Boeing agrees to plead guilty to misdemeanor charges in Justice Department plea agreement

Boeing on Sunday pleaded guilty to a felony charge of conspiracy to defraud the federal government in connection with two deadly crashes of the 737 Max in 2018 and 2019, according to a court document filed late Sunday.

In the deal with the department, partly outlined in court filings, Boeing also agreed to pay a $487.2 million fine — the maximum allowed by law — and invest at least $455 million over the next three years to strengthen its compliance and safety programs.

The company will be placed on probation for three years, overseen by the Federal District Court for the Northern District of Texas. As part of the probation, the Justice Department will appoint an independent compliance monitor who will ensure that safety measures are in place and adhered to, and who will file an annual report with the government. The company will face additional penalties if any of the conditions are violated. The company’s board of directors will also be required to meet with the families of crash victims.

Boeing’s decision to plead guilty is significant because the company has not yet been convicted of a federal crime in decadesIn the filing, the department described the charge of conspiracy to defraud the federal government as “the most serious, readily provable offense.”

The deal reached Sunday stems from violations of a 2021 agreement Boeing made with the Justice Department that required it to make significant safety changes after the two deadly crashes. The department has made it a priority during the Biden administration to ensure that companies like Boeing adhere to such agreements.

The department and Boeing filed a joint filing Sunday night, telling the district court they had reached an agreement in principle. The formal agreement will be filed in the next week or so. The court will then schedule a hearing where the company can formally admit its guilt. The victims’ families will be able to speak at that hearing.

Families of the victims, who were briefed on the general outline of the deal a week ago, said it did not go far enough. Paul G. Cassell, a lawyer for more than a dozen families, said the families had sought an admission of guilt in the deaths of 346 people killed in crashes involving Boeing’s troubled 737 Max plane in Indonesia and Ethiopia in late 2018 and early 2019. The families had hoped for stronger consequences for the company and its executives, including a lawsuit.

The Justice Department acknowledged the families’ position in its court filing Sunday. In a separate document, the families said they will object to the deal and “intend to argue that the plea agreement with Boeing unfairly grants Boeing concessions that other criminal defendants would never receive and fails to hold Boeing accountable for the deaths of 346 individuals.”

Mr Cassell said the government’s deal with Boeing is “clearly not in the public interest”.

“This sweetheart deal fails to acknowledge that 346 people died because of Boeing’s conspiracy,” Mr. Cassell said. “Through devious lawyering between Boeing and the DOJ, the deadly consequences of Boeing’s crime are being hidden.”

Boeing’s decision to plead guilty does not provide immunity to employees or executives. And the deal does not shield it from charges that could arise from other investigations, including one into a Jan. 5 Alaska Airlines episode in which a panel blew up a Boeing 737 Max jet shortly after the plane took off from Portland, Oregon, airport. While the blowout caused no serious injuries, the incident could have been catastrophic had it happened minutes later, as the plane reached cruising altitude and flight attendants and passengers were moving about the cabin.

A Boeing spokeswoman confirmed that the company had reached an agreement with the Justice Department, but declined to comment further.

The deal is an update to a 2021 deferred prosecution agreement reached in the waning days of the Trump administration that allowed Boeing to avoid criminal charges in the two deadly crashes. The company has already paid $500 million in restitution to the victims’ families and $243.6 million in fines.

Boeing’s 2021 settlement required the company to refrain from wrongdoing for three years. In May, the Justice Department said Boeing breached the agreement because the company failed to “design, implement and maintain” an ethics and compliance program in its operations to prevent and detect violations of U.S. fraud laws.

As part of the 2021 settlement, the Justice Department said Boeing would have to pay only $243.6 million more if the company was in violation. But a judge will ultimately decide whether the 2021 payment counts toward the total fine, said a Justice Department official, who spoke on condition of anonymity to discuss the deal. The judge will also decide how much more restitution must be paid at sentencing.

The 2021 indictment targeted two Boeing employees accused of withholding information from the Federal Aviation Administration about changes Boeing made to flight control software that played a role in both crashes.

Under the settlement, Boeing paid more than $1.7 billion to its customers, in addition to fines and damages to victims’ families, for being unable to take delivery of their 737 Max jets during a 20-month global ban on the aircraft.

All told, Boeing has spent about $20 billion on the crashes, including fines, payments to families, refunds to airlines and other costs stemming from the FAA’s nearly two-year grounding of the 737 Max

The Justice Department has faced competing pressure over how to punish struggling Boeing, one of the largest U.S. exporters and a major employer of the government’s top defense contractors. In 2023, nearly 40 percent of the company’s revenue came from U.S. government contracts.

While full details of the deal were not included in Sunday’s public court record, Boeing is likely to receive assurances from the government that a felony conviction will be forthcoming. will not hinder its government contractsreducing the impact of the charges on the company’s operations, said Mark Lindquist, an attorney for the families of victims of the Max 8 crashes who is now representing passengers on the Alaska Airlines flight. Those waivers would be separate from the plea agreement, he said.

“While many of us would have preferred a more vigorous prosecution, a guilty plea to a crime is a serious step forward in accountability,” Mr. Lindquist said.