Nasa Says Metals Fraud Caused $700M Satellite Failure(bloomberg.com)
bloomberg.com
Nasa Says Metals Fraud Caused $700M Satellite Failure
https://www.bloomberg.com/news/articles/2019-05-01/nasa-says-aluminum-fraud-caused-700-million-satellite-failures
229 comments
The deferred prosecution agreement essentially means that as long as the SEI adheres to the financial terms of the plea agreement the government will eventually drop the charges [0]. That's an amazing deal in its generosity and I'm sure that the financial penalties levied are outweighed by the financial gain realized over the years of their fraudulent activity. The rationale for not pursuing the company for the full $700 million dollars lost escapes me. The damages were entirely foreseeable.
[0] http://www.mololamken.com/news-knowledge-18.html
[0] http://www.mololamken.com/news-knowledge-18.html
> rationale for not pursuing the company for the full $700 million dollars lost escapes me
Satellites are usually insured. (Not sure about NASA protocol, though.) If that’s the case, the insurer will sue. Shareholder lawsuits will also, naturally, follow, as will suits from all the other customers.
Agree, though, that it’s shocking nobody is going to jail in relation to a fraud guilty plea.
Satellites are usually insured. (Not sure about NASA protocol, though.) If that’s the case, the insurer will sue. Shareholder lawsuits will also, naturally, follow, as will suits from all the other customers.
Agree, though, that it’s shocking nobody is going to jail in relation to a fraud guilty plea.
> it’s shocking nobody is going to jail in relation to a fraud guilty plea.
They are though. From the justice.gov article:
"Dennis Balius, the SPI testing lab supervisor, led a scheme to alter tests within SPI’s computerized systems and provide false certifications with the altered results to customers. Balius also instructed employees to violate other testing standards, such as increasing the speed of the testing machines or cutting samples in a manner that did not meet the required specifications. Balius pleaded guilty in July 2017 and was sentenced to three years in prison and ordered to pay over $170,000 in restitution."
You can't send SPI to jail though, because it isn't a human.
They are though. From the justice.gov article:
"Dennis Balius, the SPI testing lab supervisor, led a scheme to alter tests within SPI’s computerized systems and provide false certifications with the altered results to customers. Balius also instructed employees to violate other testing standards, such as increasing the speed of the testing machines or cutting samples in a manner that did not meet the required specifications. Balius pleaded guilty in July 2017 and was sentenced to three years in prison and ordered to pay over $170,000 in restitution."
You can't send SPI to jail though, because it isn't a human.
On top of all that, if it was human it wouldn't have the ability to file for any meaningful type of bankruptcy here in the States. Corporations have it made.
Theoretically you could sentence a corporation to community service. I.e., forcibly rewrite its charter into that of a social benefit corporation, where the social-benefit goals are “doing whatever the government says.” Sort of half-way between commandeering a resource and nationalizing a corporation.
Staff are at-will. The only thing a government really gets from that is the corporation’s assets, which it would rather have in cash than in i.e. durable equipment. Hence fines.
The problem lately, though, is that the government has been really conservative at metting out an appropriate amount of fines. Human beings are regularly deprived of decades of their lives for silly stuff like possession - if a corporation is forced to pay more than a quarter's profits everyone gets up in arms.
So I agree that a collection of liquid assets is more reasonable, but it the volume is an issue.
So I agree that a collection of liquid assets is more reasonable, but it the volume is an issue.
>because it isn't a human.
This is especially interesting in the context of corporate personhood[1]. You can't send a corporation to jail, but you can disband it entirely, or prevent it from operating. A lot of the practical solutions try to leave badly behaving company operating, though, since if we shut them down there is a lot of collateral damage in the form of lost productivity in the economy and lost jobs. IANAL, but my opinion is that there needs to be a better non-nuclear option for an actual guilty conviction for corporations. As I understand it, if a company actually goes to trial and is convicted, they are not allowed to operate anymore, hence the plea deals and fines.
Please correct me if I am wrong, though.
[1]https://en.wikipedia.org/wiki/Corporate_personhood
This is especially interesting in the context of corporate personhood[1]. You can't send a corporation to jail, but you can disband it entirely, or prevent it from operating. A lot of the practical solutions try to leave badly behaving company operating, though, since if we shut them down there is a lot of collateral damage in the form of lost productivity in the economy and lost jobs. IANAL, but my opinion is that there needs to be a better non-nuclear option for an actual guilty conviction for corporations. As I understand it, if a company actually goes to trial and is convicted, they are not allowed to operate anymore, hence the plea deals and fines.
