Pittsburgh-based Mellon Bank has agreed to pay the federal government $16.5 million to settle all claims relating to the destruction of 77,000 federal individual income tax returns and checks in 2001.

Mellon had a contract to collect and process returns and payments for the Internal Revenue Service during the peak busy season in the spring of 2001. Mellon employees who later claimed they were overworked and unable to meet deadlines purposely destroyed 77,000 tax returns and accompanying checks totaling $1.3 billion at a Pittsburgh service center in April 2001.

Mellon has previously paid the government more than $18 million to cover the interest the government lost on the delayed payments as well as the costs of relocating the Pittsburgh service center to a new site. Mellon has agreed to cooperate with the government and has accepted responsibility for its employees' actions.

In return for the cooperation and the payment of fines, the United State's district attorney's office has agreed not to pursue any civil or administrative monetary claims against Mellon.

Eight former Mellon employees have been indicted relating to their participation in the destruction of the documents. Several have pleaded guilty; court proceedings are pending for others.

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