Boeing Agrees to Plead Guilty in 737 MAX Criminal Case

Plane maker faces conviction and a $244 million fine for misleading air-safety regulators before two fatal crashes that killed 346 people

[ABS News Service/08.07.2024]

Boeing increase; green up pointing triangle agreed to plead guilty to misleading air-safety regulators in the run-up to two deadly 737 MAX crashes, a stunning concession that would brand the world’s biggest aerospace company a felon.

Boeing will formally acknowledge guilt and accept fresh punishment over its dealings with the Federal Aviation Administration before two 737 MAX crashes that killed 346 people, according to a late Sunday court filing.

As part of a plea to one count of conspiracy to defraud the U.S., prosecutors have asked the company to pay a second $244 million criminal fine and spend $455 million over the next three years to improve its compliance and safety programs. Boeing also must hire an independent monitor for three years to oversee those improvements. A court still needs to sign off on the plea agreement.

Pleading guilty creates business challenges for Boeing. Companies with felony convictions can be suspended or barred as defense contractors. Boeing is expected to seek a waiver from that consequence. The company was awarded Defense Department contracts last year valued at $22.8 billion, according to federal data. Boeing and the Defense Department are in talks on the issue, a person familiar with the matter said.

Also as part of the plea agreement, Boeing’s board of directors agreed to meet with victims’ family members.

The plea deal falls short of what families of the MAX crash victims had wanted. They had asked federal prosecutors to seek a fine as high as about $25 billion, prosecute Boeing at trial without concessions, and pursue other charges against the company and executives they believe are responsible for the crashes. Justice Department officials have told the families they faced various legal hurdles, including a statute of limitations and a lack of evidence to prove alternative charges such as manslaughter beyond a reasonable doubt. An earlier attempt to prosecute a Boeing employee over the allegations failed at trial.

The company faces three years of court-supervised probation during which it could face additional penalties if it fails to comply with the terms. The decision was disclosed in a filing by the Justice Department in federal court in Fort Worth, Texas. Prosecutors asked the court to schedule a hearing in July on the plea agreement.

A Justice Department official said the deal holds the company accountable and protects the public.

Boeing confirmed that it reached the agreement and declined to comment further.

In another filing overnight, an attorney for the families signaled his clients would object to the DOJ’s deal with Boeing. “The families intend to argue that the plea deal with Boeing unfairly makes concessions to Boeing that other criminal defendants would never receive and fails to hold Boeing accountable for the deaths of 346 persons,” the attorney said in a filing.

The plea would wipe out a more lenient punishment Boeing received in January 2021, when prosecutors agreed to defer the criminal charge as long as the company stayed out of trouble. The government and Boeing were negotiating terms of the agreement through Sunday, the deadline for prosecutors to impose or dismiss the charge. Boeing’s board hasn’t yet approved a written plea agreement, which is expected to be made public by July 19, the court filing said.

Boeing admitted three years ago that two former employees misled the FAA about a new flight-control feature on the 737 MAX that wasn’t supposed to activate in normal flying conditions. In the fatal crashes in 2018 and 2019, pilots were unable to regain control after the planes’ noses were forced downward by repeated, erroneous activations of the flight-control system.

Prosecutors launched a criminal investigation shortly after the first accident, a Lion Air flight that crashed into the Java Sea in October 2018, causing 189 deaths. Authorities focused on how two Boeing employees communicated with the FAA about the cockpit feature before the regulator decided on pilot-training requirements for the new-model jet.

The department announced a settlement with Boeing in January 2021, the final days of the Trump administration. The company agreed to a deferred-prosecution agreement, a form of corporate probation. Boeing needed to successfully serve a three-year probationary period to have the charge dismissed.

As part of the 2021 deal, Boeing paid a $243.6 million criminal fine and $500 million to compensate the families of deceased passengers. Boeing avoided a corporate monitor at the time, even though some Justice Department attorneys argued internally at the time that it should be assigned one, The Wall Street Journal reported last month.

But the case has taken several volatile turns since then. First, prosecutors failed to notify the families of the crash victims about the terms of the original settlement, violating a law that protects the rights of crime victims. The families challenged Boeing’s settlement, saying it was too lenient. 

Then, a federal jury acquitted the only individual charged with the crime, a former Boeing pilot who had been accused of misleading the FAA about the new flight-control feature’s ability to activate in more routine flying conditions. Prosecutors said Mark Forkner was trying to save Boeing tens of millions of dollars by persuading regulators to approve lighter pilot-training requirements for the MAX. Forkner’s lawyers said he wasn’t aware of the change and didn’t lie to air-safety regulators.

Finally, the company’s settlement was upended in May 2024 when prosecutors said Boeing had failed to comply with a core requirement of its probationary agreement: maintaining an effective compliance program. That allowed prosecutors to void the settlement. The government last week told the company to plead guilty or face a criminal trial.

Boeing, which had already admitted to wrongdoing in its 2021 settlement, chose the plea. The families said in their own filing late Sunday that they want the judge overseeing the case, Reed O’Connor, to reject the plea.

Under federal rules, O’Connor can only approve or reject the plea. He can’t pick and choose pieces of the deal or change the terms. The Justice Department’s filing said the charge outlined in Sunday’s filing is “the most serious readily provable offense.”

Boeing still faces civil litigation over the crashes. It has accepted liability for the deaths of passengers killed in the second 737 MAX crash, a flight operated by Ethiopian Airlines. Boeing faces lawsuits filed by families whose relatives perished in the 2018 Lion Air crash, although Boeing has settled most of the claims.