A 40-year-old Oregon contractor has pleaded guilty to funneling more than $465,000 in illegal kickbacks to a prime contractor's employee in exchange for extra repair work at U.S. Postal Service facilities, prosecutors say. Ilya Zagaryuk admitted in federal court in Sacramento, California, that the scheme ran from May 2022 to February 2024 and touched postal properties across Oregon, Idaho, Wyoming, Montana and Washington.
According to MLex, Zagaryuk pleaded guilty to one count of conspiracy to commit an offense against the United States, specifically conspiracy to pay kickbacks. The outlet reports that he paid his co-conspirator over $465,000, with the two men building padded estimates and invoices that had nothing to do with actual repair costs. Court documents describe the case as conspiracy to commit an offense against the United States, specifically conspiracy to pay kickbacks, and the Department of Justice says Zagaryuk owned a company that contracted repair services for USPS facilities.
Zagaryuk had reportedly lived in Damascus, Oregon, and prosecutors say his co-conspirator worked as an employee of a prime contractor handling Postal Service projects. The arrangement, as described in the case, let Zagaryuk pay his contact in exchange for the contact steering additional work toward Zagaryuk and his company — padding the books at the expense of the Postal Service and, ultimately, taxpayers.
Inflated Invoices Built In the Split
The co-conspirators intentionally inflated contracting documents, including estimates and invoices, to build in funds for the kickbacks that were not based on legitimate repair work costs, according to the same MLex report. Acting Deputy Assistant Attorney General for Criminal Enforcement Daniel W. Glad said Zagaryuk and his co-conspirator conspired to inflate subcontracts to build in a split between themselves, adding that the conspirators repeatedly cheated the USPS through dishonest contracting and invoicing.
Associate Attorney General Stanley E. Woodward Jr. said the Department of Justice is committed to prosecuting people who cheat the U.S. government out of fair prices, and said collusion that harms the Postal Service and taxpayers is illegal and will not be tolerated. U.S. Attorney Eric Grant said protecting taxpayers and federal-agency dollars is central to his office's mission, and that his office will work with federal partners to uncover procurement fraud and ensure public money is spent lawfully.
The U.S. Postal Service Office of Inspector General and the FBI's Sacramento Field Office investigated the case. As part of his plea, Zagaryuk agreed to pay $465,347 in restitution jointly and severally with co-defendants to the Postal Service, according to a U.S. Department of Justice, Eastern District of California release reported by Action News Now. He faces a maximum sentence of five years in prison and a fine of up to $250,000, though a court will determine his actual sentence after weighing applicable statutory factors and federal sentencing guidelines.
Contractor Record Shows Dozens of Prior Projects
Separately from the federal case, a contractor profile maintained by BuildZoom lists Ilya S. Zagaryuk as holding Oregon contractor license 105616, which was inactive when last checked, with that status last verified on December 19, 2023. The same listing shows building-permit records associating Zagaryuk with 61 permitted projects, though that third-party data does not establish any connection between those projects and the federal kickback case.
The case is part of a broader federal push against procurement fraud. The Procurement Collusion Strike Force, created in November 2019, works to combat antitrust crimes and fraudulent schemes affecting government procurement at all levels, and the Department of Justice says whistleblowers may qualify for rewards for voluntarily reporting original information about antitrust and related offenses that result in at least $1 million in criminal fines or other recoveries.
Pattern of USPS Contracting Fraud Cases
Federal watchdogs have scrutinized the postal contracting system. A separate USPS OIG settlement this past September emphasized that the agency's special agents will pursue contractors who overcharge the government and enrich themselves at USPS customers' expense.
Other recent cases echo the same pattern. In December 2025, a separate USPS-related fraud settlement returned $750,000 to the Postal Service for fraudulent invoices, according to the USPS Office of Inspector General. A 2021 case out of Michigan saw a federal grand jury indict a construction contractor accused of stealing more than $1.2 million from the Postal Service through a multi-year scheme involving false invoices, per the U.S. Department of Justice, Eastern District of Michigan. And a trucking company owner separately pleaded guilty in a USPS freight-auction matter involving more than $1 million in payments for transportation work that allegedly never happened, as detailed by FreightWaves.
