FEDEX Bribe and Contract-Award Scandal

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FEDEX Bribe and Contract-Award Scandal

Five recently unsealed indictments (here, here, here, and here) allege a massive ten-year conspiracy to defraud that involved FedEx Ground Package System, Inc. (“FedEx”) management/employees and several contractors.  The conspiracy allegedly resulted in the wrongful payment of over $280,000,000 to the conspirators.[1] At the center of the conspiracy is FedEx Senior Line Manager Ryan Mower, who allegedly awarded contracts to conspirators in exchange for bribes of over $900,000 that were paid over the period of the conspiracy. In addition to awarding improper contracts, the Indictments state that Mower submitted fraudulent reports in order to support giving conspirators payment for work that was never performed. Mower also allegedly failed to report the income received from the conspiracy on his income taxes, leading to additional charges of false tax returns.


Understanding the conspiracy requires some background on FedEx’s delivery system.  FedEx operates approximately thirty-nine hubs, or distribution centers, across the United States. FedEx carries out deliveries by engaging contracted service providers (“CSPs”) (also known as Independent Service Providers, or “ISPs” under its current model) to transport and deliver packages from its hubs. FedEx generally awards contracts for delivery routes (known in the industry as “runs”) through either a rotating system for short-term routes or an auction for permanent routes. CSPs earn points in FedEx’s system by successfully completing routes and passing safety tests. These points are supposed to determine which CSP will receive the next permanent routes up for auction. Sometimes, a short-term route may turn into a permanent route, at which point FedEx places it up for auction and awards it to the CSP with the most points. FedEx limits the number of routes that a company may have out of a single geographic area. All of these policies are designed to ensure that FedEx does not deal unfairly with CSPs or become overly dependent on a single CSP.

As Senior Line Manager, Mower was responsible for overseeing FedEx’s dealings with CSPs. Mower allegedly accepted bribes and dealt unfairly and dishonestly with CSPs by awarding short-term and permanent routes to CSPs in exchange for bribe payments. Once Mower established such a relationship with CSPs, he would allegedly overreport miles traveled by the CSPs, even including miles for “ghost runs” never executed, so that the CSP would be overpaid. Mower allegedly hid his favoritism for the co-conspirators from FedEx by underreporting the amount of runs these CSPs were executing.

While Mower appears in all five indictments centered around this scheme, the United States has named several other parties as defendants, all of whom communicated directly with Mower regarding the conspiracy and had ownership interests in the CSPs involved in the conspiracy.[2] While most of the defendants had sole ownership of the companies, some of the owners were merely investors holding large percentages of ownership interest.

The United States indicted Mower and the co-conspirators last year in the District of Utah on charges of wire fraud and money laundering. The government is also seeking forfeiture of real property, a money judgment, and substitute property. The United States separately charged Mower with tax fraud for underreporting his income for the years 2014-18 by over $916,000.[3]



[1] See USA v. Tuchinsky et al, USA v. Kovachevic et al, USA v. Murdock et al, USA v. Ugarte et al, and USA v. Mower. FedEx Ground is a subsidiary of FedEx Corp. that operates land delivery routes in the United States.

[2] USA v. Tuchinsky et al. names two other unknown defendants who also worked at FedEx and awarded contracts to CSPs in exchange for bribes. This Article does not describe the actions of these defendants in detail because they had a much smaller role in the conspiracy than Mower.

[3] See generally USA v. Mower.


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