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Excerpts from USPS
Postal Inspection Service 2003 Annual Report |
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USPS Postal Inspection Service's 2003 Annual Report
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Postal Inspectors Keep an Eye Out for Workers' Compensation Fraud (pdf)
(621K)
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Internal and External Investigations (902K) |
Statistical Charts
(162
KB)
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Short Summary:
U.S. Postal Inspectors in FY 2003 arrested 11,161 criminal suspects, with
56% of the arrests for mail theft. Inspectors investigated 3,150 mail fraud
cases, arrested 1,453 fraud suspects, and responded to approximately 80,000
consumer fraud complaints. Postal Inspectors conducted 572 embezzlement
investigations during FY 2003 and identified more than $5.4 million in
postal losses. There are approximately 1,970 Postal Inspectors and roughly
1,100 uniformed Postal Police Officers The report highlights crimes
such as: a rural letter carrier pled guilty in 2003 to selling stolen postal
(arrow) keys; 43 employees convicted on OWCP fraud; (one employee was
injured after 8 days employment and received OWCP for 36 yrs.) 274
convictions for assaults and threats (stats include on-duty postal
employees); rationale for reduction of postal police force; standard
operating procedure for employees handling registered mail,
a publisher signed
a $3.7 million settlement
for underpaid postage and much more (7/5/04) |
| Financial Investigations- The majority of financial
investigations conducted by the U.S. Postal Inspection Service comprise
employee embezzlements. Postal Inspectors have uncovered a range of
embezzlement schemes used by postal employees: failing to report postal
retail sales and using the cash for personal expenses; delaying the
reporting of postal sales to fund personal, short-term loans; stealing
postal stamps, retail products, or packaging products; and covering
shortages in postal funds by submitting bogus reimbursements for nonexistent
or inflated business expenses. Postal Inspectors conducted 572 embezzlement
investigations during FY 2003 and identified more than $5.4 million in
postal losses. |
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A former postmaster in Wayne, West Virginia, was sentenced on
February 24, 2003, to six months in prison and two years of
probation, and was ordered to pay $67,264 in restitution for embezzling
postal funds. Postal Inspectors determined the postmaster had stolen more
than $166,000 in postage sales and post office box rental fees |
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| A former sales and services associate (SSA)
from the Columbia University Finance Unit in New York City was sentenced on
March 17, 2003, to one year in prison and three years of probation, and was
ordered to pay $144,469 in restitution for embezzling postal funds. An
Inspection Service investigation found the man had withheld six of the
unit’s cash deposits. He concealed his activities for more than a year by
manipulating postal funds and falsifying postal records. |
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| A former postal manager of the
Longworth House Office Building Station for the U.S. House of
Representatives was sentenced on June 26, 2003, to 14 months in prison and
three years of probation, and was ordered to pay $199,620 in restitution for
stealing postal funds. Postal Inspectors found the manager had issued money
orders to himself and spent other postal funds on personal items. |
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| U.S.
Postal Inspectors concluded eight major investigations in FY 2003 involving
the underpayment of postage by large-scale, commercial mailers. Postage
fraud schemes are generally complex due to the many postal operations and
postage rate structures, and can pose a problem |
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A Colorado mailer
signed a $2.4 million settlement agreement on July 23, 2003, as the result
of intentionally underpaying postage. Although the Salida Post Office was
only two blocks from the mailer's business, Postal Inspectors found the
company had been taking its large mailings to an office 13 miles away. That
office, which was not equipped to handle large mailings, accepted the mail
at incorrect, lower postage rates and then transported it by truck to the
Salida Post Office. The mailer actually had sophisticated software to
compute the correct postage, but continued to exploit the situation at the
remote office. Approximately 8 million pieces of underpaid mail were
processed through the office |
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| As the result of a seven-year
investigation by Postal Inspectors, the U.S. Attorney’s Office in New
Jersey filed a civil complaint against a Carlstadt company. The company had
presented 21 fraudulent checks to cover more than $652,000 worth of
mailings. Postal Inspectors determined the company knew it had insufficient
funds to back the checks. In March 2003, the judge ordered the company to
pay the Postal Service triple damages of nearly $2 million, and $210,000 in
penalties, as provided by ACE. Affirmative Civil Enforcement (ACE) is an
effective tool used by investigative agencies and criminal prosecutors to
ensure the fullest recovery of losses for the government. ACE allows the
government to fashion settlements to address unique law enforcement issues
that can arise in complicated fraud cases. ACE also grants triple damages
and penalties for false claims |
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| A publisher in Jamesburg, New Jersey,
signed a $3.7 million settlement agreement on July 3, 2003, in lieu of a
civil trial. Postal Inspectors determined the publisher had been submitting
false mailing documents for three years. The deception allowed him to pay
lower postage for 10 of his publications. The settlement represented nearly
double the revenue the publisher owed the Postal Service |
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| Mail Theft by Employees and Contractors- U.S. Postal
Service employees work conscientiously to move the nation’s mail to its
proper destination. They take their responsibilities seriously.
