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Boeing reaches $2.5B settlement for conspiracy to defraud FAA

Boeing on Thursday agreed to a $2.5 billion with the Justice Department over charges that it engaged in a conspiracy to defraud the FAA over its 737 Max aircraft. File Photo by John Angelillo/UPI
Boeing on Thursday agreed to a $2.5 billion with the Justice Department over charges that it engaged in a conspiracy to defraud the FAA over its 737 Max aircraft. File Photo by John Angelillo/UPI | License Photo

Jan. 7 (UPI) -- Boeing on Thursday agreed to pay more than $2.5 billion in a settlement with the Justice Department related to charges that it conspired to defraud the Federal Aviation Administration.

The charges stem from a pair of crashes involving Boeing 737 Max plane in Indonesia and Ethiopia that left a combined 346 people dead and caused the aircraft to be grounded worldwide from March 2019 until late last year, the Justice Department said.

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Under Thursday's settlement, Boeing will pay a $243.6 million criminal penalty, $1.77 billion in compensation to its 737 MAX customers and establish a $500 million crash-victim beneficiaries fund to compensate those related to the victims of the crashes.

In its statement Thursday, the Justice Department said Boeing admitted in court documents that two of its 737 Max Flight Technical pilots "deceived" the FAA about how the Maneuvering Characteristics Augmentation System impacted the aircraft's flight control system.

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As a result a key document from the FAA as well as airplane manual and training materials for U.S. based airlines lacked vital information about the system.

"The tragic crashes of Lion Air Flight 610 and Ethiopian Airlines Flight 302 exposed fraudulent and deceptive conduct by employees of one of the world's leading commercial airplane manufacturers," said David Burns, the acting assistant attorney general of the Justice Department's Criminal Division. "Boeing's employees chose the path of profit over candor by concealing material information from the FAA concerning the operation of its 737 Max airplane and engaging in an effort to cover up their deception."

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On Dec. 29, American Airlines became the first U.S. carrier to return the 737 Max to commercial service in a 3-hour trip from Miami to New York City.

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