FOR
IMMEDIATE RELEASE
Friday, May 1, 1998
Contact: Jeff Nelligan OIG Communications Director
Telephone: (202) 366-6312
OIG 11-98
GUILTY
PLEAS ANNOUNCED IN ONE OF LARGEST EVER
SUSPECTED UNAPPROVED PARTS SETTLEMENTS
The U.S. Department of Transportation’s Office of Inspector General today announced guilty pleas in one of the largest settlements ever in a case involving suspected unapproved aircraft parts (SUPS). Arrow Air has pleaded guilty and agreed to pay a $3 million criminal fine and $2 million in restitution for falsifying records pertaining to the origin of parts removed from two Boeing 727 aircraft.
"The safety risks associated with suspected unapproved aircraft parts have received close attention from our offices," said Inspector General Kenneth M. Mead. "The first-rate law enforcement work that went into this case and the large size of the settlement should serve as a clear warning to any individual or company that contemplates trafficking in SUPS."
Arrow is charged with "parting out" parts from two Boeing 727 aircraft during 1994 and 1995. "Parting out" is a process that takes place when it is no longer economically feasible to operate an aircraft and the aircraft is disassembled, with certain parts removed for use on other aircraft. Prior to being parted out, both aircraft had been operated outside the United States by foreign air careers and did not hold U.S. airworthiness certificates.
More than 3,000 parts removed from the aircraft were transferred to a parts sales company, AAA Interair, Inc. (AAA), a company which at the time had a common owner and shared several common directors and officers. "Equipment Transfer Tags" placed on most of the parts by Arrow’s inspectors were marked to make it appear that they were in serviceable condition under Federal Aviation Administration (FAA) regulations and could therefore be installed in commercial aircraft holding U.S. airworthiness certificates without further inspection or testing. In fact, the required inspections necessary to insure airworthiness were never conducted. The illegally tagged parts transferred to AAA included gyros, main landing gear assemblies, steering computers, navigational computers and other flight critical parts.
Arrow will pay the maximum criminal fine of $3 million under the penalty provisions of federal law. Additionally, the plea agreement calls for a restitution payment of $2 million to the Center for Aerospace Safety Education (CASE), associated with Embry-Riddle Aeronautical University in Daytona Beach, Fla. In consultation with the FAA, CASE will use the money to promote aviation safety through research and education programs with a special emphasis on the problems associated with the production, distribution, and use of unapproved parts in civil aviation.
Organizations involved in the case included special agents from the Office of Inspector General, FAA Inspectors, and the FBI.
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