Unfortunately, a small number of employees abuse the public’s trust. It is
the job of the Postal Inspection Service to identify dishonest employees and
take steps to have them prosecuted and removed from the Postal Service |
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| A Postal Inspector arrested a Postal
Service custodian from the Roy Royall Station in Houston, Texas, in
February 2003. After Inspectors analyzed postal records and conducted a
lance of the employee, they found he had been stealing gas credit cards from
the station and using them to sell discounted gas to dump truck drivers.
Losses exceeded $54,000. He lost his job with the Postal Service, and
prosecution is pending. |
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| A rural letter carrier pled guilty in
March 2003 to selling stolen postal keys. Postal Inspectors determined he
had sold a stolen postal “arrow key” to a suspect and given him an official
Postal Service shirt. Both the key and shirt were used to steal more than
200 pieces of mail from two apartment complex mailboxes in Florida. Postal
Inspectors and Polk County, Florida, deputies arrested the rural carrier in
October 2002, and he was sentenced in July 2003 to 60 days in prison and
three years’ supervised release. |
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| Workers' Compensation (OWCP) Fraud Cases |
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On August 8, 1965,
eight days after joining the Postal Service as a full-time distribution
clerk at the Memphis, Tennessee, Post Office the clerk suffered a back
injury on the job. The clerk, age 34, applied for and received workers'
compensation benefits, claiming she could no longer perform her duties. She
continued to receive benefits for the next 36 years, collecting 75 percent
of her regular pay. She never again set foot on the workroom floor.
The clerk was to receive nearly $2 million in workers' compensation pay.
She'd still be collecting benefits if it wasn't for U.S. Postal Inspector
Gale Nelson, charged with investigating fraud against the workers'
compensation program. Four years after the federal law enforcement officer
initiated an investigation of the former clerk compensation checks stopped
arriving in the mail. The former Clerk's two sisters also postal employees
injured on the job pled guilty and sentenced to probation and home
confinement, and were ordered to pay restitution totaling more than $206,000 |
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| A mail processor in Providence, Rhode
Island, pled guilty in December 2002 to making false statements related
to workers’ compensation. Postal Inspectors found that, although she claimed
she was totally disabled, the employee was working as an operations manager
for a trucking company from an office set up in her home. She handled the
postal highway contract route for the business, worth about $3 million a
year in revenue, and coordinated all nonpostal contracts as well. Inspectors
set up surveillance on the employee and captured video images of her
actually driving a highway contract route, transporting drivers, and
refueling trucking company vehicles. When confronted with the evidence, she
pled guilty to the charges and resigned from the Postal Service. She was
sentenced on March 7, 2003, to four months of home confinement with
electronic monitoring, two years’ probation, and 50 hours of community
service, and was ordered to pay restitution to the Postal Service of
$42,846. Further, she is permanently disbarred from ever again receiving
workers’ compensation benefits. The Postal Service realized a long-term cost
savings of $517,590 as a result of the investigation |
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Employment Fraud Postal Inspectors arrested a Rocky Mount, North
Carolina, letter carrier in April 2003 for making false statements to
obtain workers' compensation benefits. After a referral from the Injury
Compensation Unit, Inspectors determined the disabled carrier was holding a
job, although he failed to report his income to the Department of Labor
(DOL). He collected more than $33,000 in benefits based on false information
he provided. The carrier lost his job and pled guilty to making false
statements in June 2003. DOL terminated his benefits in July, and sentencing
for the carrier was scheduled for 2004. |
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In
