After more than a decade of litigation, Yellow Corp. is in the process of settling with the Department of Defense regarding allegations of knowingly overloading the US government.
According to the Department of Justice, Yellow Corp., based in Overland Park, Kansas, agrees to pay the federal government nearly $7 million to resolve the civil litigation that began in November 2008. From 2005 to 2013, the trucking company allegedly overcharged the Department of Defense. by documenting cargo weights in excess of the actual weight, according to court documents.
The US government has also accused Yellow Corp. of having made false declarations and false records. The allegations include the trucking company falsely acknowledging that it would make corrections during the weigh-in process.
Settlement documents show that Yellow Corp. will pay the United States $6.85 million. Of this amount, nearly $2.5 million are damages. The whistleblower who initiated the investigation will receive nearly $2 million along with 19.5% interest paid by Yellow Corp.
Yellow Corp. does not admit guilt to any of the allegations. In fact, the settlement allows the Department of Defense to continue to do business with the trucking company. In a statement, Yellow Corp. pointed out that all of the allegations took place before the current management arrived at the company.
Darrel Harris has been named president of Yellow Corp. in April 2021.
“The agreement will allow the company and its 30,000 freight professionals to remain focused on moving freight for more than 200,000 customers, including the Department of Defense, with whom Yellow has a customer relationship dating back to the Second World War”, Yellow Corp. said in a statement. “The men and women of Yellow take great pride in the vital work they do every day on behalf of America’s men and women in uniform.”
Lawsuit of Yellow Corp investors.
Last April, Yellow Corp. reached a settlement worth more than $2 million in a lawsuit filed by investors relating to the Justice Department investigation. That lawsuit accused the company of earning at least $2 million a month in “illicit revenue” from the alleged overcharging scheme.
During the time of the alleged scheme, then-executives of YRC sold nearly $10 million worth of stock at prices ranging from $15 to $24 per share. After the Justice Department announced its lawsuit in December 2018, YRC shares fell from an opening price of $4.41 to $3.17 in one day, down 28% on a above-average volume of shares traded.
COVID loan controversy
The House Committee on Oversight and Reform is trying to find out why Yellow Corp. received a massive loan through the Coronavirus Aid, Relief and Economic Security Act.
In July 2020, Yellow Corp. received 95% of $735.9 million in CARES Act loans for businesses critical to maintaining US national security. A few weeks later, the Congressional Oversight Commission issued a report criticizing the trucking company’s national security eligibility used to justify the loan. This commission was created by the CARES Act and oversees the management of COVID relief loans by the Treasury Department and the Federal Reserve through September 2025.
Rep. James Clyburn, DS.C., sent a letter to the Archivist of America requesting documents from the National Archives and Records Administration after new evidence obtained by the subcommittee suggests former White House officials of Trump may have played a role in Yellow Corp. $700 million loan.
In its latest report, the Congressional Oversight Committee said the investigation is still ongoing. Last year, the commission received responses to requests for information from the Department of Defense and the US Treasury. The commission is now seeking additional documents relating to communications between the two agencies and representatives of Yellow Corp., including lobbyists. LL