Boeing is facing scrutiny from the Justice Department that could lead to criminal charges. But a department official involved in the case formerly consulted on behalf of the company — just one among many such officials with close corporate connections.
Families of victims of Ethiopian Airlines flight 302, a Boeing 737 Max 8 that crashed in 2019, display photos of their loved ones as Boeing CEO Dave Calhoun testifies before a subcommittee of the Senate Energy and National Resources Committee, Washington, DC, June 18, 2024. (Allison Bailey / Middle East Images / AFP via Getty Images)
JACOBIN
06.25.2024
06.25.2024
Aformer Boeing consultant is among the Justice Department officials who will soon determine whether the aviation behemoth will face criminal charges in the wake of two fatal plane crashes and ongoing safety problems, according to federal disclosures.
Additionally, Boeing’s top lobbyist — Ziad Ojakli, a former aide to President George W. Bush — has been at events with President Joe Biden at the White House at least five times since 2021, according to White House visitor log disclosures reviewed by us. Boeing’s CEO, David Calhoun, has attended events with Biden three times since 2022.
Though federal prosecutors have reportedly recommended criminal charges against the company, it is unclear whether those recommendations will be followed by the Biden administration, which has allowed corporate prosecutions to remain near record lows. Biden officials have handed out more than sixty deferred- or non-prosecution agreements in corporate cases, and the amount of money recovered in such cases has dramatically plummeted.
On Monday, Reuters reported that lower-level Justice Department prosecutors overseeing a 2021 criminal case against Boeing had recommended criminal charges against the company to top agency officials. The case was revived last month in the wake of recent high-profile safety scandals at the company.
But many of the top officials who are now deliberating on whether to charge Boeing come from some of the nation’s largest corporate law and consulting firms — and one previously worked on the company’s behalf.
Lisa Monaco, the deputy attorney general and second-in-command at the agency, had Boeing as a client during her time at WestExec Advisors, a consulting firm cofounded by Secretary of State Antony Blinken. In January 2021 as she was being appointed to her current position, Monaco reported owning between $1,001 and $15,000 of Boeing stock, according to financial disclosure forms; she reported the same in 2022. Monaco did not report Boeing stock holdings in her 2023 disclosure forms.
Other key players at the center of the Boeing deal are Nicole Argentieri, the acting chief of the Justice Department’s criminal division, and Glenn Leon, chief of the Justice Department’s criminal fraud section. Both have done time in the corporate world — and have a record of handing down agreements that are favorable to companies accused of misconduct like Boeing.
In the year since Argentieri took charge, the agency has offered industry-friendly deferred prosecution agreements and nonprosecution agreements — the same kind of deal that has allowed Boeing to avoid a trial on fraud charges — in nearly all major corporate fraud cases.
In five out of seven major fraud cases resolved over the last year, and in all cases that involved companies based in the United States, deferred prosecution agreements were offered, according to records of enforcement actions.
In recent years, the Department of Justice has prosecuted fewer corporations than ever, reaching a twenty-five-year low of cases against companies in 2021 and only moderately increasing since.In recent years, the Department of Justice has prosecuted fewer corporations than ever.
Instead, the department has encouraged companies to self-police by expanding their own corporate compliance programs, through which companies ensure they are abiding by applicable laws and regulations. If corporations have this self-policing system in place, they’re offered leniency in potential enforcement actions, Monaco and a former assistant attorney general said in two separate speeches on the matter.
Some advocates blame the revolving door between the high-paying corporate world and enforcement jobs at the Justice Department for the reluctance to go after companies like Boeing.
“As long as these top people at these enforcement agencies are then able to go into the private sector and get a salary that is three or five or ten times their government salary, there’s going to be a revolving door,” said Peter Reilly, a professor at Texas A&M University School of Law who is part of the legal team representing families of victims of the 2018 and 2019 Boeing crashes.
As a result, he said, decisions in major corporate cases will inevitably “be influenced by people looking out for what they want to do after their government job.”