Oregon, a letter carrier claimed he suffered a wrist sprain and back
injury after falling from his postal vehicle; a claim of "psychological
injuries" was later added to the list. The Department of Labor accepted the
claim, and the employee stayed home from his job for 18 months, collecting
$1,725 every two weeks in tax-free workers' compensation benefits. Postal
Inspectors received a tip the carrier was lying, so they began a
surveillance of him, with interesting results. The carrier was not only a
full-time student, but Inspectors obtained a videotape of him riding bulls
at a rodeo in Phoenix and riding sheep at a children's rodeo. In fact, the
only time the claimant appeared disabled was at the doctor's office, where
he limped and used a cane. After his physician saw the videos, he reported
to DOL: "I think it is clear the patient had the appearance of being
disabled for the benefit of my office, but beyond my office to have not been
disabled whatsoever ... I must say I am astonished by the boldness of what
appears to be a very long-term ruse." Inspectors presented their evidence to
the carrier, who resigned from the Postal Service. The Department of Labor
terminated the carrier's disability payments and the case was accepted for
prosecution. The former employee was convicted and sentenced to three months
in prison, three months of home detention, and five years of probation. He
was also assessed a court fee of $1,300 and ordered to pay restitution of
$29,500. The investigation by Postal Inspectors resulted in a future
cost-savings of $915,975 for the Postal Service. The only time Postal
Inspectors ever saw this letter carrier using a cane was when he went to
doctor appointments to certify his "total disability." Even the doctor was
surprised when he later viewed videotapes of his patient hanging onto the
back of an angry bull at a local rodeo. Maybe riding a bull requires a whole
different set of muscles than delivering mail? Maybe so, but he was unable
to convince the jury that convicted him of workers' compensation fraud,
resulting in a sentence of three months in prison, three months of home
detention, and five years of probation, as well as restitution of $29,500.
This single investigation by Postal Inspectors resulted in a future
cost-savings of $915,975 for the Postal Service.
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A letter carrier in Fresno, California, was sentenced on May 28, 2003,
for making false statements to obtain federal employees' compensation.
Postal Inspectors received an anonymous tip that the supposedly disabled
carrier had been running a tree-trimming business for 10 years and did not
report his income to DOL, or the fact that he was able to work. When Postal
Inspectors confronted him about his activities, the employee admitted his
job included chopping down trees, raking leaves, cutting firewood, and
loading wood onto his pickup truck. As a result of the Inspection Service
investigation, the now-former employee was sentenced to five years'
probation and ordered to pay restitution of $174,737. The Postal Service
realized a future cost savings of $590,750. |
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A clerk in San Francisco, California, was indicted for workers'
compensation fraud on April 24, 2003, just six days before the statute of
limitations for her case would have expired. She had claimed a back injury
in 1975 and then switched between the Office of Workers' Compensation
Program and the Office of Personnel Management to file disability claims
before resuming employment with the Postal Service in 1981. Within 30 days
of returning to her job, she reported a recurrence of the back injury and
went on the periodic rolls. DOL rated her as having no wage-earning or
re-employment potential for an indefinite period. Postal Inspectors,
however, found she had been actively working in a family business and as a
notary since 1987. An undercover surveillance of her activities by Postal
Inspectors and DOL-OIG agents provided evidence of her false claims.
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On February 19, 2003, a clerk at a vehicle maintenance facility in San
Diego, California, was convicted of insurance-related workers'
compensation fraud after pleading guilty in August 2002. Postal Inspectors
determined the clerk was employed as a tow truck operator and mechanic while
claiming he was totally disabled and could not work for the Postal Service.
