A Damascus, Oregon, repair contractor has admitted to paying more than $465,000 in kickbacks to win more work fixing up U.S. Postal Service buildings across the Northwest and Mountain West, federal prosecutors announced Oct. 27 (via U.S. Department of Justice).
Ilya Zagaryuk, 40, pleaded guilty in federal court in Sacramento to conspiracy to commit an offense against the United States, specifically conspiracy to pay kickbacks. The case was filed in the U.S. District Court for the Eastern District of California, and the U.S. Attorney's Office there said the plea was entered the same day the news went out.
According to the Justice Department, Zagaryuk owned a company that took on contracts and subcontracts for repairs at dozens of Postal Service facilities in Oregon, Idaho, Wyoming, Montana and Washington. Neither the national release nor the U.S. Attorney's version names the company.
Here's how the scheme worked, per prosecutors. Between May 2022 and February 2024, Zagaryuk paid a co-conspirator who worked for a prime contractor on Postal Service jobs. In exchange, that employee steered additional repair work to Zagaryuk's company. To cover the payoffs, the two sides padded estimates and invoices with money that had nothing to do with the real cost of the repairs. In other words, the Postal Service was billed for the kickbacks.
The charge carries up to five years in prison and a fine of as much as $250,000. Zagaryuk agreed to pay $465,347.75 in restitution to the Postal Service, and he's on the hook for that amount jointly and severally with co-defendants. The releases don't name those co-defendants or the prime contractor, and they don't give a sentencing date. A federal judge will set the sentence after weighing the U.S. Sentencing Guidelines and other factors.
Officials framed the case as a warning to anyone working on federal facilities. "Collusion that harms the U.S. Postal Service, and ultimately the American taxpayer, is illegal and will not be tolerated," said Associate Attorney General Stanley E. Woodward Jr. Daniel W. Glad, acting deputy assistant attorney general for the Antitrust Division, said of the co-conspirators, "They did this countless times and cheated the U.S. Postal Service out of honest contracting and invoicing."
U.S. Attorney Eric Grant of the Eastern District of California added, "Protecting taxpayers and federal-agency dollars is central to our mission."
The Postal Service Office of Inspector General and the FBI's Sacramento Field Office investigated. Prosecutors from the Antitrust Division's San Francisco office and the Eastern District of California are handling the case.
It's also part of the work of the Procurement Collusion Strike Force, a joint effort of the Antitrust Division, U.S. Attorneys' offices, the FBI and federal inspectors general that the Justice Department announced in November 2019. The strike force goes after bid rigging, price fixing, market allocation and related schemes in federal, state and local spending. Its own page says that as of Sept. 30, 2026, it had opened more than 215 investigations and logged more than 90 guilty pleas and trial convictions, with over $75 million in fines and restitution.
Why it matters for Contractors
Facility repair work for agencies like the Postal Service often runs through a prime contractor that hands jobs down to smaller subs. That makes the person at the prime who picks subs a gatekeeper, and this case shows prosecutors will follow the money from that person to the sub. Paying someone at the prime to steer work your way isn't a gray-area sales tactic. On federal jobs it's a crime, and here it's one that can bring prison time plus a six-figure restitution bill.
It also shows how these cases get built: through the paperwork. Estimates and invoices padded to hide payoffs are exactly what investigators pull apart. If anyone up the chain ever asks you to bump a number so it can be split later, that's the moment to walk away and keep your own records clean.
If you're a small shop that keeps losing federal or public work to a competitor that seems to have an inside track, there's a place to report it. The Procurement Collusion Strike Force takes tips through an online citizen complaint form on its justice.gov page, and you don't have to give your name. The Justice Department also points to the Antitrust Division's whistleblower rewards program, launched in July 2025 with the Postal Service as a partner, which can pay rewards when original information leads to criminal fines or recoveries of at least $1 million.