OP-based YRC Freight ‘systematically overcharged’ defense department, federal suit says

Overland Park-based YRC Freight “systematically overcharged” the U.S. government for shipments for more than seven years and “made false statements” to cover up the fraud, according to federal charges.

An announcement Friday by the U.S. Justice Department called the actions “fraudulent and illegal,” and indicated that other customers may have been overcharged as well.

“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 announcement said.

YRC Worldwide, which owns YRC Freight, Yellow Transportation and Roadway Express that were named in the complaint, called the claims “totally without merit” in a statement posted on its website. It also said that the company had been “diligently cooperating” with a federal inquiry for nine years. The statement said the shipments in question were prior to 2013.

“We have made every effort over nearly a decade to address the government’s questions. We are confident that the evidence will demonstrate YRC Freight acted consistently with our contract and all applicable guidelines. We look forward to continuing to provide essential and valuable logistics services to the U.S. government and all our customers,” Jim Fry, YRC Worldwide’s general counsel, said in the company’s statement.

The company also said defense department shipments currently represent less than 1 percent of its business.

Shares of YRC Worldwide plunged after the government charges, falling $1.26, or 28.4 percent, to close at $3.17.

According to the government’s announcement, shipments’ weights originally were estimated and later YRC Freight weighed them to determine the specific amount to charge.

It said the company “suppressed the results” when the shipment turned out to be lighter than estimated and continued to charge the government based on the higher 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 announcement said, including the parenthetical reference to other customers.

This story was originally published December 14, 2018 at 2:58 PM.