He also failed to report his income and misrepresented his physical
abilities to DOL and the Postal Service. As a result of the investigation,
the clerk lost his job and was sentenced to five years' probation and 200
hours of community service, and was ordered to pay $17,000 in restitution to
the Postal Service. The Postal Service also realized a future cost savings
of $526,742. |
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A former postal clerk in Tulsa, Oklahoma, was convicted and sentenced on
March 11, 2003, for making false statements to obtain federal employees'
compensation. In December 1991, the clerk was placed on the periodic rolls
after straining her back and displacing a lumbar disc, and she then
relocated to Sarasota, Florida. Postal Inspectors there determined she got a
job at a local call center but was not reporting her income or her ability
to work to the Department of Labor and the Postal Service. The clerk
provided Inspectors with a sworn statement admitting to the deception,
stating, "I know I lied on Form 1032, but I was afraid of losing my monthly
check. I am terribly sorry." The claimant was scheduled to turn herself in,
but she instead fled to Tulsa, her hometown. Inspectors in Tulsa found and
arrested her and, under an agreement between the U.S. Attorney Offices in
Oklahoma and Florida, she was tried in Oklahoma. The clerk lost her job and
was sentenced to five years of probation and ordered to pay restitution of
$28,205. The Postal Service achieved a future cost savings of $515,591.
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A former full-time postal clerk in Newark, New Jersey, was convicted of
mail fraud after Postal Inspectors found he was working as a massage
therapist while claiming to the Postal Service he was unable to work. The
clerk claimed to be totally disabled after falling and injuring his back on
the job, but Inspectors determined he failed to report his income to DOL and
was lying about his inability to work. The clerk lost his job and pled
guilty to workers' compensation fraud in November 2002. He was sentenced to
a year of probation and was ordered to pay $5,102 in restitution to the
Postal Service; Inspectors recovered another $21,943 in benefits. The Postal
Service realized a future cost savings of more than $1 million as a result
of the investigation. |
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Case Files: Misrepresentations of Physical Abilities A letter carrier in
White Plains, New York, was sentenced on April 11, 2003, to one year in
prison and two years' probation, contingent upon completing 100 hours of
community service, for making false statements to obtain workers'
compensation. Postal Inspectors determined the now-former letter carrier had
tried to get witnesses of a vehicle accident to lie about it. He told his
supervisor he was unable to work and was in bed for five days following the
incident. Inspectors revealed he was actually quite busy, acting as referee
in a basketball game three days after the accident and at least eight times
during the period he was allegedly unable to work. In what Inspectors refer
to as a "front-end" investigation, the claimant was kept from collecting
automatic monthly benefits and was ordered to pay the Postal Service $1,312
in restitution. |
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A postal clerk in Champaign, Illinois, was sentenced on August 29, 2003,
to one year in prison and three years' supervised release for defrauding the
workers' compensation program and stealing government money. Postal
Inspectors and agents from the DOL-OIG found he was deliberately concealing
income he earned from an auction house he owned and ran-at the same time he
claimed to be totally disabled. The clerk lost his job and was ordered to
pay restitution of $35,252 to the Postal Service and $29,523 to the Social
Security Administration. The Postal Service achieved a long-term cost
avoidance of $779,945 as a result of the investigation. |
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| Other Cases |
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| Postal Inspectors arrested a
postal clerk in July 2003, who was a 38-year employee, after he
brandished a cap pistol at the Ronald Reagan National Airport Mail Center.
The man was charged with brandishing an object similar in appearance to a
firearm, a violation of Virginia Code. He pled not guilty on September 3,
2003. |
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| Postal Inspectors arrested a
fulltime distribution clerk at the West Jersey Processing and
Distribution Center (P&DC) in Whippany, New Jersey, on October 23, 2002, for
bank robbery. Inspectors and FBI agents identified the suspect’s latent
fingerprints on bank notes he used while committing four bank robberies in
New Jersey. An Automated Fingerprint Identification System “hit” was
obtained on the employee, and he was arrested without incident at his home
in East Orange. The investigation linked the employee to 27 bank robberies
in five states since 1998. He was sentenced in August 2003 to 13 years in
prison and was ordered to pay restitution of $105,000.
