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Despite DOJ’s Promises, No Boeing Executives Prosecuted For Fraud Scheme

The Department of Justice has now failed a second time to bring criminal charges against corporate executives who broke the law, after announcing a new policy of bringing charges against corporate executives who broke the law.

The first failure was DOJ giving corporate executives at General Motors (GM) a complete pass for defrauding consumers and misleading regulators on a faulty ignition switch that killed over 120 people. Now, DOJ has let Boeing Corporation executives involved in a scheme to defraud the United States Air Force completely off the hook.

Last Wednesday, the DOJ announced that Boeing agreed to pay $18 million to settle charges related to violations of the False Claims Act, for submitting fraudulent labor charges to the US Air Force for maintenance of the C-17 Globemaster aircraft.

Boeing has annual revenues of roughly $90 billion, with much of the revenue coming from defense contracts with the US Air Force, $18 million is practically a rounding error for what DOJ describes in the press release settlement as an “aerospace and defense industry giant.”

In this instance, the Department of Justice had an incredibly strong case. Former Boeing employee James Webb started the ball rolling by bringing the allegations under the whistleblower provision of the False Claims Act. Webb claimed that Boeing employees at the company’s Long Beach Depot Center in California submitted false labor claims from 2006 to 2013.

How widespread the practice of submitting false labor claims was/is within Boeing and what level of corporate leadership was aware of the scheme remains unknown to the public. The Department of Justice went out of its way to make sure the press release on the settlement noted that “The claims resolved by today’s civil settlement are allegations only; there has been no determination of liability.”

Does Boeing have internal controls to prevent fraud like this? If so, did those individuals in more senior positions responsible for monitoring know about the false claims? Is chiseling the federal government on contracts a larger problem within Boeing? The DOJ appears uninterested in finding out.

Given Boeing’s proven conduct and DOJ’s permissive attitude, one can only wonder at what else the company is getting away with. So much for a new day at the Department of Justice.

Dan Wright

Dan Wright

Daniel Wright is a longtime blogger and currently writes for Shadowproof. He lives in New Jersey, by choice.