Cuong H. Nguyen, a San Diego-based internet merchant who admitted guilt to charges involving a sophisticated conspiracy to defraud the U.S. Postal Service (USPS) of millions of dollars in postage fees over the course of about four years, was sentenced in federal court.
Nguyen pleaded guilty to participating in a “wide-ranging postage counterfeiting, forging, and tampering scheme that, over the course of multiple years and more than 160,000 packages, deprived the U.S. Postal Service of approximately $5 million of postage due and owing,” according to a press release issued by the U.S. Attorney’s Office for the Southern District of California.
Defendant Tampered with the System for Proving Postage
Special Agents from the U.S. Postal Inspection Service, the IRS Criminal Investigation division, and the Financial Investigations and Border Crimes Task Force—based in San Diego and Imperial Counties and supported by the Treasury Executive Office of Asset Forfeiture—investigated Nguyen’s conspiracy scheme.
The Special Agents’ investigation revealed that Nguyen had tampered with postage evidencing systems (PES), also known as postage meters, which are secure systems that produce distinctive marks on shipping labels to indicate prepayment of postage.
Postage meters enable users to purchase and print shipping labels online through the USPS, and these systems are governed by the USPS in compliance with U.S. Code of Federal Regulations, 39 CFR Part 501, to protect postal income. The U.S. Attorney’s Office claims that between 2015 and 2019, Nguyen shipped over 162,221 packages of food and drink items from his businesses in San Diego using the postage-evidence system known as Click-N-Ship.
Nguyen paid substantially less than was required, nevertheless, because he and others changed, copied, and/or fabricated the shipping labels on those goods. However, the items continued to be delivered, costing the USPS millions of dollars in postage over several years.
Fraud by the U.S. Postal Service is a Federal Crime
The USPS’s law enforcement division, the U.S. Postal Inspection Service, is responsible for enforcing the more than 200 federal laws that cover offenses against the postal service, USPS personnel, and USPS customers. It also conducts mail-related crime investigations.
Due to the USPS’s status as a government institution, fraud and other illicit mail-related behavior are treated as federal offenses. Nguyen was charged with federal criminal conspiracy under Title 18, U.S.C., Section 371, which carries a maximum punishment of five years in prison, forfeiture, and $250,000 in fines, for his involvement in the postal fraud operation. In April 2021, he entered a guilty plea to the case.
At his sentence hearing before the Hon. Cynthia A. Bashant, the judge stated, “The USPS offers a crucial service, Nguyen acknowledged to the scheme. Such dishonest actions will make it impossible for us to continue using the postal service in the future. Nguyen’s plea deal includes a three-year probationary period. Additionally, he has committed to return to the US $862,374 in earnings, cash, and assets derived directly or indirectly from the fraud scheme.
Fraud Scheme Is Called a “Complex Web of Digital Crime” by the U.S. Attorney
According to Inspector in Charge Carroll N. Harris III of the U.S. Postal Inspection Service Los Angeles Division, “Scammers incorrectly assume they can hide and benefit from postal fraud because the U.S. Postal Service delivers over 150 billion pieces of mail yearly.
“For more than 246 years, the U.S. Postal Inspection Service has protected the country’s mail delivery system. We are unwavering in our pursuit against scammers. The sentence handed down today confirms the Postal Inspectors’ dedication to upholding justice and maintaining public confidence in the mail.”
In response to the sentence, acting US Attorney Randy S. Grossman said, “I congratulate the work of the USPIS, IRS-CI, and the FIBC for dismantling this complex web of digital crime. The U.S. Attorney’s Office will continue to collaborate with our law enforcement partners to pursue the most difficult cases while safeguarding our country’s resources, particularly the U.S. Postal Service, as demonstrated by this excellent case.”
If you are facing federal criminal charges related to the RICO Act, for money laundering, or for other white-collar crimes, contact Chambers Law Firm at 714-760-4088 for a free legal consultation.
