Criminal Nerve

As customers of the U.S. Postal Service and other large couriers, we enjoy protections against our items getting lost, damaged, or destroyed once we ship them off.

But there are criminals who instead exploit these indemnity programs without so much as an afterthought. Sometimes, fraudsters go to extremes, like in this case our Office of Investigations recently closed with the help of our law enforcement partners.

As early as October 2018, three brothers in Florida, Pennsylvania, and New Jersey started filing insured parcel claims with USPS and UPS. On paper, it was all legit: They sent packages with valuables like designer sunglasses and clothing, brand-name headphones, and other high-end electronics.

But the packages got lost or damaged during transit, so they filed claims for compensation. Each claim had, of course, the corresponding proof of value attached.

Except none of it was true. They were sending the parcels to themselves and to each other. The contents were worthless: used cardboard, crumpled paper, even sand. The highest value contents were airline-throwaway level, like cheap plastic headphones. And the proofs of value were doctored — completely bogus.

The farce went on for a solid year and a half, and the brothers got crafty: They started sending packages to new addresses. They also changed who supposedly received and cashed the indemnity checks.

But no matter the cast of made-up characters, bank surveillance footage always captured the brothers doing the deed.

When the victims caught wind of what was happening, they began denying payment. For example, the Postal Service and UPS refused to issue or deliver some of the claim checks. Then a bank placed a hold on an account used to deposit the fraud proceeds. Did this deter the brothers?

Absolutely not — instead, they showed an even more criminal nerve: they posed as third parties and repeatedly sought recoveries from USPS and UPS. They even filed more than 10 lawsuits against UPS in various New Jersey counties claiming it didn’t pay what they were owed. They also sued the bank to try to access the funds from their scheme.

The case was ultimately prosecuted by the U.S. Attorney’s Office for the Eastern District of Pennsylvania. U.S. Attorney Jacqueline C. Romero said the “brothers made their fraud a family affair.”

As it happened, the three already had criminal histories ranging from insurance fraud, to burglary, to aggravated assault. The consequences for this latest grift would be another family affair to remember.

This is how it finally unraveled: UPS filed a complaint with the Postal Inspection Service to open an investigation into the suspicious pattern of checks. And when postal inspectors found a trail of postal checks being issued to the brothers, they brought the case to our special agents, as postal indemnity programs fall within the USPS OIG’s jurisdiction.

In total, over 1,200 fraudulent insured parcel claims were submitted with USPS and UPS, for which the brothers received almost $300,000 in ill-gotten gains.

In April 2020, our special agents seized $47,000 in cash from one of the many bank accounts the brothers used to commit this fraud. Six months later, our special agents and their partners executed search warrants at two of the brothers’ homes and seized more cash and more incriminating evidence.

In May 2023, the brothers were found guilty at the end of a federal jury trial in the Eastern District of Pennsylvania. The charges included mail fraud, wire fraud, bank fraud, and money laundering conspiracy.

This February, the Pennsylvania brother was sentenced to two years in federal custody, three years’ supervised release, and was ordered to pay restitution of almost $48,000.

In March, the Florida brother was sentenced to almost five years in federal prison and the New Jersey brother was sentenced to over 10 years’ imprisonment. The latter two received three and five years’ probation respectively, and were each ordered to pay over $281,000 in restitution.

“The USPS OIG will continue to work with our law enforcement partners to vigorously investigate these indemnity fraud cases. Hopefully, the sentences handed down will be a deterrent to those who might attempt to defraud the Postal Service by filing false claims.”

– Jeffrey Krafels
Executive Special Agent in Charge
USPS OIG Mid-Atlantic Area Field Office

Don’t let fraudsters take advantage of systems that benefit so many. If you suspect or know of indemnity or other financial fraud affecting the Postal Service, please report it to our Hotline.

For further reading:

U.S. Department of Justice (via uspsoig.gov), Two Brothers Sentenced to Prison for Multi-District Scheme to Defraud the United States Postal Service, UPS, and Citizens Bank