Father, son admit fraudulent titanium sales to defense subcontractor

John H. Durham, United States Attorney for the District of Connecticut, announced that John J. Palie, Jr., 62, of Tiverton, Rhode Island, and John J. Palie III, 42, of Plymouth Mass., waived their right to be indicted and pleaded guilty June 27, 2018, before U.S. District Judge Stefan R. Underhill in Bridgeport, Conn., to fraud offenses stemming from their having sold titanium to a Connecticut defense subcontractor. 
(U.S. Dept. of Justice photo)

John H. Durham, United States Attorney for the District of Connecticut, announced that John J. Palie, Jr., 62, of Tiverton, Rhode Island, and John J. Palie III, 42, of Plymouth Mass., waived their right to be indicted and pleaded guilty June 27, 2018, before U.S. District Judge Stefan R. Underhill in Bridgeport, Conn., to fraud offenses stemming from their having sold titanium to a Connecticut defense subcontractor. (U.S. Dept. of Justice photo)

NEW HAVEN, Conn. --

John H. Durham, United States Attorney for the District of Connecticut, announced that John J. Palie, Jr., 62, of Tiverton, R.I., and John J. Palie III, 42, of Plymouth, Mass., waived their right to be indicted and pleaded guilty June 27, 2018, before U.S. District Judge Stefan R. Underhill in Bridgeport, Conn., to fraud offenses stemming from their having sold titanium to a Connecticut defense subcontractor.

 

The case is being investigated by the Defense Criminal Investigative Service, the U.S. Department of Defense Office of Inspector General, the U.S. Air Force Office of Special Investigations Procurement Fraud Detachment 6, Operating Location-A, Hanscom Air Force Base, Mass., and the U.S. Department of Transportation, Office of Inspector General.  The case is being prosecuted by Assistant U.S. Attorney Henry Kopel.

 

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 in West Bridgewater, Massachusetts, that acquired and sold specialty metals, including titanium. John Palie III was a manager at A&P, responsible for, among other things, the purchase and sale of titanium, and the preparation of titanium orders for shipment and delivery to customers. 

 

In pleading guilty, Palie Jr., and Palie III admitted they arranged two separate titanium sales to a Connecticut-based aircraft parts manufacturer involving 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.

 

In April and May 2012, Palie Jr., and Palie III arranged a sale of 11 pieces of titanium to the 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. The order listed the engine manufacturer as the end buyer of the titanium.

 

In 2013, Palie Jr., and Palie III arranged another sale of titanium to the Connecticut aircraft parts manufacturer with the engine manufacturer as the end buyer.  In August 2013, 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. Due to concerns about the quality of the titanium, the engine manufacturer directed the aircraft parts manufacturer not to accept it. Palie III agreed to replace the 400 pieces with other titanium that satisfied the quality standard in question. 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. In November 2013, Palie III had the falsely labeled pieces, along with false certificates, shipped back to the aircraft parts manufacturer.

 

The government contends the losses sustained by the multiple victim companies purchasing fraudulently misrepresented titanium total $1,328,000.

 

Palie Jr., and Palie III each pleaded guilty to two counts of mail fraud, an offense that carries a maximum term of imprisonment of 20 years on each count. Judge Underhill scheduled sentencing for September 19, 2018.

 

Palie Jr. and Palie III were released pending sentencing.