Air Industries Pleads Guilty to Shipping Defective Parts : Courts: The Garden Grove company and a former executive admit to felony charges over fasteners sold to Boeing.
Admitting that they shipped defective airplane fasteners to Boeing Co. and other contractors, Air Industries Corp. in Garden Grove and one of its former executives have pleaded guilty to felony charges of mail fraud, federal authorities said Friday.
As part of the guilty plea, entered this week in federal court in Seattle, Air Industries agreed to pay $3.1 million in fines, restitution and investigation costs.
Air Industries, a 450-employee firm that continues to be a major supplier of fasteners to Seattle-based Boeing, pleaded guilty to three counts of mail fraud.
Daniel Arredondo, the former vice president of sales at Air Industries, pleaded guilty to one count of mail fraud. Arredondo, 53, of Dana Point faces a maximum penalty of five years in jail, although he is more likely to receive probation, said Bruce Carter, assistant U.S. attorney in Seattle.
The guilty pleas conclude the criminal investigation that began in April, 1992, with a federal raid of Air Industries’ corporate offices.
The raid stemmed from a whistle-blower lawsuit filed by two senior technicians who said in their complaint that in 1990 they started gathering evidence of defective fasteners being shipped to customers.
That civil suit, filed in federal court in Los Angeles, is pending.
“This strengthens our case quite a bit,” said William Ramsey, a Valencia attorney representing the two whistle-blowers, who stand to receive as much as 25% of money recovered from their lawsuit, which is being pursued jointly with the federal government.
Sam Higgins, Air Industries chairman and president who is named as a defendant in the whistle-blower suit, was out of town Friday and unavailable for comment, his secretary said. Other top executives of the company also were unavailable Friday. The company’s attorney in Los Angeles did not return phone calls.
Shortly after the 1992 raid, Higgins told The Times: “We are confident that, after a thorough investigation, the U.S. attorney’s office will issue a statement exonerating the company.”
But federal authorities said Friday that Air Industries admitted that the company falsified test results and shipped parts that did not meet specifications. In 1992, some Air Industries employees told authorities that falsifying test records went back to 1988.
Authorities said many of these defective fasteners were actually placed on a variety of aircraft. Experts said these so-called structural fasteners hold up wings and other parts of airplanes.
U.S. Atty. Kate Pflaumer said Friday that no accidents have been traced to the defective parts.
Officials at Boeing, Air Industries’ biggest customer of these fasteners, had no comment on the guilty pleas.