Monaco is a prime example of this. She currently oversees national security matters and criminal prosecutions by the Justice Department, among other key roles. Monaco previously represented companies including Apple, ExxonMobil, and Kia Motors at O’Melveny & Myers LLP, which is reportedly one of the country’s highest-paying law firms.
Dozens of former O’Melveny & Myers employees have gone on to serve in high-level roles — such as secretaries of state and transportation, national security advisor, White House counsel, and other positions — in Democratic and Republican administrations, the law firm brags on its website.
While Argentieri has prosecutorial bona fides — spending a decade as a mob prosecutor in New York’s federal courts — she, too, has done stints in the lucrative world of white-collar defense. From 2018 to 2022, she was a partner at O’Melveny & Myers, during which time she was said to have “amassed a growing list of high-powered clients,” including billionaire private equity investor and Trump ally Tom Barrack.
“There are all of these people coming from Big Law, and at Big Law, they were defending these giant corporations,” said Andrea Beaty, research director at the Revolving Door Project, an organization that scrutinizes executive branch appointees. “And now they’re expected to be on the other side of the table.”The revolving door also works the other way around — many attorneys depart for private sector jobs after a stint in government.
Monaco’s relationship with Boeing, Beaty said, “speaks to the nonadversarial relationship” between these companies and the country’s top law enforcement officials.
And, as Beaty noted, the revolving door also works the other way around — many attorneys depart for private sector jobs after a stint in government. One lead prosecutor on the Boeing case in 2021 has since departed her work as US attorney for a job with Kirkland & Ellis, a white-collar defense firm that Boeing is now relying on for advice on its legal troubles. Boeing’s current chief legal officer, Brett Gerry, is also a Justice Department alum — and raked in $6.2 million from the company in 2022.
The Department of Justice did not return our request for comment.
Boeing Under Fire
Boeing’s controversial deferred prosecution agreement in 2021 came after two Boeing 737 Max planes crashed in 2018 and 2019, killing 346 passengers. The deal between the aerospace company and the Justice Department, which allowed Boeing and its senior executives to avoid criminal prosecution on fraud charges, was shrouded in secrecy and came in the Trump administration’s final days as the former president was grabbing headlines for his role in the Capitol insurrection.
At the time, victims’ family members alleged that the prosecutors working under Trump broke the law when they failed to consult with family members before the deal was finalized.
After a Boeing plane suffered a midflight blowout at ten thousand feet over Portland this January, exposing ongoing issues with Boeing’s planes, pressure to hold the company accountable for its shoddy manufacturing intensified. Experts told us that the 2021 immunity deal, which expired just days after the near catastrophe, could come under question as reports of fraud at Boeing and its subcontractors surfaced in the wake of the incident.
Specifically, whistleblowers at Spirit AeroSystems, a Boeing subcontractor, allegedly told company officials about an “excessive amount of defects” in the manufacturing process in the months leading up to the midflight blowout, according to federal documents revealed by us.
In May, federal prosecutors notified Boeing that they believed the company had violated the terms of the immunity deal — the first step to reviving the criminal fraud case from 2021. Now, the Justice Department has until July 7 to actually bring those charges, as some prosecutors have reportedly recommended.
The families of victims are demanding that the Justice Department take action.
In an April letter sent to criminal fraud section chief Leon, a lawyer representing victims’ families said federal prosecutors laid out five key areas where they believed Boeing violated the deferred prosecution agreement. The letter also highlighted how the families have been kept in the dark regarding false statements by the Trump-run Justice Department, how the prosecution agreement was reached, and why the case was filed in a Texas court known to issue corporate-friendly rulings, among other issues.The families of victims are demanding that the Justice Department take action.
“Many observers have wondered why the Justice Department strangely chose to file its conspiracy charge against Boeing in the Fort Worth Division of the Northern District of Texas,” the letter states. “Seattle, Chicago, and [Washington] D.C. all seem much more obvious choices — not to mention more potentially convenient locations for the victims’ families.”
