated with her son. The Postal Service removed the worker in March 2011.

ƒƒ A sales and service associate in Puerto Rico pled guilty in March 2012 in federal court to one count of embezzlement of postal funds. He was sentenced to serve 24 months of probation and ordered to pay $6,436 in restitution to the Postal Service. The investigation determined that the sales associate improperly voided about $6,436 in valid retail merchandise and stamp sale transactions in Postal Service registers to steal money for his personal use. The associate admitted he voided legitimate register transactions to help make up for cash drawer shortages.

The Postal Service manages contracts, ranging from multimillion dollar national contracts for services such as transportation networks and IT infrastructures to local contracts for supplies and services at individual postal facilities. The OIG aids the Postal Service by investigating allegations of contract fraud, waste, and misconduct. When contract improprieties are documented, special agents present the evidence for criminal and civil prosecution and administrative remedies. During this reporting period, we conducted 69 contract fraud investigations, resulting in four arrests and more than $44 million in monetary benefits to the Postal Service.

The Postal Service Facilities Real Estate and Assets Office issued a letter of demand to a contractor in December 2011, ordering a repayment of $96,876. The contractor leased space from Postal Service for a cellular telephone tower on the roof of a postal facility. The contractor subcontracts with various cellular telephone providers, including Sprint/Nextel, for their equipment installation and use of the tower. The lease with the contractor, initiated about 10 years earlier, required the individual subcontracting cellular telephone companies to pay for their own power and mandated they install an electric meter to measure and account for their power usage. Sprint/Nextel installed equipment on the Postal Service roof in October 2001; however, they did not install a meter to measure electricity used to power their equipment until June 2010. As a result, in conflict with the lease, Postal Service paid for Sprint/Nextel’s electricity usage during that time. A Postal Service manager negotiated with the contractor; however, a settlement could not be reached. The OIG investigation assessed the estimated charge for the electricity used by Sprint/Nextel during this period as $50,502. According to the contract, late charges are assessed a fee of 1.5% interest monthly, compounded daily. The additional interest charges amounted to $46,374, for a total of $96,876.

Major Fraud Investigations Division
The president of a private mailing company was sentenced in September 2011 to 51 month’s incarceration, 3 years supervised release, and ordered to pay restitution to the Postal Service. An OIG investigation determined that between January 2005 and December 2006, a postal mailer devised a scheme to defraud the Postal Service. The mailer directed and submitted numerous fraudulent postage statements for Standard Mail, indicating that a certain number of pre-cancelled stamps were used in mailings when the mailer knew it to be false. The mailer paid a Missouri postmaster a bribe with checks totaling $20,000 and paid a postal customer service supervisor a separate bribe of $10,000 in cash. The loss of revenue to the Postal Service from the scheme to defraud was estimated to be between $2 million and $4 million. The president of the mailing company and one additional employee, along with the postal customer service supervisor and the postmaster, were prosecuted in federal court. In June 2011, the mailing company employee was sentenced to 3 years of probation, 80 hours community service, and ordered to pay restitution. That same month, the customer service supervisor was sentenced to one count of bribery and received 2 years of probation and 60 hours community service. Also in June, a jury found the postmaster guilty of bribery and accepting a gratuity. In August 2011,the postmaster was sentenced to 24 months in prison and 1 year of supervised release. This case, which the OIG officially closed on February 22, 2012, resulted in an approximate total of $3,894,630 in restitution to the Postal Service.

3 thoughts on “USPS OIG Summary Of Financial Crimes In Semiannual Report to Congress

  1. Whats so shocking enufisenuf? people ripping off others is nothing new, misappropriation of funds, wastefull spending, gouging,skimming all just another day, the banks/goverments/unions/employees/churches/little leagues/your kids? come on enufisenuf dont play stupid all the time.

    Even if your a member of the Hells Anglels your going to be paying dues.

    Good honest unions,good honest employeers/employees, life would be great ..why you so anti-union? there must be something in it for you? Somebodys got to stop the rape and pillage of the work force? enufisenuf for President of the American Postal Workers Union.

    Life goes on….

    “It looks like the end of the road for a long-lived inquiry into possible misappropriation of funds by a (now former) Postal Regulatory Commission employee.

    In a new activity report covering the six-month period from October through March, the PRC’s inspector general said he referred the case to the U.S. Attorney for the District of Columbia, who declined to prosecute. The matter dates back to a 2008 IG audit related to bookkeeping practices at the commission, a five-member panel that oversees the U.S. Postal Service.

    Among other no-nos, auditors flagged a non-interest-bearing checking account containing almost $192,000. That came as a surprise to commission managers, who thought the account had been closed a year earlier. While no money had been withdrawn, “the funds were at increasing risk of misuse and were not available for other PRC purposes,” the inspector general said in the audit. Following the finding, the commission shut down the account and sent the money to the Postal Service Fund, where it was supposed to have gone all along.

    The employee, who was not named in the report, retired in 2009, PRC spokeswoman Ann Fisher said today. She declined further comment.”

  2. The above post is shocking indeed! Keeps paying dem dues bruthas n sistas sos I can gets my APWU Officer Only Retirement Plan funded by them there dues!

  3. On April 9, 2012, in the United States District Court for the District of Connecticut, Michael Martin, former President of American Postal Workers Union (APWU) Local 3093 (located in Norwalk, Conn.), was sentenced to five years of probation, the first six months of which Martin must spend in home confinement with electronic monitoring. Martin was also ordered to perform 200 hours of community service and was ordered to pay restitution in the amount of $20,201. Martin previously pled guilty to one count of Theft by Mail by an Employee of the United States Postal Service (USPS). The sentencing follows an investigation by the OLMS Boston District Office

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