Boeing Pleads Guilty to Felony Fraud in 737 Max Jet Crashes

ON 07/09/2024 AT 07 : 26 AM

The biggest aircraft manufacturer in the world took a plea after lying to the government about what really happened in two crashes which killed 346 people.
Artist's rendering of Lion Air Boeing 737 Max crash.
Artist's rendering of what the Lion Air Boeing 737 Max crash in October 2018 might have looked like. The plane crashed into the Java Sea off the coast of Indonesia in October 2018 shortly after takeoff. Investigators later proved the cause was a problem with Boeing's automated anti-stall avionics software in the still very new aircraft. Trillions graphic, with AI

The deal reached between the DOJ and Boeing is one which should not fly, as it avoids any real criminal accountability on Boeing’s part and was arranged without any regard for the families of those who lost siblings, parents, and children in the tragedies. But it will anyway as the U.S. Defense Department and Boeing need each other, however corrupt the underlying crimes might be.

The case began when Boeing re-engineered its successfully 737 aircraft models and created the 737 Max. The new model included multiple refinements designed to improve fuel economy and improve overall performance of the craft. Among the many changes were its new CFM LEAP-1B engines which were more efficient; a new wing design with split-tip winglets, also created to produce less drag; nose landing gear enhancements; new pneumatic systems; and significantly changed avionics and sensor systems. It also included new software to manage control of the aircraft, to augment what the pilots could control directly all the way to brand new autopilot systems.

With so many improvements which would offer lower operational costs for aircraft owners, and other important updates which made the new version of the aircraft highly desirable to many customers, Boeing rushed the product to market in May 2017. It sold well. But on October 29, 2018, just a year and five months after the first commercial 737 Max made its maiden flight for Malindo Air, a 737 Max jet operated by Indonesia’s Lion Air lost control and plunged into the waters of the Java Sea only 13 minutes after takeoff. All passengers and crew were killed in that crash, for a total of 189 fatalities.

Despite the terrifying nature of the crash and intense investigations as to why it happened were ongoing, Boeing and aircraft regulators allowed the plane to continue to fly.

Six months later, on March 10, 2019, Ethiopian Airlines Flight 302 took a nosedive only six minutes after becoming airborne. It hit the ground in Bishoftu, Ethiopia, breaking apart in a fiery crash that killed 157 people this time, including all passengers and crew once again.

After temporarily grounding all 737 Max aircraft and intensive investigations on behalf of the Federal Aviation Administration and others, a root cause was discovered behind the two crashes. It involved issues with the plane’s MCAS (Maneuvering Characteristics Augmentation System) software, a system which helps prevent the jet from stalling during climbs, and flaws with sensors which provide data to MCAS. In the case of the Lion Air disaster, it was discovered the pilot did not know MCAS could automatically force the nose of the craft down. When that happened shortly after takeoff, the Lion Air jet pushed itself into a dive in the water long before the pilot had any idea what was going on. In the Ethiopian Airlines situation, the pilots knew the new MCAS system could push the nose downwards without any action on their part. But on their craft there was a faulty sensor which triggered the MCAS to tip the jet towards the ground. It happened so fast that the pilots did not have enough time to prevent the crash.

After further detective work, it was revealed that Boeing was aware of issues with MCAS when it released its test data to secure flight-ready approval from the Federal Aviation Administration in 2016 and early 2017. It was aware pilots would need additional training to understand and be able to handle the significantly different handling characteristics and automation systems in the new planes. It was also aware of scenarios like those which happened in both crashes which would require special actions by the pilots. Yet Boeing never put in place the necessary increased pilot training required to ensure safe operation of the new aircraft, a fault which might have prevented both accidents. It reportedly did so because that training would add to purchase costs for the new jets, since routine training is normally part of the package of what Boeing sells.

Boeing also chose to hide the information about the flaws with MCAS from the FAA rather than disclose something which might delay the new aircraft entering the global market.

The Department of Justice sued Boeing for these actions in 2021. Like in the current case, it settled with Boeing out of court. While the plane manufacturer acknowledged what it had done in endangering literally tens of thousands of people who had flown on the 737 Max jets before it was revealed why the Lion Air and Ethiopia Airlines planes had crashed, no guilt was found in the case and Boeing did not admit to any crimes.

Under that settlement, made provided Boeing ensured better testing would go forward for future aircraft, thecompany had to pay $2.5 billion in damages. It also had to fix the root cause issues in MCAS and the sensors and ensure more extensive pilot training for these planes. It also had to certify that everything it had said to the regulators during the investigation was full and accurate.

It is understood Boeing revealed to the DOJ at the time at least some of the information about what they held back from the FAA when they secured original approval to introduce the 737 Max aircraft for commercial use.

Boeing also signed off then on a three-year probation agreement with the government, under which it would follow strict guidelines of disclosure for future activities and questioning brought by the FAA, the National Transportation Safety Board, and other official actors within the Department of Transportation.

