Prosecutors file plea deal with Boeing to resolve fraud allegations related to 737 Max crashes

The Justice Department on Wednesday presented Boeing with an agreement under which the aerospace giant will plead guilty to fraud charges that it misled U.S. regulators who approved the 737 Max passenger plane before two planes crashed and killed 346 people.

The detailed plea agreement was filed in a federal district court in Texas. The U.S. aerospace company and the Justice Department reached an agreement on the guilty plea and general terms of the agreement earlier this month.

The final version said Boeing admitted that it entered into an agreement through its employees “by unfair means” to defraud a Federal Aviation Administration group that was evaluating the 737 Max. Because of Boeing’s deception, the FAA had “incomplete and inaccurate information” about the plane’s flight-control software and how much training pilots would need to operate it, the plea agreement said.

District Judge Reed O’Connor could accept the agreement and sentence reached between Boeing and prosecutors, or he could reject it, which would likely lead to new negotiations between the company and the Justice Department.

The agreement calls for the appointment of an independent compliance monitor, three years of probation and a $243.6 million fine. It also requires Boeing to invest at least $455 million “in its compliance, quality and safety programs.”

Boeing has been accused of misleading the Federal Aviation Administration about aspects of the Max before the agency approved the plane to fly. Boeing failed to inform airlines and pilots about a new software system, called MCAS, that could point the plane’s nose down without pilot input if a sensor detected the plane was about to enter an aerodynamic stall.

Max planes crashed in Indonesia in 2018 and Ethiopia in 2019 after a sensor error caused the plane’s nose to pitch down and the pilots were unable to regain control of the plane.

Boeing avoided prosecution in 2021 by reaching a $2.5 billion settlement with the Justice Department that included a previous $243.6 million fine. The fraud charge appeared to be permanently dismissed until January, when a panel looking into a missed exit on an Alaska Airlines flight that blew up a 737 Max, prompting renewed scrutiny of the company’s safety record.

In May of this year, prosecutors said Boeing had failed to live up to the terms of a 2021 agreement by failing to make promised changes to detect and prevent violations of federal anti-fraud laws. Boeing agreed this month to plead guilty to the fraud case rather than endure a potentially lengthy public trial.

The role and authority of the monitor is seen as a key provision of the new plea agreement, according to experts in corporate governance and white-collar crime. Paul Cassell, a lawyer for the families, said the families of the crash victims should have the right to suggest a monitor, whom the judge appoints.

In Wednesday’s letter, the Justice Department said Boeing “has taken significant steps” to improve its anti-fraud compliance program since 2021, but the changes “have not been fully implemented or tested to demonstrate that they will prevent and detect similar misconduct in the future.”

That’s where an independent monitor will step in “to mitigate the risk of misconduct,” the settlement said.

Some of the passengers’ relatives plan to ask a judge to throw out the settlement. They want a full trial, stiffer penalties for Boeing, and many want current and former Boeing executives charged.

If a judge approves the deal, it would address criminal charges stemming from the 737 Max crashes. It would not resolve other issues, including potential litigation related to the Alaska Airlines scandal.

O’Connor will give the families’ lawyers seven days to file legal motions opposing the settlement. Boeing and the Justice Department will have 14 days to respond, and the families will have five days to respond to the company’s and the government’s motions.