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What laws could investigators use to pursue a case against Boeing?

Boeing 737 MAX 9 airplane
In this file photo taken on March 12, 2019, a worker is pictured next to a Boeing 737 MAX 9 airplane on the tarmac at the Boeing Renton Factory in Renton, Washington. - Boeing. PHOTO | AFP| FILE 

Aircraft manufacturers like Boeing rarely face a criminal investigation resulting from plane crashes. But last fall a grand jury in Washington, D.C., issued a subpoena for records after the crash of a Lion Air 737 Max plane.

In the wake of the recent Ethiopian Airlines crash involving similar circumstances, the FBI has joined that investigation.

The New York Times described Boeing’s push to develop the 737 Max as “frenetic” and reported that prosecutors and regulators are investigating whether that led Boeing “to miss crucial safety risks and to underplay the need for pilot training.”

But what federal criminal laws are the investigators looking at as they pore over Boeing’s records? Both the Justice Department and Boeing have declined to comment on the criminal inquiry.

One statute they may consider is the federal false statements law.

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The broad statute is used when a company provides information to a federal agency like the Federal Aviation Administration to certify the safety of a plane, and it makes it a crime to provide an agency with “any materially false, fictitious, or fraudulent statement or representation” about a matter that comes within its jurisdiction.

Faulty data

Investigators will examine whether Boeing made any false statements regarding a new software system added to avoid stalls in Boeing’s 737 Max series.

Investigators suspect that faulty data from sensors on both planes may have caused the system, known as MCAS, to malfunction.

Boeing’s chief executive has said that the automated flight system played a role in the two crashes.

Boeing also charged extra for two safety features on its 737 Max jets that might have helped the pilots detect erroneous sensor readings to avoid problems with the software.

Investigators likely will examine whether Boeing made any misstatements about the upgrades or if the company failed to disclose possible safety problems to the FAA without those upgrades.

The false statement law covers not only outright lies, but also submissions in which a person “falsifies, conceals, or covers up” information submitted to a federal agency.

There have been a number of prosecutions involving false statements to the FAA under the statute. Most of those cases, though, involve pilots who fail to disclose information that might result in the agency revoking or refusing to renew a license.

The challenge to bringing a false statement charge is that the government must show they were made “knowingly and willfully.” That means negligence by Boeing would not be enough to prove a violation.

The criminal investigation also could examine whether Boeing violated a law adopted in 2000.

Intent to defraud

The statute makes it a crime to “knowingly and with intent to defraud” to falsify or conceal a material fact about an aircraft part or to make “any materially fraudulent representation” about a part.

It can be applied to conduct outside the United States so long as the company is organized under the laws of this country, which, as a Delaware corporation, Boeing is.

The aircraft fraud parts law carries stiff penalties, including a fine of $10 million for each violation by a company and a sentence of up to life in prison for individuals charged if the part involved was the “proximate cause” of a malfunction that resulted in death.

A conviction also could result in a criminal forfeiture of “any property constituting, or derived from, any proceeds that the person obtained, directly or indirectly, as a result of the offence.”

If there is evidence of fraud and not just false statements, the Justice Department could also pursue a wire fraud case.

Prosecutors used that law against General Motors for the failure of ignition switches in certain models that caused a number of deaths, along with a charge under the false statement law.

In addition, the auto parts maker Takata pleaded guilty to a wire fraud charge for installing faulty air bag inflaters.

Federal prosecutors have a number of options if there is evidence that Boeing intentionally provided false or misleading information to the FAA. The investigation is still in a preliminary stage, and there is no guarantee that a criminal case will emerge.

For the company, there is danger in any criminal investigation because even the hint of possible misconduct could have significant consequences as it tries to deal with the fallout from crashes of its best-selling aircraft.

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