A federal judge in Texas scheduled a June 23 trial for Boeing (BA, Financials) in a criminal fraud case centered on the company's alleged misrepresentations to U.S. regulators about flight control software in its 737 MAX aircraft.
U.S. District Judge Reed O'Connor suddenly decided to delay a previously scheduled April 11 deadline for both parties to modify a suggested plea deal and instead let the matter go to trial. The sudden shift was not explained by the judge.Boeing had been charged by the Department of Justice earlier with violating a 2021 deferred prosecution agreement. Federal prosecutors now claim the agreement let the firm escape criminal punishment in return for certain stipulations not fulfilled.In July 2023, Boeing agreed to plead guilty to a charge of conspiracy to defraud the United States and pay up to $487.2 million in penalties. The deal also called for an independent monitor to supervise safety and compliance improvements over three years, costing $455 million. In early 2024, O'Connor turned down the plea bargain, citing a clause on diversity and inclusion as objectionable.The Wall Street Journal claims Boeing is now trying to cancel the suggested plea agreement completely. The firm said in a statement that it was in "good faith discussions" with the Department of Justice about a prospective settlement.The complaint originates from the company's alleged fraud on the Federal Aviation Administration about the Maneuvering Characteristics Augmentation System, or MCAS, a software component in two deadly accidents in 2018 and 2019 in Indonesia and Ethiopia. Three hundred forty-six people died in the accidents, which caused the worldwide suspension of the 737 MAX fleet.O'Connor called Boeing's behavior "the deadliest corporate crime in U.S. history" in 2023. Families of accident victims have pressed authorities to go with full criminal prosecution and turn down any fresh plea deal. Erin Applebaum, a lawyer for 34 Ethiopian Airlines disaster victim families, termed the prior settlement a "sweetheart deal."The trial announcement comes after January 2024 revived safety worries when a door panel on an Alaska Airlines (ALK, Financials) 737 MAX plane came loose mid-flight. Though the event increased the continuous examination of Boeing's production and safety procedures, no casualties were recorded.
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