PR note:
Postal
Worker aka 'Puffy Cheek Bandit' gets 13 years |
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| A Norcross, Georgia, man who
Postal Inspectors alleged had manipulated postal vending machines was
sentenced on April 24, 2003, to 27 months in prison and was ordered to pay
$3,700 in restitution. The man altered pennies so they would be accepted as
dimes in postal vending machines. After depositing 200 altered pennies into
postal machines, which “read” them as being worth $20, he would select the
lowest-priced stamp items, allowing him to receive the maximum amount of
change in dollar coins. Inspectors estimated he had deposited approximately
154,000 of the altered pennies into the machines. |
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Two West Virginia men pled guilty
on July 17, 2003, for their part in the armed robbery of a highway contract
route (HCR) driver at the Sissonville, West Virginia, Post Office. In
February 2000, a man brandishing a gun approached the HCR driver at the rear
dock of the post office. As he tied the driver’s hands, an accomplice
entered the truck. A clerk inside the post office (which had been properly
secured) called 911 while the men made several attempts to enter the
building.
Postal Inspectors identified a postal clerk as a suspect, and arrested three
others believed to be involved in the robbery. The first suspect was
sentenced in August 2003 to more than 10 years in prison and three years’
supervised release, and was ordered to pay $75,241 in restitution to the
U.S. Postal Service. |
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| A Virginia highway contract route
driver pled guilty on November 21, 2002, to five criminal counts stemming
from a complaint about large amounts of mail on his property. The driver—a
former deputy sheriff—was responsible for preparing and delivering mail to
five post offices in southeastern Virginia. Washington Division Postal
Inspectors executed a search warrant at the contractor’s home and found mail
filling three abandoned vehicles, pits filled with mail in the surrounding
woods, and piles of mail beneath his mobile home. The mostly First-Class and
standard bulk business mail dated back about 10 years, through May 2002, and
Inspectors needed three, nine-ton postal vehicles to transport it from the
property |
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| Security Force
Safety and
Security (556 KB)
The Postal Inspection Service maintains an armed, uniformed
Security Force to provide ongoing protection for postal employees and
property. Officers are assigned to facilities considered most at risk for
crime. The presence of officers serves as a deterrent to criminal activity
and provides an environment conducive to the safety of postal employees and
customers.
Following a comprehensive review of Security Force operations, staffing, and
risk assessment at postal facilities, the Postal Inspection Service closed
Security Force operations at six sites: Buffalo, New York; Hartford,
Connecticut; Birmingham, Alabama; Jacksonville, Florida; Denver, Colorado;
and Seattle, Washington. The Safety and Security Group determined that using
electronic-security measures, strengthening facility design, and hiring
unarmed, contract guards would upgrade security at these facilities and
allow Security Force positions to be redeployed to areas at greater risk.
As attention to security issues has increased in the past two years, the
Postal Inspection Service has recommended to the Postal Service numerous
improvements to physical security at postal facilities, including installing
perimeter fences, access-control technology at building entrances,
closed-circuit television systems, and other enhancements that reduce the
risk of unauthorized entry to postal property.
As the result of new methods being used by terrorists, the Postal Inspection
Service has also sought to increase security in ways other than physical
countermeasures. Employee security practices have been modified and
expanded, and detailed security measures are now in place to protect the
Postal Service from terrorist attack, particularly in response to changes in
the nation's terror alert status.
The Postal Inspection Service continues to evaluate the deployment of Postal
Inspectors, Postal Police Officers, and support positions; the
reorganization or elimination of certain functional areas of the Postal
Inspection Service; and the development or enhancement of some support
positions. The goal is to use resources in the most effective and efficient
manner to protect the Postal Service, the public, and the U.S. Mail, with
the flexibility to allocate limited resources to the areas of greatest need.
