Boeing to plead guilty to criminal fraud charges – NBC4 Washington

Boeing to plead guilty to criminal fraud charges – NBC4 Washington

Boeing to plead guilty to criminal fraud charges – NBC4 Washington

Boeing will plead guilty to one count of criminal fraud stemming from two deadly crashes of 737 Max jets after the government determined the company violated an agreement that had shielded it from prosecution for more than three years, the Justice Department said late Sunday.

Federal prosecutors gave Boeing the option this week of pleading guilty and paying a fine as part of its sentence or facing trial on the criminal charge of conspiracy to defraud the United States.

Prosecutors accused the U.S. aerospace giant of misleading regulators who approved the plane and pilot training requirements.

The plea agreement, which still needs to be approved by a federal judge to take effect, calls for Boeing to pay an additional $243.6 million in fines. That was the same amount it paid under the 2021 settlement that the Justice Department says the company breached. An independent monitor will be appointed to oversee Boeing’s safety and quality procedures for three years.

The plea agreement covers only wrongdoing by Boeing before the crashes, which killed all 346 passengers and crew aboard the two new Max planes. It does not grant Boeing immunity for other incidents, including a panel that blew up on a Max plane during an Alaska Airlines flight in January, a Justice Department official said.

The settlement also does not cover any current or former Boeing officials, only the corporation.

In a court filing late Sunday, the Justice Department said it expected to file the written plea agreement with the court by July 19.

Federal prosecutors alleged that Boeing committed a conspiracy to defraud the government by misleading regulators about a flight control system that was implicated in crashes in Indonesia in October 2018 and in Ethiopia less than five months later.

As part of the January 2021 agreement, the Justice Department said it would not prosecute Boeing on the charge if the company met certain conditions for three years. Last month, prosecutors alleged that Boeing had breached the terms of that agreement.

The company’s plea is set to be entered in U.S. District Court in Texas. The judge overseeing the case, who has criticized what he called Boeing’s “egregious criminal conduct,” could accept the plea and sentence prosecutors proposed with it or could reject the deal, which would likely lead to new negotiations between the Justice Department and Boeing.

Relatives of those killed in the crashes were informed of the plea offer a week ago and said at the time they would ask the judge to reject it.

U.S. agencies can use a criminal conviction as grounds to bar companies from doing business with the government for a set period of time. Boeing is a major contractor for the Department of Defense and NASA.

The case dates back to the crashes in Indonesia and Ethiopia. The Lion Air pilots involved in the first crash were unaware that there was flight control software that could push the nose of the plane down without their intervention. The Ethiopian Airlines pilots did know this, but were unable to control the plane when the software was activated based on information from a faulty sensor.

An Alaska Airlines flight from Oregon to Southern California made an emergency landing Friday after a piece of the plane’s side broke off in mid-air.

In 2021, the Justice Department accused Boeing of misleading FAA regulators about the software, which did not exist on older 737s, and about how much training pilots would need to fly the plane safely. However, the department agreed not to prosecute Boeing at the time if the company paid a $2.5 billion settlement, including the $243.6 million fine, and took steps to comply with anti-fraud laws for three years.

Boeing, which blamed two low-level employees for misleading regulators, has tried to put the crashes behind it. After grounding the Max jets for 20 months, regulators let them fly again after Boeing reduced the power of the flight software. The Max jets have logged thousands of safe flights, and airline orders have surged, rising to about 750 in 2021, about 700 more in 2022 and nearly 1,000 in 2023.

The Arlington, Virginia-based company has dozens of airline customers around the world. Top 737 Max customers include Southwest, United, American, Alaska, Ryanair and flydubai.

Relatives of those killed in the crashes continued to press the Justice Department to prosecute Boeing and its executives, both former and current, but acknowledged that the public appeared to be losing interest in questions about the Max’s safety record.

That changed in January, when a panel covering an unused emergency exit broke off a Max during an Alaska Airlines flight over Oregon.

The pilots managed to land the 737 Max safely and no one was seriously injured, but the incident prompted closer scrutiny of the company. The Justice Department opened a new investigation, the FBI told passengers on the Alaska plane they could be victims of a crime and the FAA said it was stepping up oversight of Boeing.

According to some legal experts, a criminal conviction could jeopardize Boeing’s status as a federal contractor. The plea agreement announced Sunday does not address that question, leaving it up to each government agency to decide whether to ban Boeing.

The Air Force cited a “compelling national interest” in allowing Boeing to continue competing for contracts after the company paid a $615 million fine in 2006 to settle criminal and civil charges, including that it used information stolen from a rival to win a space launch contract.

Hours after lawmakers revealed that another Boeing whistleblower had come forward, the company’s chief executive, David Calhoun, faced a Senate committee on Tuesday to address reports of safety and quality control problems.

The company has 170,000 employees and 37 percent of its revenue last year came from U.S. government contracts. Most of that was defense work, including military sales that Washington arranged for other countries.

However, agencies often have discretion to allow companies convicted of a felony to remain eligible for government contracts, according to John Coffee, a Columbia law professor and director of the university’s center on corporate governance.

Relatives of victims of the Indonesian and Ethiopian crashes have pushed for a criminal trial that could shed light on what people inside Boeing knew about misleading the FAA. They also wanted the Justice Department to prosecute senior Boeing officials, not just the company.

“Boeing has paid fines many times and it doesn’t seem like there’s been any change,” said Ike Riffel of Redding, California, whose sons Melvin and Bennett died in the Ethiopian Airlines crash. “When people start going to prison, that’s when we’ll see a change.”

At a recent Senate hearing, Boeing CEO David Calhoun defended the company’s safety record after turning around and apologizing to family members of Max crash victims sitting in the rows behind him “for the pain we have caused.”

Hours before the hearing, the Senate investigations subcommittee released a 204-page report with new allegations from a whistleblower who said he was concerned that defective parts could be entering 737s. The whistleblower was the latest in a series of current and former Boeing employees who have raised concerns about the company’s safety and said they faced retaliation as a result.


Koenig reported from Dallas. Richer reported from Boston.