Please correct me if I am wrong, though.
[1]https://en.wikipedia.org/wiki/Corporate_personhood
In the context of insolvency, a less culpable state, needless asset and job wastage was addressed for railroads by barring liquidation while displacing management with a board of trustees and stripping owners of their equity and voting power.
I'm not sure why equity holders of malfeasant corporations having criminal culpability should fare better than equity holders of corporations that suffer misfortune. The distinction creates a moral hazard.
I'm not sure why equity holders of malfeasant corporations having criminal culpability should fare better than equity holders of corporations that suffer misfortune. The distinction creates a moral hazard.
> A lot of the practical solutions try to leave badly behaving company operating, though, since if we shut them down there is a lot of collateral damage in the form of lost productivity in the economy and lost jobs.
There's a lot of collateral damage with sending the family's breadearner, or a mother, or a father to jail, but we do it anyways.
There's a lot of collateral damage with sending the family's breadearner, or a mother, or a father to jail, but we do it anyways.
Well the traditional options for dealing with a criminal corporation are disbanding the corporation, nationalizing it, or fining it.
Fines don't work as well as would be desired, as sometimes it can still be profitable, except for crazy large fines which are basically equivalent to forcibly disbanding the company.
In any case, all three of these tend to hurt the wrong people. They tend to either hurt the shareholders who did nothing wrong (and despite economic theory, have only limited ability to know what really happens inside the company or influence it), or hurts the regular old employees, many of whom will get laid off if massive fines occur, or if the business is forced to closed, and sells off its business units to competitors.
The people with the ability to prevent corporate crimes are most often upper management or the executives. Given how these people are generally compensated, and the demands of the shareholders for maximum profits, most of the incentives don't tilt in favor of them making waves to prevent any corporate crimes they notice are in progress.
In my opinion the correct solution is to recognize that being an executive or upper management in a corporation is a position of public trust, and thus a privilege not a right. Thus when a company commits a significant crime, the upper manager/executives responsible for it should be forced out by the government.
Specifically the courts should have the power to force out a specific executive, upper manager, or board member (as applicable) if: 1. the person was in a position where they knew about the crime (and thus implicit) or ought to have known about the crime (and thus are too incompetent to hold a position of public trust or are practicing willful ignorance) and 2. either had the authority to prevent the crime, or failed to bring the matter to their boss (or the executive with the authority to take actions to prevent the crime, etc).
Furthermore, when this happens the court should have the authority to alter the executives employment contract to nullify any "golden parachute" compensation packages or structures that would make getting forcibly kicked out profitable for the individual in question.
Basically this means that it is in executives and upper management's personal interest to prevent the company from committing corporate crime, since getting forced out would otherwise be possible.
Obviously this should only apply to significant crimes, or repetitive small crimes that the company does not address. It would be absurd to try to apply this to a minor OSHA violation. But on the other hand if the company is constantly being hit with these, and is not making commercially reasonable attempts to fix the underlying systemic problems, then this should be applicable.
And obviously this should become a regular part of corporate criminal settlements, as long as that the named individual be provided an opportunity to demonstrate that they were doing everything they were authorized to attempt to prevent the crime, or to demonstrate the existence of a conspiracy to prevent them from knowing about the crime in question which they would otherwise be expected to have known about, etc.
Note: In practice for condition 1, the government would normally be expected to show that the person ought to have known, given their position and job responsibilities, but the actual knowledge condition is there in case the government finds correspondence where the individual describes the crime, and dismisses it, such as where they decide the fines are just "the cost of doing business".
Fines don't work as well as would be desired, as sometimes it can still be profitable, except for crazy large fines which are basically equivalent to forcibly disbanding the company.
In any case, all three of these tend to hurt the wrong people. They tend to either hurt the shareholders who did nothing wrong (and despite economic theory, have only limited ability to know what really happens inside the company or influence it), or hurts the regular old employees, many of whom will get laid off if massive fines occur, or if the business is forced to closed, and sells off its business units to competitors.
The people with the ability to prevent corporate crimes are most often upper management or the executives. Given how these people are generally compensated, and the demands of the shareholders for maximum profits, most of the incentives don't tilt in favor of them making waves to prevent any corporate crimes they notice are in progress.
In my opinion the correct solution is to recognize that being an executive or upper management in a corporation is a position of public trust, and thus a privilege not a right. Thus when a company commits a significant crime, the upper manager/executives responsible for it should be forced out by the government.
