Probe expands beyond Boeing 737 Max, includes Dreamliner

By Steve Miletich / The Seattle Times

Federal prosecutors have subpoenaed records from Boeing relating to the production of the 787 Dreamliner in South Carolina, where there have been allegations of shoddy work, according to two sources familiar with the investigation.

The subpoena was issued by the Department of Justice, the sources said. DOJ also is conducting a criminal investigation into the certification and design of the 737 Max after two deadly crashes of that jetliner.

The 787 subpoena significantly widens the scope of the DOJ’s scrutiny of safety issues at Boeing.

The two sources who revealed the subpoena spoke on condition of anonymity because of the confidential nature of the inquiries.

A third source said a handful of subpoenas were issued in early June to individual employees at Boeing’s 787 Dreamliner production plant in North Charleston, South Carolina.

DOJ spokesman Peter Carr, in Washington, D.C., declined to comment Friday. A Boeing spokesman said, “We don’t comment on legal matters.”

It wasn’t clear if the subpoena served on the company was issued by the same prosecutors overseeing the 737 Max investigation. But the third source, also speaking on condition of anonymity because of the confidentiality of the inquiries, said the subpoenas to employees at the South Carolina plant came from the “same group” of prosecutors involved in the 737 Max investigation, including DOJ trial attorneys Cory Jacobs and Carol Sipperly in the Fraud Section.

Boeing divides its Dreamliner production between the South Carolina assembly plant, which rolled out its first plane in 2012, and the sprawling Everett facility where it has built jets for decades. The 737 Max is built in Renton.

Federal prosecutors in Washington, D.C., have been looking into the development of the 737 Max, including a new flight-safety control system known as MCAS, after one crash on Oct. 29 off Indonesia and another in Ethiopia on March 10. Those disasters killed 346 people and led to worldwide grounding of the plane.

The grand-jury investigation into the Max has been cloaked in secrecy, but some of the Justice Department’s activities have become known as prosecutors issued subpoenas for documents. The Department of Transportation’s Inspector General and the FBI are working with the DOJ.

A Seattle Times story in March detailed how Federal Aviation Administration managers pushed its engineers to delegate more of the certification process for the 737 Max to Boeing itself. The Times story also detailed flaws in an original safety analysis that Boeing delivered to the FAA.

Allegations relating to the 787 Dreamliner have centered on shoddy work and cutting corners at the company’s South Carolina plant.

While there are differences in the 737 and 787 matters, prosecutors are likely looking into whether broad cultural problems run throughout the company, according to the third source and a person in South Carolina, who also spoke on condition of anonymity because of the sensitive nature of the matter.

That could include pressure to sign off on faulty work to avoid delays in delivering planes to customers, the source said.

The New York Times reported in April that the North Charleston plant has been plagued by production issues and weak oversight that threatened to compromise safety.

Production ran years behind schedule, due to manufacturing and supplier problems, before the plane entered service in 2011.

The newspaper, citing a review of hundreds of pages of internal emails, corporate documents and federal records, as well as interviews with current and former employees, described a culture that often valued production speed over quality. Confronting manufacturing delays at the plant, Boeing pushed its workforce to quickly turn out Dreamliners, at times ignoring issues raised by employees, the newspaper reported.

The Dreamliner, introduced in 2007 and billed as Boeing’s most important new plane in a generation, featured lightweight carbon-fiber fuselage and advanced technology.

Initially assembled just in Everett, it was popular with airlines, prompting Boeing to break ground on a second Dreamliner plant in 2009 in South Carolina, which has the lowest percentage of union members of any state in the country.

Last year, the Everett plant produced 55% of the 145 Dreamliners that Boeing delivered, while the South Carolina factory delivered the rest. The biggest 787, the -10 model, is assembled only in South Carolina.

The entire fleet was grounded in January 2013 after two battery-overheating incidents: a battery fire on an empty 787 parked at the gate at Boston airport, then a smoldering battery on a flight in Japan that forced an emergency landing. The FAA lifted the grounding in April 2013 after Boeing modified the jets with beefed-up batteries, containment boxes and venting tubes.

In the 737 Max investigation, prosecutors appear to be getting information from someone with inside knowledge of the plane’s development based on the questions they are asking, the third source said.

That investigation was opened after the first crash, a highly unusual step for prosecutors after one crash, prompting speculation that someone had come forward with information, the source said.

Still, prosecutors appear to be trying to figure out whether a crime occurred, given the general scope of their questions, the source said.

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Prosecutors will be looking for any evidence of the “hallmarks of classic fraud” — misrepresentation to federal regulators and customers, one of the sources said, comparing the investigation with the Justice Department’s probe of Volkswagen that led to criminal charges in an emissions scandal.

In 2017, Volkswagen pleaded guilty to three criminal felony counts and agreed to pay a $2.8 billion criminal penalty as a result of the company’s scheme to sell diesel vehicles in the U.S. by cheating on emissions tests mandated by the Environmental Protection Agency and the California Air Resources Board.

Boeing has not been charged with any crime related to the 737 crashes or the 787 production.