Could These Fraud Allegations Land Boeing In A Criminal Trial?

In January, we revealed fraud and safety lapse allegations at a major Boeing supplier — and in today’s story, we dig into how those allegations could now be drawing the airline manufacturer into a major criminal trial. 

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The Department of Justice said on Tuesday that Boeing violated a sweetheart deal the airplane manufacturer scored three years earlier in the final days of the Trump administration — opening the door for criminal prosecution over two fatal Boeing crashes.

Allegations of fraud at a key Boeing supplier, which The Lever first reported in January, may have played a role in the Justice Department’s determination. Federal prosecutors said in the new court filing that Boeing had breached the 2021 immunity deal by failing to “prevent and detect violations of the U.S. fraud laws throughout its operations.”

In January, following an airplane door plug blowing out over Portland, Ore., The Lever brought to light testimony from employees at a Boeing subcontractor who alleged they were told to falsify records and misrepresent defects and safety issues. The Wichita, Kansas-based subcontractor, Spirit Aerosystems, made the body of the Boeing plane that had suffered the blowout.

Experts later told The Lever that the allegations from Spirit workers appeared to violate the deferred prosecution agreement (DPA) that Boeing had struck with federal prosecutors in January 2021 to shield them from criminal prosecution. 

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“This matter is further evidence that Boeing might be failing to meet core requirements set forth in the Boeing DPA,” said Peter Reilly, a law professor at Texas A&M University and a consultant for the legal team working with families of victims of the 2018 and 2019 crashes.

Federal prosecutors did not offer additional details in Tuesday’s court filing on why they believed Boeing had breached the deal. But they wrote that, among other concerns, they believed Boeing had violated a stipulation in the original deal that specified that Boeing must prevent fraud across all its operations, “including… those of its contractors and subcontractors.”

Other allegations of safety issues and misrepresentations have emerged at Boeing since January, including recent claims by a Boeing engineer about serious safety concerns in the manufacturing of the company’s 787 Dreamliner airplanes, which are now being investigated by the Federal Aviation Administration. 

In audits of Boeing and Spirit conducted after the January midair blowout, the Federal Aviation Administration found numerous quality control issues. While it’s still unclear what exactly led to the January incident — in part because Boeing is missing key documentation on the matter — an initial investigation by the National Transportation Safety Board suggested the bolts that secured the panel to the fuselage were removed at a Boeing factory and never reinstalled.

Now, federal prosecutors’ decision to challenge the 2021 deal may signal even more trouble for Boeing ahead — and a potential day in court for the families of victims of the 2018 and 2019 crashes in flights from Indonesia and Ethiopia, which together killed 346 people.

In January 2021, just days before President Joe Biden took office, federal prosecutors announced they were charging Boeing with one count of fraud for lying to federal regulators about the faulty flight system that caused the crashes. But the same day the Department of Justice announced the fraud conspiracy charge, it also announced that Boeing and prosecutors had signed a deferred prosecution agreement — a type of deal often offered in major corporate cases that shields the defendant from trial.

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The deal required Boeing to pay out sanctions of $2.5 billion (equivalent to 3 percent of Boeing’s 2023 revenue) and to implement a corporate-compliance program to prevent future instances of fraud, among other mandates. The deal expired this January, kicking off a six-month review period for prosecutors to decide whether the company had violated the agreement.

The Department of Justice said it met with the families of victims of the two Boeing crashes in April. The victims have been advocating for years for prosecutors to rescind the agreement. 

Paul Cassell, an attorney representing the families, wrote in an email that prosecutors would be meeting again with families on May 31. “We anticipate hearing more then about how the [Department of Justice] intends to move forward with prosecuting Boeing,” he said.

Boeing now has until June 13 to respond to the Department of Justice's allegations, and prosecutors said they will announce their plans for the case sometime before July 7. It’s not yet clear whether federal prosecutors will move forward and prosecute Boeing on the fraud charges. But now, this notice of violation has cleared the way for them to do so.

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