Lawyers say US wants Boeing to admit to fraud over fatal crashes

The U.S. Justice Department is pressing Boeing to plead guilty to fraud charges related to two fatal crashes of its 737 Max jets, according to several people who heard federal prosecutors outline details of the proposed deal on Sunday.

Boeing will have until the end of the coming week to accept or reject the offer, which includes the aerospace giant agreeing to an independent monitor to oversee compliance with anti-fraud laws, they said.

The case stems from the department’s finding that Boeing breached an agreement to resolve a 2021 allegation that it conspired to defraud the U.S. government. Prosecutors alleged at the time that Boeing misled regulators that approved the 737 Max and set training requirements for pilots to fly the plane, blaming two relatively low-ranking employees for the fraud.

The Justice Department told relatives of some of the 346 people who died in crashes in 2018 and 2019 about the proposal to address their guilt during a video meeting. Family members who want Boeing to face a criminal trial and pay a $24.8 billion fine reacted angrily. One of them said that prosecutors gaslighted families; another shouted at them for several minutes when given the chance to speak.

“We are nervous. They should just take it to court,” said Nadia Milleron, a Massachusetts resident whose 24-year-old daughter Samya Stumo died in the second of two 737 Max crashes. “It’s just a rework to get Boeing out of trouble.”

FILE – A plane flies over a sign at Boeing Co.’s newly expanded 737 delivery center, Oct. 19, 2015, at Boeing Field in Seattle. The U.S. Justice Department plans to propose that Boeing plead guilty to fraud in connection with two deadly plane crashes involving 737 Max jets, according to two people who heard federal prosecutors detail the offer Sunday, June 30, 2024. (AP Photo/Ted S. Warren, File)

Photo: ASSOCIATED PRESS/Ted S. Warren

Prosecutors told the families that if Boeing rejects the settlement offer, the Justice Department will take the matter to court, participants in the meeting said. Justice Department officials presented the offer to Boeing during a meeting Sunday, according to a person familiar with the situation.

Boeing and the Justice Department declined to comment.

The settlement would preclude U.S. District Judge Reed O’Connor from increasing Boeing’s sentence, and some families plan to ask a Texas judge to throw out the settlement if Boeing agrees to it.

“The fundamental outrageous part of this agreement is that it does not acknowledge that 346 people died as a result of Boeing’s wrongdoing,” said Paul Cassell, one of the lawyers for the victims’ families. “Boeing will not be held accountable for this and they are not going to admit that this happened.”

Sanjiv Singh, a lawyer for 16 families who lost loved ones in the October 2018 Lion Air crash off the coast of Indonesia, called the settlement offer “extremely disappointing.” The terms, he said, “looked like a lovers’ deal to me.”

Another lawyer representing families suing Boeing, Mark Lindquist, said he asked Glenn Leon, head of the Justice Department’s fraud section, whether the department would add additional charges if Boeing rejected the settlement. “I wouldn’t do it one way or the other,” Lindquist said.

The meeting with families of crash victims came weeks after prosecutors told O’Connor that the U.S. aerospace giant had breached a January 2021 agreement that shielded Boeing from criminal penalties over the crashes. The second was in Ethiopia, less than five months after the one in Indonesia.

A conviction could jeopardize Boeing’s status as a federal contractor, some legal experts say. The company has large contracts with the Pentagon and NASA.

However, federal agencies can grant waivers to companies convicted of crimes to preserve their right to government contracts. Lawyers for the families of the crash victims expect this to be the case with Boeing.

Boeing paid a $244 million fine as part of a 2021 settlement on the original fraud charge. The Justice Department will likely seek another, similar penalty as part of the new settlement offer, said a person familiar with the matter, who spoke on condition of anonymity to discuss the ongoing case.

The deal would include a monitor overseeing Boeing — but the company would field three candidates and the Justice Department would choose one or ask Boeing for additional names. This provision was particularly hated by family members at the interview, participants said.

The Justice Department also has given no indication it intends to bring criminal charges against a current or former Boeing executive, another long-awaited request from the families.

Lindquist, the former prosecutor, said officials made clear in an earlier meeting that individuals — even CEOs — can be more sympathetic defendants than corporations. Officials pointed to the 2022 acquittal of Boeing’s chief technical pilot for the Max on fraud charges as an example.

It’s unclear what impact the settlement might have on other investigations into Boeing, including investigations into a panel called a door stopper being dislodged from the side of a Boeing Max 9 during a January flight with Alaska Airlines.