Specifically the courts should have the power to force out a specific executive, upper manager, or board member (as applicable) if: 1. the person was in a position where they knew about the crime (and thus implicit) or ought to have known about the crime (and thus are too incompetent to hold a position of public trust or are practicing willful ignorance) and 2. either had the authority to prevent the crime, or failed to bring the matter to their boss (or the executive with the authority to take actions to prevent the crime, etc).
Furthermore, when this happens the court should have the authority to alter the executives employment contract to nullify any "golden parachute" compensation packages or structures that would make getting forcibly kicked out profitable for the individual in question.
Basically this means that it is in executives and upper management's personal interest to prevent the company from committing corporate crime, since getting forced out would otherwise be possible.
Obviously this should only apply to significant crimes, or repetitive small crimes that the company does not address. It would be absurd to try to apply this to a minor OSHA violation. But on the other hand if the company is constantly being hit with these, and is not making commercially reasonable attempts to fix the underlying systemic problems, then this should be applicable.
And obviously this should become a regular part of corporate criminal settlements, as long as that the named individual be provided an opportunity to demonstrate that they were doing everything they were authorized to attempt to prevent the crime, or to demonstrate the existence of a conspiracy to prevent them from knowing about the crime in question which they would otherwise be expected to have known about, etc.
Note: In practice for condition 1, the government would normally be expected to show that the person ought to have known, given their position and job responsibilities, but the actual knowledge condition is there in case the government finds correspondence where the individual describes the crime, and dismisses it, such as where they decide the fines are just "the cost of doing business".
As far as that goes, I'd be willing to start with implementing standards for execution and working back from there. I haven't looked it up, but I imagine this is how law enforcement evolved in humans.
Frankly I don't see why being a member of a corporation should protect an individual from criminal charges. If you do or authorize something illegal on behalf of your company, you should be personally responsible.
I know it's a long-standing doctrine in law and there is probably a good reason for it, but it just seems too easy to abuse.
I know it's a long-standing doctrine in law and there is probably a good reason for it, but it just seems too easy to abuse.
Well...it doesn't. Members of corporations absolutely can be and are convicted of crimes.
The issue is really whether corporation itself, as a legal "person" can be convicted, and if so, what does that actually mean, legally?
The issue is really whether corporation itself, as a legal "person" can be convicted, and if so, what does that actually mean, legally?
The issue is really whether corporation itself, as a legal "person" can be convicted, and if so, what does that actually mean, legally?
It wouldn't be up for debate if responsible entities at corporations were actually held responsible for their actions. Corporate personhood is a smokescreen in this case.
It wouldn't be up for debate if responsible entities at corporations were actually held responsible for their actions. Corporate personhood is a smokescreen in this case.
What if you don’t know that your actions are illegal? Who could reasonably do a job as an employee if they didn’t have that liability shield?
The justice system is broken enough in the USA (unless you are rich) that I can’t imagine introducing more issues.
The justice system is broken enough in the USA (unless you are rich) that I can’t imagine introducing more issues.
What if you don’t know that your actions are illegal? Who could reasonably do a job as an employee if they didn’t have that liability shield?
This isn't an excuse for private citizens, so why should it be an excuse as an employee?
That said, we should propagate responsibility as high as possible. If you are a rank-and-file employee and your manager is asking you to do something illegal, unless you have enough professional autonomy to decline the request without being fired then your manager is responsible, not you.
This isn't an excuse for private citizens, so why should it be an excuse as an employee?
That said, we should propagate responsibility as high as possible. If you are a rank-and-file employee and your manager is asking you to do something illegal, unless you have enough professional autonomy to decline the request without being fired then your manager is responsible, not you.
Private citizens are employees. Employees have agreed to exchange their labor to another party that intends to profit from it. Why should the labor face the liability when ultimately it is the company that interfaces with the public and profits from their efforts?
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> As I understand it, if a company actually goes to trial and is convicted, they are not allowed to operate anymore, hence the plea deals and fines.
You know, I am a lawyer (a corporate one who freelances as a white collar crime journalist at that!) and I don't even know how this would work. I can't even think of a single criminal case against a corporation that I've reported on that went to trial. It just doesn't really come up. I suspect because it's much easier to charge the directors of the corporation with racketeering or fraud.
That being said, I can't imagine a criminal conviction of a corporation would dissolve the entity. We don't execute people for committing fraud so I'd be surprised if a judge would execute an entity. I'm also not sure what would stop a corporation from quickly winding up if it seemed criminal charges were on the horizon. After all, you can't charge a "person" with a crime if that "person" isn't there to defend themselves.
