Oxnard Defense Firm Is Charged With Fraud : Contracts: The company and owner are accused of failing to repair engine parts for Air Force’s largest cargo plane.
An Oxnard defense firm that repaired used engine parts for the U.S. Air Force’s largest cargo plane was indicted Wednesday on charges of failing to do required repairs, falsifying maintenance records, and overcharging the government.
Dixon Aircraft Components and owner Rudolf Augustus Dixon also are accused of disguising and selling worn-out and obsolete engine parts to commercial airlines in a 50-count indictment issued by a federal grand jury in Los Angeles.
The specific charges include mail fraud, wire fraud and conspiracy to defraud the Department of Defense, the Federal Aviation Administration and civilian aircraft parts companies, according to the indictment.
“He would buy a part for $500 that essentially had scrap value, and with a minimum effort and some technical expertise, he would transform it into a part sold for $25,000,” Assistant U.S. Atty. George B. Newhouse Jr. said. “There is a safety risk, obviously, because the safety regulations and oversight by the FAA has been circumvented.”
The indictments came 2 1/2 years after the FBI opened an investigation when one of Dixon’s employees reported alleged cheating in the government contract. The employee had become alarmed about the quality of work while watching news coverage of Operation Desert Storm, Newhouse said.
The Defense Criminal Investigative Service, the U.S. Air Force Office of Special Investigations and the U.S. Department of Transportation also assisted in the investigation.
Newhouse, who is prosecuting the case, said the charges related to civilian aircraft are potentially more serious than those related to work on military planes.
The company’s $1.5-million contract with the Air Force covered work on engine components for the giant C-5 transport plane, which is powered by four engines.
The parts Dixon sold to civilian companies are used in helicopters and smaller, turboprop planes.
“The chances of there being a problem resulting in loss of engine power and potentially a crash are better when you only have two engines,” Newhouse said.
Federal investigators, however, have found no crashes or equipment failures linked to parts sold by Dixon’s company. It is difficult to measure the danger, Newhouse said, because the parts had different levels of wear and were altered in different ways.
The indictment names four aviation companies that unknowingly bought illegally altered parts from Dixon. They are Turbine Traders of Monrovia, Aviation Sales of Dallas, International Helicopter Inc. of Norwood, N.J., and Aerotech World of Purchase, N.Y.
One engine part was also sold to now-defunct Pan Am Express and Hawaiian Airlines.
In 1990, the company was awarded the $1.5-million contract to work on an engine component of the Air Force’s fleet of giant C-5 cargo planes.
The metal parts, called combustion liners, separate a jet engine’s moving parts from the extreme heat generated in the combustion chamber where oxygen and fuel react.
Because the liners can develop cracks from the heat, they are inspected periodically, Newhouse said.
The C-5 transport planes are the mainstay of the Air Force’s supply network. They were used heavily during Operation Desert Storm and are now being used in Somalia, Newhouse said.
According to the indictment, Dixon allegedly ordered his employees to omit key maintenance steps required under the Air Force contract because they were too costly and time-consuming.
“They were steps he knew the Air Force would never know if they’d been done or not,” Newhouse said. “There’s a lot of money to be made if you have an unscrupulous operator.”
Dixon would then order employees to falsely certify that the repairs had been done according to FAA standards, the grand jury alleged.
In addition, Dixon is accused of submitting fraudulent claims for work and of overcharging the government for parts purchased in connection with the repairs.
In June, 1991, Dixon allegedly purchased seven combustion liners from Ontario Air Parts Inc. for $7,500 each. He then inflated the price to $42,000 in his bill to the government, the indictment says.
Dixon, 57, was born in Jamaica and is a U.S. citizen. He learned his trade while working at a Pratt & Whitney’s aircraft manufacturing plant in Canada during the 1960s, Newhouse said.
Dixon began doing business at 1100 Mountain View Ave. in Oxnard around 1986. He employed up to 30 employees at one time. The company is no longer operating in Oxnard. Authorities are unsure whether Dixon has begun doing business elsewhere.
Newhouse said Dixon was believed to be in Texas on Wednesday evening. Dixon could not be reached for comment.
The indictment comes 21 months after federal authorities raided Dixon’s Oxnard facility and seized records and engine parts as evidence. The investigation began in 1991 when an employee told federal authorities of widespread cheating at the company.
