Boeing Faces Potential Fraud Charges as US Justice Department Finds 2021 Settlement Violation

The US Justice Department has determined that Boeing violated the terms of a $2.5 billion settlement reached in January 2021, which shielded the company from criminal prosecution over two deadly crashes involving its 737 Max aircraft. The settlement, known as a deferred prosecution agreement (DPA), required Boeing to make changes to prevent future violations of federal anti-fraud laws.

Why this matters: This development has significant implications for the aviation industry and public trust, as it raises concerns about the accountability of major corporations in ensuring passenger safety. If prosecuted, Boeing could face severe penalties, which could have a ripple effect on the industry and lead to increased scrutiny of regulatory practices.

The Justice Department notified a federal judge in Texas of its determination on Tuesday. Boeing blamed the deception on two relatively low-level employees. The company has come under renewed scrutiny since a door-plug panel blew off a 737 Max jetliner during an Alaska Airlines flight in January. The FBI has told passengers from the flight that they might be victims of a crime.

Boeing confirmed it had received word from the Justice Department of its determination. "We believe that we have honored the terms of that agreement, and look forward to the opportunity to respond to the Department on this issue," Boeing stated.

The Justice Department's determination means that Boeing could be prosecuted for any federal criminal violation, including the charge of fraud that the company hoped to avoid with the $2.5 billion settlement. The Justice Department will decide whether to file charges against Boeing, with a decision expected by July 7. Prosecutors will meet with families of the crash victims on May 31.

Paul Cassell, a lawyer representing families of passengers who died in the Max crash in Ethiopia, called the determination a "positive first step" but emphasized the need for further action to hold Boeing accountable. Erin Applebaum, another lawyer for victims' family members, expressed hope that a prosecution would follow.

Investigations into the 2018 and 2019 crashes, which occurred in Indonesia and Ethiopia respectively, pointed to a flight-control system that Boeing added to the Max without telling pilots or airlines. The Justice Department investigated Boeing and settled the case in January 2021, with Boeing paying $2.5 billion in fines, compensation, and damages to airlines.

The 2021 settlement included a $243.6 million fine, a $500 million fund for victim compensation, and nearly $1.8 billion to airlines whose Max jets were grounded. Boeing has faced civil lawsuits, congressional investigations, and significant damage to its business since the crashes. The Justice Department's determination that Boeing violated the settlement agreement opens a new chapter in the company's legal troubles, potentially leading to fraud charges in a Texas federal court.

Key Takeaways

• US Justice Department finds Boeing violated $2.5 billion settlement terms over 737 Max crashes.
• Violation could lead to criminal prosecution, severe penalties, and industry scrutiny.
• Boeing blamed deception on two low-level employees, but Justice Department disagrees.
• Decision on prosecution expected by July 7; families of crash victims to meet with prosecutors.
• Violation opens new chapter in Boeing's legal troubles, potentially leading to fraud charges.