That's never happened to me, I've never even heard of that happening. I'm certain it's against the law though, so I wonder if those people were prosecuted?
I've had packages get squished, dented, etc. but never anything like that.
Oh, I remember once I tried to mail something that wasn't flat (I had put something inside the envelope that was thick - maybe some arrowheads if I remember right) and they must have ran it through the machine to cancel it, instead of canceling it by hand. That envelope ended up getting returned to me so chewed up it was unrecognizable. There was a stamp on it apologizing... but that was it.