A Red Ventures company ‘cheated’ postal service, will pay $2.7M to settle case, feds say
Internet sales and marketing giant Red Ventures, and its subsidiary MyMove, have agreed to pay $2.75 million to the federal government to resolve claims they misrepresented costs when handling millions of Americans’ change of address forms, federal authorities said Wednesday.
The payment settles a whistleblower case by former MyMove employee Marcos Arellano, who alleged the companies “knowingly” withheld money owed to the U.S. Postal Service, according to a news release by the office of U.S. Attorney Dena King in Charlotte.
“This settlement demonstrates that those who cheat the government will be held accountable,” King said in a statement.
In a statement to The Charlotte Observer, a Red Ventures spokesperson said its movers division always “handles relationships with its customers, partners and the U.S. government with the highest integrity.”
The statement didn’t address the allegations in the case.
“Red Ventures has chosen to reach a settlement agreement in this case so that we can resume focus of our time and resources on helping millions of people streamline and improve their moving experience,” according to the statement.
Arellano did not respond to a request for comment from The Charlotte Observer Wednesday.
Red Ventures is based in Indian Land, South Carolina. Its portfolio of companies include CNET, Lonely Planet and Bankrate, among others.
About MyMove and change of address forms
Red Ventures’ MyMove subsidiary has an exclusive partnership with the postal service to help with millions of Americans’ changes of address each year, according to MyMove’s website.
As part of MyMove’s contract, MyMove has to pay the postal service a certain amount of monthly gross revenues from its change-of-address program with the service. But the company instead “improperly and secretly” deducted some of its costs beforehand, King said.
The settlement also resolved allegations that MyMove fraudulently shifted labor costs to a contract that contained a profit-sharing agreement with the USPS, according to court documents. That maneuver increased MyMove’s profits at the expense of the postal service, prosecutors said.
The claims resolved by the settlement remain allegations, according to the U.S. Attorney’s Office release, and no liability has been determined.
Arellano raised the allegations under the federal False Claims Act, which allows a private party to file an action on behalf of the federal government and receive part of any settlement. Prosecutors did not say how much of the settlement Arellano would get.