You know, I am a lawyer (a corporate one who freelances as a white collar crime journalist at that!) and I don't even know how this would work. I can't even think of a single criminal case against a corporation that I've reported on that went to trial. It just doesn't really come up. I suspect because it's much easier to charge the directors of the corporation with racketeering or fraud.
That being said, I can't imagine a criminal conviction of a corporation would dissolve the entity. We don't execute people for committing fraud so I'd be surprised if a judge would execute an entity. I'm also not sure what would stop a corporation from quickly winding up if it seemed criminal charges were on the horizon. After all, you can't charge a "person" with a crime if that "person" isn't there to defend themselves.
you can't charge a "person" with a crime if that "person" isn't there to defend themselves
Individuals charged with crimes are defended by attorneys without visibly participating in their criminal trials all the time.
I can't imagine a criminal conviction of a corporation would dissolve the entity.
No need to dissolve it, simply place it under the same kind of restrictions that someone in prison is placed under - no direct financial activity, severely curtailed communications, etc.
Individuals charged with crimes are defended by attorneys without visibly participating in their criminal trials all the time.
I can't imagine a criminal conviction of a corporation would dissolve the entity.
No need to dissolve it, simply place it under the same kind of restrictions that someone in prison is placed under - no direct financial activity, severely curtailed communications, etc.
> Individuals charged with crimes are defended by attorneys without visibly participating in their criminal trials all the time.
Lack of visible participation is far from lack of participation. In the US due process requires the defendant's presence to commence a criminal trial. Once charges have been brought the defendant has a right (that can in some circumstances be waived) to attend and participate in every stage of the trail. Barring a few narrow circumstances[1] once proceedings have commenced a criminal trial in absentia is unconstitutional.
[1]https://en.wikipedia.org/wiki/Trial_in_absentia#United_State...
Lack of visible participation is far from lack of participation. In the US due process requires the defendant's presence to commence a criminal trial. Once charges have been brought the defendant has a right (that can in some circumstances be waived) to attend and participate in every stage of the trail. Barring a few narrow circumstances[1] once proceedings have commenced a criminal trial in absentia is unconstitutional.
[1]https://en.wikipedia.org/wiki/Trial_in_absentia#United_State...
I feel like if we were scaling this to a corporation then all shareholders would potentially have a right to be present for the trial? There might (terribly) be some sane precedent set prior to the 13th amendment regarding the rights of slave owners to be present at trial for their slaves - I'm 100% anti-slavery but it is the last instance I'm aware of that might yield light on what rights legal persons who partially own other legal persons who have been charged with a crime have.
Edited - reworded "persons" to "legal persons" in a few places.
Edited - reworded "persons" to "legal persons" in a few places.
This would be an interesting law school exam question :) Is there a de minimus ownership that triggers a shareholders right to be present? Were slave owners permitted to mount a defense on behalf of their accused slaves?
Post your question on r/legaladviceofftopic I bet you'll get some very interesting answers...
Post your question on r/legaladviceofftopic I bet you'll get some very interesting answers...
And this discussion demonstrates the absurdity of corporations = people.
If you prick it, does it bleed? If you tickle it, does it laugh? If you poison it, does it die?
So, this point bugs me. I am dead set against the decision to allow corporations to participate in our political system but nobody has ever said "So, mom, dad... this is Purdue Pharma - you can call him Fred for short - we're uh, we're getting married!". Corporations aren't people, they aren't human beings and they aren't homo-sapiens what they are is, quite accurately, legal "persons" when it comes to how a lot of US laws are worded.
There are things that you do and a corporation do that a river can't do, and to describe this set of things laws use the term "person" this makes sense but the name is terrible. In the US, for instance, you can't sue a mountain if you fall and hurt yourself - you can sue a mining company that left equipment there, or maybe the national parks service for having unsafe trails or maybe even your friend Fred (i.e. Purdue Pharma) for pushing you off the edge of the cliff (maybe, more accurately, for failing to inform you of a dizziness side effect in a medication they sold you that caused you to fall) but you can't sue the mountain itself and, likewise, there is no way a mountain could be punished that we can comprehend - again, maybe if this mountain is owned by someone then, as a result of this suit, you are awarded partial mining rights or ownership of the mountain - but that is a compensation granted at the loss of some other entity, maybe a mining company, or the property owner or even the US government.
Either way, corporations and human beings have some legal commonalities that aren't shared with mountains.
elliekelly as you're actually a lawyer, can you express this better or clarify it?