Last week, families sent another letter addressed to Leon and Argentieri demanding that the agency pursue criminal charges against Boeing. They also are seeking a $24.8 billion fine against the company over the 2018 and 2019 crashes.
“These are some of the strongest people I’ve ever met in my life, and all they want is justice for their loved ones and safety for the flying public,” said Reilly, the professor and advocate for the victims’ families. “And they will continue to work at this until they get it.”
Yet it’s unclear where the Justice Department will ultimately land.
Monday’s report from Reuters, which suggested that some prosecutors on the case had asked for charges, was preceded by a New York Times report that the Justice Department is, instead, leaning toward an independent monitor.
“If the prosecutors want to prosecute, who are the high officials within [the Justice Department] serving as a block to that happening?” Reilly said of the rumors circling around the deliberations.
Though he said he did not know the answer to that question, he guessed that the Justice Department’s political appointees — the same ones who previously consulted for Boeing and worked for major corporate law firms — were the most likely roadblock.
“Without Fear of Retaliation”
The Boeing deferred prosecution agreement was signed in January 2021 under the Trump administration — around the time when the use of these immunity deals was particularly popular in cases of corporate misdeeds.
Deferred prosecution agreements originated as a tool for prosecutors to grant a reprieve to low-level offenders for petty crimes. But over the last two decades, they have become a tool for big corporations to avoid facing a trial — or a guilty plea — in some of the country’s biggest corporate misconduct cases.Over the last two decades, deferred prosecution agreements have become a tool for big corporations to avoid facing a trial — or a guilty plea — in some of the country’s biggest corporate misconduct cases.
The use of such agreements reached a high in 2015 and 2016, and has fallen slightly in recent years. But Biden’s Justice Department continues to deploy them, despite criticism that they are essentially a free pass for companies. Unlike plea deals, judges don’t review deferred prosecution agreements, which allow the agreements to be far more lenient.
Aside from the Justice Department’s robust antitrust division, which has been revitalized under the Biden administration, corporate prosecutions under the leadership of Monaco and Attorney General Merrick Garland have been sluggish.
In the fall, Argentieri defended the criminal division’s use of deferred prosecution agreements, telling lawmakers at a Senate hearing that the agreements “are not a pass,” under bipartisan pressure to ramp up enforcement.
Regardless of the ultimate outcome in the Boeing case, the fact that the Justice Department challenged the immunity deal at all was a sign of how much pressure the case had brought on prosecutors, said Beaty, the researcher at the Revolving Door Project.
“If the DOJ [Department of Justice] were to hold Boeing accountable, obviously that would be extremely encouraging,” said Beaty. “But this would be unusual in the overall trend of how they handle these types of cases.”
In March 2023, the Justice Department’s Criminal Division issued a memo on corporate compliance programs, stating that prosecutors should consider “the adequacy and effectiveness of the corporation’s compliance program at the time of the offense, as well as at the time of a charging decision.”
“Prosecutors should assess whether the company’s complaint-handling process includes proactive measures to create a workplace atmosphere without fear of retaliation, appropriate processes for the submission of complaints, and processes to protect whistleblowers,” the memo states. “The company’s top leaders — the board of directors and executives — set the tone for the rest of the company.”
This type of workplace atmosphere has clearly not been set at Boeing: during a Senate hearing on June 18, Boeing CEO David Calhoun admitted that whistleblowers were retaliated against.
“We have taken action on people who have retaliated,” Calhoun told senators during the hearing.
Despite her previous clientele, Monaco has claimed in the past that she has “no tolerance” for corporate misconduct as a prosecutor. “We will hold those that break the law accountable,” she said in one 2021 speech.
In the case of Boeing, Monaco and her colleagues have a matter of days left to make their decision.
You can subscribe to David Sirota’s investigative journalism project, the Lever, here.
CONTRIBUTORS
Katya Schwenk is a journalist based in Phoenix, Arizona.
Freddy Brewster is a freelance reporter and has been published in the Los Angeles Times, NBC News, CalMatters, the Lost Coast Outpost, and other outlets across California.
Helen Santoro is a journalist based in Colorado.
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