Yellow Corp. reaches nearly $7M settlement with Defense Department

After more than a decade in litigation, Yellow Corp. is settling with the Department of Defense regarding allegations of knowingly overcharging the U.S. government.

According to the Department of Justice, Overland Park, Kan.-based Yellow Corp. is agreeing to pay the federal government nearly $7 million to resolve civil litigation that began in November 2008. From 2005 to 2013, the trucking company allegedly overbilled the Defense Department by documenting cargo weights that were greater than the actual weight, according to court documents.

The U.S. government also accused Yellow Corp. of making false statements and records. Allegations include the trucking company falsely acknowledging that it would make corrections during the reweigh process.

Settlement documents show that Yellow Corp. will pay the United States $6.85 million. Of that, nearly $2.5 million is restitution. The whistleblower behind the investigation will receive nearly $2 million as well as 19.5% of the interest paid by Yellow Corp.

Yellow Corp. is not admitting guilt to any of the allegations. In fact, the settlement allows the Defense Department to continue doing business with the trucking company. In a statement, Yellow Corp. pointed out that all allegations occurred before current management arrived at the company.

Darrel Harris was named president of Yellow Corp. in April 2021.

“The agreement will enable the company and its 30,000 freight professionals to remain centrally focused on transporting goods for more than 200,000 customers, including the Department of Defense, with whom Yellow has enjoyed a customer relationship dating back to World War II,” Yellow Corp. said in a statement. “The men and women of Yellow take great pride in the critical work they perform each day on behalf of America’s men and women in uniform.”

Yellow Corp. investor lawsuit

Last April, Yellow Corp. reached a settlement worth more than $2 million in a lawsuit filed by investors regarding the Department of Justice investigation. That lawsuit accused the company of earning at least $2 million a month in “illicit revenue” derived from the alleged overcharging scheme.

During the period of the alleged scheme, then-YRC executives sold nearly $10 million worth of shares at prices from $15 to $24 per share. After the Department of Justice announced its lawsuit in December 2018, shares of YRC fell from an opening price of $4.41 to $3.17 in one day, a 28% drop on heavier-than-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 the $735.9 million in CARES Act loans for businesses critical to maintaining U.S. national security. Just a few weeks later, the Congressional Oversight Commission issued a report criticizing the trucking company’s national security eligibility used to justify the loan. That commission was created by the CARES Act and oversees the Department of Treasury and Federal Reserve Board’s management of COVID relief loans through September 2025.

Rep. James Clyburn, D-S.C., sent a letter to the U.S. archivist seeking records from the National Archives and Records Administration after new evidence obtained by the subcommittee suggested former Trump White House officials may have played a role in Yellow Corp.’s $700 million loan.

In its latest report, the Congressional Oversight Commission indicated that the investigation is still underway. Last year, the commission received responses to requests for information from the Defense Department and the U.S. Treasury. The commission now is seeking additional documents relating to communications between the two agencies and representatives of Yellow Corp., including lobbyists. LL