U.S. judge orders Boeing arraigned on MAX fraud charge

By David Shepardson

(Reuters) -A federal judge on Thursday ordered Boeing Co to appear in court on Jan. 26 to be arraigned on a 2021 felony charge after families of those killed in two fatal crashes objected to a 2021 plea deal.

Boeing won immunity from criminal prosecution as part its $2.5 billion January 2021 Justice Department deferred prosecution agreement over a 737 MAX fraud conspiracy charge related to the plane’s flawed design.

The families argued that the Justice Department “lied and violated their rights through a secret process,” and asked U.S. District Judge Reed O’Connor to rescind Boeing’s immunity from criminal prosecution.

O’Connor, of the Northern District of Texas, in Fort Worth, ruled in October that people killed in two Boeing 737 MAX crashes are legally considered “crime victims,” and family members had urged him to require Boeing to be legally arraigned on the felony charge.

Boeing and the Justice Department declined comment.

O’Connor directed any lawful representatives of those that identified as “crime victims” who intend to appear to be heard at the proceedings must provide notice and “an appropriate person appear at the arraignment on behalf” of Boeing.

The crashes in 2018 and 2019 in Indonesia and Ethiopia, which cost Boeing more than $20 billion, led to a 20-month grounding for the best-selling plane and prompted the U.S. Congress to pass legislation reforming airplane certification.

Both Boeing and the Justice Department oppose reopening the deferred prosecution agreement, which included $500 million in victim compensation, a $243.6 million fine and $1.7 billion in compensation to airlines.

The Justice Department said in 2021 “misleading statements, half-truths, and omissions communicated by Boeing employees to the (Federal Aviation Administration) impeded the government’s ability to ensure the safety of the flying public.”

The Justice Department said in a November court filing it did not oppose an arraignment for Boeing but opposes undoing the agreement, saying it “would impose serious hardships on the parties and the many victims who have received compensation.”

Boeing said in November it opposes any effort to reopen the agreement, calling it “unprecedented, unworkable, and inequitable” and noted it has been complying with the agreement for nearly two years.

In September, Boeing agreed to pay $200 million to settle civil charges by the Securities and Exchange Commission it misled investors about the MAX.

Polish national airline PLL LOT in October asked O’Connor to declare it a crime victim in the MAX criminal case, a move that could make the airline eligible for significant compensation.

(Reporting by David Shepardson; Editing by Leslie Adler and Marguerita Choy)

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