Not long after the initial settlement, regulators learned Boeing were still misleading them about internal compliance processes in general and other matters more directly tied to the 737 Max case.

The Department of Justice filed suit again, arguing that by continuing to lie Boeing had violated the terms of the 2021 settlement agreement. Among its allegations were that two Boeing test pilots involved in the certification of the jets deliberately withheld information about their own testing of the new MCAS systems in this craft.

This time the DOJ pressed for a criminal trial, charging Boeing with felonies related to its misdeeds regarding the 737 Max.

Yesterday, after being given a deadline of July 7 to decide what to do about the case, Boeing filed legal papers that day agreeing to plead guilty to one felony count of conspiracy to defraud the U.S. Government, by lying to the Federal Aviation Administration.

It is the same charge the DOJ filed against Boeing in 2021, but the plea deal reached then included no admission of guilt.

The guilty plea was entered into court and made public yesterday. According to the agreement, Boeing will pay a fine of $487.2 million in direct penalties and must lay out another $455 million over multiple years to tighten internal safety programs and compliance methodologies. It must also be submitted to oversight by an independent monitoring committee. The manufacturer will also be put on another three years’ probation, with strict legal compliance required with all these steps or it will face additional charges.

The settlement also stipulates that Boeing must invite the families of the victims of the 2018 and 2020 crashes to a special meeting of Boeing’s Board of Directors, where they can air their grievances and listen in person to whether the board or the company show remorse. The families will also be looking for proof the company has changed the way it operates so that nothing like the 737 Max disaster will ever happen again.

No executive will be held liable for any actions because of this settlement, as is typical for white collar crimes of this sort. This is even though the actions to deceive regulators and public were deliberate, and the individuals responsible could easily be charged with criminal negligence.

The amount of money Boeing is being asked to pay is also meaningless, at least compared to how much profit the aerospace enterprise makes. It pulled in $7.677 billion in earnings in 2024, so the initial payout of $487.2 million it owes the DOJ represents only 6.3% of that. Considering that those profits are also up by 50.53% compared to what it made in 2023, numbers driven substantially by massive military aid outlays for warplanes and weaponry to keep the Ukraine War going and support Israel’s genocide in Gaza, Boeing can easily absorb that minor write-down on its books.

The deal was also concocted, negotiated, and agreed upon without any consultation with the families of those who died because of what Boeing did.

The Department of Justice issued a statement after this week’s settlement came out which tried to sound tough despite how much they let Boeing get away with.

“This criminal conviction demonstrates the department’s commitment to holding Boeing accountable for its misconduct,” it said in an oral comment on the settlement.

Boeing’s response was even more vague. Instead of detailing anything about their guilty plea, their statement it had signed off on an “agreement in principle in terms of a resolution with the Justice Department subject to the memorialization and approval of specific terms.”

The moment the plea deal was approved, attorneys for the plaintiffs filed objections to the plea arrangement.

One came from Paul Cassell, lead attorney for the plaintiffs and a professor at the University of Utah’s S.J. Quinney College of Law.

“Through crafty lawyering between Boeing and DOJ, the deadly consequences of Boeing’s crime are being hidden,” Cassell said about what just went down.

Erin Applebaum, an attorney who helped advise Cassell during the prosecution of the case, and who is a partner at the firm Kreindler & Kreindler, said her firm and Cassell’s were “extremely disappointed that DOJ is moving forward with this wholly inadequate plea deal despite the families’ strong opposition to its terms.”

Even with the legal challenge to the DOJ plea deal with Boeing, it is unlikely either that this new deal will be overturned because of the plaintiffs’ opposition or that it will change in any substantive way.

One reason is the nature of the case, which is one filed by the DOJ itself rather than the plaintiffs, so they have full authority to negotiate without any legal precedent requiring them to consider the victims’ families’ concerns.

Another is Boeing is too important to the U.S. government for any settlement to harm the company’s ability to operate, almost no matter how big the crimes it might commit. This is partly because Boeing is the biggest aircraft maker in the world, and with Europe’s Airbus controls 99% of the world’s large aircraft market. Boeing is also such a key supplier to the U.S. Defense Department that the Pentagon would never tolerate the DOJ messing much with the company’s ability to continue to supply it. To put that in numbers, in 2023 37% of Boeing’s net revenue came from government contracts. That jumped to 47% in for the January-March 2024 quarter.

All that said, there are Defense Department regulations which block it from signing contracts with companies found guilty of felony fraud, whether by jury trial or a plea deal like this. Negotiations are already under way between the Secretary of Defense, the Department of Justice, and Boeing to grant the necessary exceptions in this matter to keep its part of the military-industrial complex cranking away at full capacity, regardless of Boeing’s latest admission of defrauding the government.