Probe of Counterfeit Aircraft Parts Ensnarls Mission Viejo Man

An Orange County consultant was charged with conspiracy, and officials at two Los Angeles area companies were implicated in a scheme that resulted in the placement of counterfeit parts in military and commercial planes, according to court documents filed Wednesday in Seattle.

The scheme was outlined in federal court as Bruce J. Rice, president of Rice Aircraft Inc of Hauppauge, N.Y., pleaded guilty to one count of conspiracy and two counts of mail fraud in connection with the sale of the counterfeit parts. The firm pleaded guilty to one count each of conspiracy and mail fraud.

Assistant U.S. Atty. Bruce Clark said no accident had been attributed to the parts, which were rivets and other fasteners sold between 1977 and 1988.

One way Rice Aircraft was able to sell its used parts was through an alleged kickback scheme, according to court records. The company paid kickbacks to employees of competitors in order to get advanced looks at their bids on important projects. It is alleged that Rice Aircraft would take that information and then underbid its rival firms, thereby winning significant contracts.

Richard K. Ohlman, a Mission Viejo parts broker, was charged Wednesday with conspiring in 1982 with Rice and Rice Aircraft to pay kickbacks to employees of Boeing Co.

Officials at Hi-Shear Corp. in Torrance and Deutsch Fastener Corp. in Lakewood--both parts manufacturers--allegedly accepted kickbacks from Rice.

Ohlman, 70, declined comment when contacted at his home Wednesday. If convicted, he faces up to five years in jail and a $5,000 fine.

Employees at Hi-Shear and Deutsch Fastener were not charged with a crime because they had agreed to cooperate as witnesses in the government’s case against Rice, Clark said.

Clark said the employees at Hi-Shear and Deutsch were acting on their own and not at the direction of management. Neither company has been accused of wrongdoing.

Besides getting bid information, the employees allegedly supplied Rice Aircraft with test reports that were used to indicate that the counterfeit parts had met safety specifications even though they had not.

Rice Aircraft’s scheme worked this way, according to documents filed by the U.S. attorney’s office: It took used or damaged nuts, bolts and rivets and had them stripped and replated. It then sold the parts as new under the original manufacturer’s trademark.

“There were in excess of a thousand transactions detailed involving aerospace manufacturers and airlines throughout the Free World,” Clark said. Federal officials said they have been unable to identify and retrieve all of the counterfeit parts.

Among the airlines that purchased the used parts were United, American, Air France, TWA, Pan Am and Varig. They were used for everything from ensuring the integrity of the aircraft’s structure to keeping panels inside the aircraft from coming loose.

Bruce Rice, 42, faces up to five years in prison and has agreed to pay a $500,000 fine. The U.S. District Court in Seattle could impose an additional $250,000 fine and order restitution of up to $1 million. Rice Aircraft has agreed to pay a $50,000 fine.

The Rice case grew out of a tip from an anonymous whistle blower in his company and was investigated by a special federal task force called Northwest Defense Contracting.

The Seattle task force, made up of the FBI, IRS and several other agencies, has been investigating criminal practices in the aircraft parts and supply business.

During the last year, counterfeit fasteners, ball bearings, valves and circuit breakers have surfaced throughout the nation. They have been found in numerous areas where public safety is a concern including nuclear plants, commercial airliners, missiles and school buses.