What You Need to Know About Boeing’s Plea Deal in Two Plane Crashes

Federal prosecutors and victims’ families are waiting for Boeing to decide whether to accept a plea deal that would settle a criminal fraud charge accusing the aerospace giant of misleading regulators who approved the 737 Max airliner before two of the planes crashed.

Relatives of some of the 346 people who died in the October 2018 and March 2019 crashes are furious about the plea offer, which Justice Department prosecutors detailed in an online meeting with the families and their attorneys Sunday.

Families want to take Boeing to court.

“This plan provides another opportunity for Boeing to hide its wrongdoing from the public,” Ike Riffel, a California man whose two sons died in the second 737 Max crash, said Monday. “The families are very disappointed, but we are committed to continuing to fight.”

Paul Cassell, a former federal judge who represents some of the victims’ families, called the settlement “very beneficial” to Boeing.

Some lawyers involved in the case, however, believe a plea deal is better than nothing.

“While I personally would have preferred a more vigorous prosecution, a guilty plea to a felony is a serious step forward” from a 2021 settlement between Boeing and the Justice Department, said Mark Lindquist, a lawyer who is suing Boeing on behalf of passengers who survived a terrifying 737 Max crash earlier this year.

The Justice Department first charged Boeing with fraud in January 2021, but agreed not to prosecute if the company paid a fine and complied with other conditions for three years. Then, seven weeks ago, the department said Boeing had violated the deferred prosecution agreement by failing to make changes to detect and prevent future violations of anti-fraud laws. Prosecutors have not publicly disclosed the alleged violations.

Here are some questions asked about this case.

What is Boeing accused of?

The Justice Department wants Boeing to plead guilty to a single count of fraud for misleading the Federal Aviation Administration (FAA) about the 737 Max’s new flight-control software and the level of training that pilots of older 737 models would need to fly the plane safely. As part of the 2021 agreement, Boeing blamed the deception on two low-level employees, one of whom was later acquitted after a trial in federal court.

Is Boeing likely to accept the plea offer?

The company doesn’t say. Lawyers for the victims’ families say the company would be crazy to reject the request.

If Boeing accepts the offer, it will plead guilty at the end of a hearing that will likely be very brief. If it declines the offer, the Justice Department has committed to taking the case to trial, which would reveal more details about Boeing’s actions as it asked the FAA to certify the Max.

Can a judge block the deal?

Yes. The Justice Department’s proposed motion and sentence, which includes a $244 million fine and the appointment of a monitor to oversee the deal, would be filed in federal court in Fort Worth, Texas. If Judge Reed O’Connor accepts the deal, he would not be able to change the terms agreed to by Boeing and prosecutors.

If the judge rejects the plea deal, Boeing and the Justice Department could try to negotiate a new deal or go to trial.

“The families will almost certainly object to Judge Reed O’Connor and ask him to deny the motion if Boeing grants it,” said Robert Clifford, another attorney for the Lion Air and Ethiopian Airlines families.

Would a guilty plea lead to more civil lawsuits against Boeing?

This would strengthen the hand of victims’ families who have not yet settled their ongoing lawsuits against the company. It is less clear whether survivors and heirs who have already agreed to settlements will be able to file new complaints.

Does the plea offer affect other Boeing investigations?

This would only resolve the fraud charge filed after the two fatal accidents, which occurred off the coast of Indonesia and in Ethiopia.

The Justice Department has opened a new investigation after a panel covering an unused emergency exit blew off aboard a 737 Max during an Alaska Airlines flight in January; the FBI told passengers on that flight they could be victims of a crime. The National Transportation Safety Board and the Federal Aviation Administration are conducting separate investigations into the explosion and Boeing’s manufacturing quality.

Is Boeing’s purchase of a key supplier linked to its recent troubles?

Boeing said Monday it will pay $4.7 billion to acquire Spirit AeroSystems, a maker of fuselages for the 737 Max, in an all-stock transaction. Fitch Ratings said the deal should help Boeing better control the pace of 737 Max production and will have no near-term impact on the company’s credit rating, even though Boeing will assume about $3.6 billion of Spirit debt.

Will the acquisition improve security?

Boeing formerly owned Spirit and believes bringing the supplier back in-house will help it improve quality and ease safety concerns about its planes.

Manufacturing errors by suppliers can end up in finished products. The Alaska Airlines explosion occurred after bolts were not reinstalled after a repair at Boeing — workers had to fix rivets that had been damaged when Spirit’s fuselage arrived — according to a preliminary NTSB report.

What are the other potential implications of a Boeing plea?

A criminal conviction can jeopardize a company’s reputation as a federal contractor, and Boeing is a prominent case. The company builds planes for the Defense Department and built a space capsule for NASA.

Joseph Facciponti, executive director of New York University School of Law’s program on corporate compliance and enforcement, said the plea could be written so that a Boeing subsidiary pleads guilty, allowing the rest of the company to avoid debarment. However, in many cases, agencies have discretion to avoid debarring companies.

“I don’t think the government wants to lose the ability to contract with Boeing, so there’s always the possibility for government agencies to allow a company that’s been convicted of a crime like this to continue to do business with them,” Facciponti said.

The case against Boeing could also affect the Justice Department’s approach to entering into deferred prosecution agreements with other companies or individuals.

Peter Reilly, a law professor at Texas A&M University who has written about these agreements, also known as DPAs, says federal prosecutors have increasingly used them in recent years to settle serious allegations against companies while avoiding the expense and uncertain outcome of a trial.

A landmark case was the 2015 settlement with General Motors over accusations that the automaker broke the law by covering up a deadly problem with the ignition switches of small cars, he said.

Congress approved DPAs as part of the Speedy Trial Act of 1974 to expedite cases involving misdemeanors and first-time offenders, Reilly said. He believes Boeing’s DPA was particularly weak and should prompt Congress to crack down on their use.

“Do people realize this is what happens when Boeing admits to committing a very serious crime and 346 people die?” Reilly said.

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Cathy Bussewitz in New York contributed to this report.