Boeing Charged With Criminal Fraud And Ordered To Pay Over $2.5 Billion Over 737 MAX

Illustration for article titled Boeing Charged With Criminal Fraud And Ordered To Pay Over $2.5 Billion Over 737 MAX
Photo: Drew Angerer / Staff (Getty Images)

Just when you thought Boeing’s troubles with the 737 MAX were over, the U.S. Department of Justice delivers a whopper. The DOJ charged Boeing with one count of conspiracy to defraud the United States. The charges come nearly 22 months after the 737 was grounded following two crashes that killed 346 people.

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On Thursday, the DOJ filed charges in U.S. District Court in the Northern District of Texas. As part of a deferred prosecution agreement, the aircraft manufacturer will pay over $2.5 billion to the government, airlines and families of crash victims. From the Department of Justice:

The criminal information charges the company with one count of conspiracy to defraud the United States. Under the terms of the DPA, Boeing will pay a total criminal monetary amount of over $2.5 billion, composed of a criminal monetary penalty of $243.6 million, compensation payments to Boeing’s 737 MAX airline customers of $1.77 billion, and the establishment of a $500 million crash-victim beneficiaries fund to compensate the heirs, relatives, and legal beneficiaries of the 346 passengers who died in the Boeing 737 MAX crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302.

While that $2.5 billion is a decent chunk of cash, only $500 million of it is allocated for families of crash victims.

The DOJ issued harsh criticism of Boeing’s actions as valuing profit over transparency and safety. It attributes the FAA’s failure to ensure the 737 MAX was safe to Boeing’s fraud.

“The tragic crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302 exposed fraudulent and deceptive conduct by employees of one of the world’s leading commercial airplane manufacturers,” said Acting Assistant Attorney General David P. Burns of the Justice Department’s Criminal Division. “Boeing’s employees chose the path of profit over candor by concealing material information from the FAA concerning the operation of its 737 Max airplane and engaging in an effort to cover up their deception. This resolution holds Boeing accountable for its employees’ criminal misconduct, addresses the financial impact to Boeing’s airline customers, and hopefully provides some measure of compensation to the crash-victims’ families and beneficiaries.”

“The misleading statements, half-truths, and omissions communicated by Boeing employees to the FAA impeded the government’s ability to ensure the safety of the flying public,” said U.S. Attorney Erin Nealy Cox for the Northern District of Texas. “This case sends a clear message: The Department of Justice will hold manufacturers like Boeing accountable for defrauding regulators – especially in industries where the stakes are this high.”

Boeing admitted in court documents it deceived the FAA regarding the Maneuvering Characteristics Augmentation System (MCAS) meant to stabilize planes at a high angle of attack. Angle of Attack is the angle between the wing and the airflow rushing past the airplane. Because of Boeing’s coverup, documents from the FAA lacked information about MCAS, as did airplane manuals and pilot training manuals.

This case has sparked multiple Congressional inquiries, a Department of Transportation investigation and a wave of lawsuits including everyone from airlines to pilots of the 737 MAX aircraft. Public confidence in the FAA and Boeing took a toll in the aftermath of the MAX scandal.

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Thankfully, the 737 MAX itself is now safe to fly and returned to the friendly skies on December 29 with American Airlines. Like some other planes that got a rocky start — the McDonnell Douglas DC-10 comes to mind — hopefully, the fixed MAX planes enjoy successful and safe careers. Flying remains the safest way of travel and I wouldn’t think twice about flying on a MAX.

Staff Writer at Jalopnik and learning pilot. Smart Fortwo (x4), Honda Beat, Suzuki Every, AmTran Bus, VW Jetta TDI (x2), VW Touareg, Audi TT, Buell Lightning, Triumph Tiger, Genuine Stella...

DISCUSSION

byronayoung
Byron Young

Boeing admitted in court documents it deceived the FAA regarding the Maneuvering Characteristics Augmentation System (MCAS) meant to stabilize planes, as Jason Torchinsky described as “the angle between the wing and the airflow rushing past the airplane.”

Not exactly, the angle between the wing and the airflow is the Angle of Attack. The MCAS system modifies the pitch trim of the aircraft based on pilot commands and flight sensor data. The failure of the 737's single non-redundant AoA sensor could lead the MCAS system to incorrectly pitch the nose of the aircraft down.