At some postal facilities, the Postal Inspection Service employs contract
security personnel as an adjunct to physical security measures. Contracts
were set up with two companies that provide uniformed security officers who
have been carefully screened and trained to provide quality service. The
vendors already provide security personnel at some of the most sensitive
government facilities, and the Inspection Service is confident that these
officers will prove beneficial to the safety and well-being of postal
employees and customers.
Personnel Hiring and Screening
The Safety and Security Group found that mail theft, workplace violence, and
other crimes targeting the U.S. Postal Service are minimized by conducting
hiring and screening reviews of employees. Postal Inspectors performed
reviews at the 85 postal districts, focusing on compliance with
employee-hiring policies and procedures, including management oversight,
police checks, drug screening, Office of Personnel Management reviews,
employee interviews, and fingerprint submissions. Inspectors identified 281
deficiencies, 276 of which have been corrected
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Investigations
The Postal
Inspection Service also conducted Observation of Mail Condition (OMC)
reviews during the fall and holiday mailing seasons. At the request of the
Postal Service's Chief Operating Officer, Inspectors reviewed operations to
evaluate the security of the mail, employees, and assets, and to verify data
input to the Mail Condition Reporting System and the Customer Service Daily
Reporting System. After Postal Inspectors visited 2,373 facilities, they
issued 16 weekly and two special reports between September 20, 2002, and
January 10, 2003, as well as two follow-up reports in May 2003. Of
particular note was the failure at some sites to report delayed Standard
Mail, for which Inspectors identified 164 operational issues.
Security was a
major focus of the fiscal year's OMC, and Postal Inspectors identified 740
security concerns that revealed opportunities for improvement. These
included employees' lack of knowledge of and adherence to policies and
procedures for handling registered mail; limiting access by authorized
personnel at postal and contract facilities; securing and accounting for
postal and contract vehicles, including "P-Tags"; securing and accounting
for keys to postal facilities and other postal-access keys; and identifying,
updating, and properly disseminating postal contingency plans, emergency
contacts, and phone numbers.
As a result of
Inspectors' observations, the Chief Operating Officer assigned
responsibility to the Postal Service's Headquarters Operations group and
vice presidents of area operations offices to assure that OMC findings and
security issues "are addressed on an ongoing basis."
The Chief
Operating Officer also distributed a Standard Operating Procedure on
registered mail and provided a training package for field groups. The
package included two security videos describing vehicle and facility access
issues noted in the Postal Inspection Service's weekly OMC reports. Postal
area managers were requested to respond each week, in writing, with a
description of the corrective actions they would take to address items of
concern. District and processing and distribution center managers
implemented specific corrective actions and, in some instances, immediate
corrective action the same week of their reviews. The actions included
remedial training, policy letters, follow-up reviews, and the correction of
deficient security procedures. Intelligence The U.S. Postal Inspection
Service formed an Intelligence Group in FY 2003 as part of its new National
Headquarters organizational structure. The group's mission is to analyze,
consolidate, and deliver intelligence information in ways that will support
the overall mission of the Postal Inspection Service. Group members will
analyze past and ongoing data from numerous internal and external sources to
identify threats, crime trends, criminal groups, and suspect individuals
with the potential to adversely impact postal operations or the public's
confidence in the U.S. Mail. By providing accurate, relevant, and timely
assessments of data, the Intelligence Group will strengthen strategic,
operational, and tactical decision-making at all levels.
The group's
effectiveness will be measured by the number of useful investigative leads
and amount of case assistance it provides to other Postal Inspection Service
groups.
The Postal
Inspection Service has always been effective at collecting information and
innovative in its approach to evaluating it. This new functional area
directs a staff trained in analytical processes to identify, monitor,
evaluate, and disseminate information on active and emerging threats to the
U.S. Postal Service, its employees, and its customers. During FY 2004, this
function will be incorporated in field division offices. The National
Headquarters group will provide operational and strategic information to
divisions and to agency executives for use in operational and long-range
decisions affecting the deployment and allocation of resources.
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