An Oregon contractor pleaded guilty to paying more than $465,000 in kickbacks to an insider who steered him Postal Service repair work, and the money came out of the repair bills themselves. That is the core of a plea the Justice Department announced on Tuesday, October 27, 2026.
According to the Justice Department release, Ilya Zagaryuk, 40, of Damascus, Oregon, owned a company that contracted and subcontracted facilities repairs on dozens of U.S. Postal Service buildings in Oregon, Idaho, Wyoming, Montana and Washington. From May 2022 to February 2024, prosecutors say, he paid a co-conspirator who worked for a prime contractor on USPS projects. The payments were a reward for directing more work to Zagaryuk's company.
How the money moved
This was not a gift on the side. DOJ says the co-conspirators "intentionally inflated contracting documents, including estimates and invoices" to build the kickbacks into the price. The Postal Service paid for repairs. Part of what it paid was never for repairs at all.
Zagaryuk pleaded guilty to conspiracy to pay kickbacks, which carries up to five years in prison and a fine of up to $250,000. He agreed to pay $465,347.75 in restitution to the Postal Service, jointly and severally with co-defendants. A federal judge in the Eastern District of California will set the sentence.
What the record proves, and what it doesn't
Proven by the plea: one contractor admits he paid the kickbacks and inflated the paperwork to cover them. Still alleged or unknown: the release does not name the co-conspirator, the prime contractor that employed that person, or the co-defendants who share the restitution bill. It does not say whether anyone at the Postal Service itself knew. A fair reading is a scheme inside the contracting chain, not proof of a corrupt postal official.
The scale matters too. Against the Postal Service's budget, $465,000 is small. The case is an Antitrust Division prosecution through the Procurement Collusion Strike Force, which lists the plea among its 2026 cases. The point is the method. A middleman at a prime contractor decides who gets the subcontract, and nobody downstream checks whether the estimate is real.
Who pays
Postal customers and taxpayers covered the padded invoices. The contractor got the work. The insider got the cash. The USPS Office of Inspector General and the FBI's Sacramento office are investigating.
The question worth watching: when the co-defendants surface in court, who was the prime contractor, and how many other USPS repair jobs did the same insider route?