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Post date: October 21 2015

A.G. Schneiderman Announces $4 Million Settlement With Shipping Giant Ups For Overcharging Government Entities In NY And 13 Other States

State Attorneys General, NYC, Chicago And Washington, D.C. Recover Funds In Whistleblower Tax Protection Case; New York Counties, Cities, And Towns Among NY Government Entities To Benefit; More Than $1.2 Million Will Be Returned To NY

Schneiderman: Corporations That Improperly Profit At The Expense Of Taxpayers Will Be Held To Account

NEW YORK – Attorney General Eric T. Schneiderman today announced a $4 million settlement with United Parcel Service, the world’s largest package delivery company, stemming from allegations that its employees violated the false claims acts of 14 states, New York City, Washington, D.C. and Chicago.

The agreement resolves allegations that certain UPS employees violated the law by recording inaccurate delivery times on packages sent via UPS next-day delivery services by government customers. That resulted in premium-priced packages that appeared to be delivered by their guaranteed commitment times when, in fact, they were not. The Attorney General alleged that UPS employees also applied inapplicable or inappropriate “exception codes” to excuse late next-day packages – including claims of “adverse weather” interfering with on-time deliveries when in fact conditions were sunny. As a result, government customers were allegedly unable to claim or receive refunds for the late deliveries under the terms of their contracts.

Under the agreement, more than $1.2 million of the total settlement will be returned to New York and local governments. In addition, as reflected in the agreement, UPS has instituted remedial training, monitoring, and reporting compliance programs to address any potential delivery failures or policy violations.

“UPS improperly profited from charging New York State government entities – and ultimately our taxpayers – when its employees failed to meet its guaranteed delivery times for overnight deliveries,” Attorney General Schneiderman said. “Corporations that improperly profit at the expense of taxpayers will be held to account.”

The settlement covers allegations of wrongdoing over a 10-year period, from 2004 to 2014, against tens of thousands of government agencies in New York, California, Delaware, Florida, Hawaii, Illinois, Indiana, Massachusetts, Minnesota, Montana, New Mexico, North Carolina, Tennessee, and Virginia, and the three cities. Attorney General Schneiderman’s office led the multi-jurisdictional group in investigating these allegations against the shipping company.

As a result of the settlement, the State and many of the affected local governments will be compensated for these inaccurately recorded late deliveries. (In cases where the funds to a single government entity would be very small, the funds will be returned to the state’s general fund.)

Attorney General Schneiderman thanks the whistleblower in this matter, Robert K. Fulk, a former UPS employee, for coming forward. Mr. Fulk initially filed a lawsuit in Federal District Court in Alexandria. New York investigated the whistleblower’s allegations under the New York False Claims Act. Under the New York False Claims Act, the whistleblower receives a portion of the recovery.

After deducting the amount to be paid to the whistleblower, as required by the New York False Claims Act, and under the terms of the settlement agreement, UPS will pay a net amount of $1,218,373.92 to New York to resolve the allegations.
The investigation leading to this settlement was conducted by the Taxpayer Protection Bureau, which Attorney General Schneiderman established in 2011 to combat the fraud and abuse of taxpayer dollars.

Assistant Attorney General Adam L. Pollock led the investigation, with assistance from Legal Support Analyst Joseph U. Onwu. Former Assistant Attorney General Marvin Peguese and Former Legal Support analyst Devin Gould also participated in the investigation. The Taxpayer Protection Bureau is led by Bureau Chief Thomas Teige Carroll and Deputy Bureau Chief Scott J. Spiegelman. It is part of the Attorney General’s Criminal Justice Division, which is led by Executive Deputy Attorney General for Criminal Justice Kelly Donovan.