U.S. DECEMBER 14, 2018 / 11:02 AM / UPDATED 11 HOURS AGO

U.S. sues YRC Worldwide freight units, alleges overcharging

WASHINGTON (Reuters) - U.S. officials have filed a lawsuit against several units of freight company YRC Worldwide Inc alleging that they systematically overcharged the federal government for services and lied to hide their misconduct, the U.S. Department of Justice said on Friday.

Shares of the Kansas-based company were down 2.7 percent in late morning trading. Representatives for the company could not be immediately reached for comment on the lawsuit.

The Justice Department said it had filed a lawsuit in the U.S. District Court in Buffalo, New York, alleging that the subsidiaries for seven years “defrauded the Department of Defense by millions of dollars for shipments that were actually lighter, and thus cheaper, than the weights for which the defendants charged the government.”

The YRC units named in the lawsuit are YRC Freight Inc, Roadway Express Inc and Yellow Transportation Inc.

The Justice Department said the case was prompted by a whistleblower. “The defendants knowingly made or used false statements concealing their overcharging practices to the Department of Defense,” it added in a statement.

Reporting by Susan Heavey; Editing by Chizu Nomiyama and Bill Rigby

Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASE
Friday, December 14, 2018

United States Sues Freight Companies for Systematic Overcharging of Shipments

The United States has filed a complaint in the Western District of New York against YRC Freight Inc., (YRC); Roadway Express Inc. (Roadway); and Yellow Transportation Inc. (Yellow), alleging that these companies systematically overcharged the government for freight carrier services and made false statements to the government that hid their misconduct, the Justice Department announced today.

The United States filed this lawsuit in U.S. District Court in Buffalo, New York. The United States alleges that, for more than seven years, the defendants defrauded the Department of Defense by millions of dollars for shipments that were actually lighter, and thus cheaper, than the weights for which the defendants charged the government. The United States further alleges that the defendants knowingly made or used false statements concealing their overcharging practices to the Department of Defense.

“Those who do business with the government must do so fairly and honestly,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “Knowingly overcharging the government is an affront to American taxpayers, and the Department of Justice will seek to ensure that those who engage in such misconduct are held accountable.”

Specifically, the United States’ lawsuit alleges that the defendants reweighed thousands of shipments and suppressed the results whenever they indicated that a shipment was actually lighter than its original estimated weight. Thus, instead of charging the Department of Defense for shipments based on the correct weight, the defendants knowingly billed the government (and their other customers) based on weights that they knew to be inflated. The defendants also allegedly made false statements to induce the Department of Defense to use them as freight carriers and further knowingly made or used false statements to improperly avoid their obligations to correct inflated invoices and return overpayments.

-snip-