Pleas Entered in $1.3M Aerospace Subcontracting Fraud Case

MANCHESTER, CT — A father-and-son business team has reached a plea agreement in a case of bad metal being sent to a company that manufactures aerospace parts, a leading prosecutor said.

John H. Durham, United States attorney for the District of Connecticut, said that John J. Palie Jr., 62, of Tiverton, RI and John J. Palie III, 42, of Plymouth, MA waived their right to be indicted and entered guilty pleas Wednesday before U.S. District Judge Stefan R. Underhill in Bridgeport to fraud offenses stemming from their having sold titanium to a Connecticut defense subcontractor.

According to court documents and statements made in court, John Palie Jr. is the owner and chief executive officer of A&P Alloys, Inc., a company based West Bridgewater, MA, that "acquired and sold specialty metals," including titanium. John Palie III was a manager at A&P, and was responsible for, among other things, the purchase and sale of titanium, and the preparation of titanium orders for shipment and delivery to customers, case records indicate.

In pleading guilty, the Palies admitted that they arranged two separate titanium sales to a Connecticut-based aircraft parts manufacturer that involved "false representations about the source and quality of the titanium."

The aircraft parts manufacturer supplies titanium parts to "a company that manufactures aircraft engines," including engines for U.S. Air Force fighter jets, according to Durham.

According to case records, in April and May of 2012, the Palies arranged a sale of 11 pieces of titanium to a Connecticut aircraft parts manufacturer, representing that the titanium had been certified as "meeting an advanced aerospace quality standard" when, in fact, it had never been certified as such, Durham said.

The order listed the engine manufacturer as the end buyer of the titanium.

In 2013, the Palies arranged another sale of titanium to a Connecticut aircraft parts manufacturer with the engine manufacturer as the end buyer, Durham said.

n August 2013, John Palie III arranged for 400 pieces of titanium, along with certificates stating that the titanium originated from a particular mill and satisfied an advanced aerospace quality standard, to be delivered to the aircraft parts manufacturer, Durham said. Due to "concerns about the quality of the titanium, the engine manufacturer directed the aircraft parts manufacturer not to accept the titanium," Durham said.

John Palie III agreed to replace the 400 pieces with other titanium that satisfied the quality standard in question, but, instead of replacing the titanium, he arranged for the returned 400 pieces to be sandblasted and re-stamped with the manufacturer’s mark of a different titanium mill so that they appeared to be replacements for the returned pieces, Durham said.

In November 2013, John Palie III had the falsely labeled pieces, along with false certificates, shipped back to the aircraft parts manufacturer, Durham said.

The government contends that the losses sustained by "multiple victim companies" that purchased "fraudulently misrepresented titanium" total $1.328 million, according to case records.

John Palie Jr. and John Palie III each pleaded guilty to two counts of mail fraud, an offense that carries a maximum prison term of 20 years on each count.

Judge Underhill scheduled sentencing for Sept. 19. Both Palies are released pending sentencing, Durham said.

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