There are things that you do and a corporation do that a river can't do, and to describe this set of things laws use the term "person" this makes sense but the name is terrible. In the US, for instance, you can't sue a mountain if you fall and hurt yourself - you can sue a mining company that left equipment there, or maybe the national parks service for having unsafe trails or maybe even your friend Fred (i.e. Purdue Pharma) for pushing you off the edge of the cliff (maybe, more accurately, for failing to inform you of a dizziness side effect in a medication they sold you that caused you to fall) but you can't sue the mountain itself and, likewise, there is no way a mountain could be punished that we can comprehend - again, maybe if this mountain is owned by someone then, as a result of this suit, you are awarded partial mining rights or ownership of the mountain - but that is a compensation granted at the loss of some other entity, maybe a mining company, or the property owner or even the US government.
Either way, corporations and human beings have some legal commonalities that aren't shared with mountains.
elliekelly as you're actually a lawyer, can you express this better or clarify it?
Lack of visible participation is far from lack of participation. In the US due process requires the defendant's presence to commence a criminal trial.
Understood, but unless my perception is wrong there are many cases where individuals are defended without significant participation - whether it be because they're (arguably) incompetent to participate, decline to participate or for other reasons.
Criminal charges do not require the assent of the charged to proceed through the system.
Understood, but unless my perception is wrong there are many cases where individuals are defended without significant participation - whether it be because they're (arguably) incompetent to participate, decline to participate or for other reasons.
Criminal charges do not require the assent of the charged to proceed through the system.
Corporations are frequently enough charged with crimes to necessitate the existence of corporate lawyers (i.e. you). The discussion of whether corporate manslaughter should be a thing was never one that hinged on whether it would be unconstitutional...
Just generally, I'm not buying this
> After all, you can't charge a "person" with a crime if that "person" isn't there to defend themselves.
especially since people can be charged with crimes for failing to show up for court dates and, while I'm not certain about the US legal system, plenty of war crime charges have been formally with the charged party in absentia.
Just generally, I'm not buying this
> After all, you can't charge a "person" with a crime if that "person" isn't there to defend themselves.
especially since people can be charged with crimes for failing to show up for court dates and, while I'm not certain about the US legal system, plenty of war crime charges have been formally with the charged party in absentia.
To be clear I'm not saying a corporation can't be charged with a crime. Just that a corporation charged with a crime almost never goes to trial. And I don't know a single corporate attorney who has ever handled a criminal case for a corporation. We negotiate contracts, not plea agreements.
So while I'm not at all a criminal attorney (and I don't pretend to be an expert here) a defendant's presence at a criminal trial is first year law school stuff. A defendant absolutely must be present for the initial appearance. They can waive their right to appear (by not showing up once they've been charged) but criminal charges cannot be brought in absentia.
My point was that a corporation that ceased to exist likely wouldn't face charges the same way a deceased person wouldn't face charges because the government can't charge a defendant without their presence.
If the government could charge people with crimes without having them appear in court they surely would have tried and convicted Whitey Bulger long before he was caught and wouldn't have been so concerned with Julian Assange's extradition.
So while I'm not at all a criminal attorney (and I don't pretend to be an expert here) a defendant's presence at a criminal trial is first year law school stuff. A defendant absolutely must be present for the initial appearance. They can waive their right to appear (by not showing up once they've been charged) but criminal charges cannot be brought in absentia.
My point was that a corporation that ceased to exist likely wouldn't face charges the same way a deceased person wouldn't face charges because the government can't charge a defendant without their presence.
If the government could charge people with crimes without having them appear in court they surely would have tried and convicted Whitey Bulger long before he was caught and wouldn't have been so concerned with Julian Assange's extradition.
(Gotta love all the non-lawyers arguing with a corporate lawyer over corporate law.)
If people could be criminally charged "in absentia", then Edward Snowden, Julian Assange, etc would be convicted of things while they were in hiding.
I think a better analogy is that they don't convict dead people of crimes. There's nothing to be gained from that.
If people could be criminally charged "in absentia", then Edward Snowden, Julian Assange, etc would be convicted of things while they were in hiding.
I think a better analogy is that they don't convict dead people of crimes. There's nothing to be gained from that.
> As I understand it, if a company actually goes to trial and is convicted, they are not allowed to operate anymore, hence the plea deals and fines.
This isn't true (a counterexample: https://www.justice.gov/usao-ndca/pr/pge-found-guilty-obstru... ). The reason for plea deals is that neither prosecutors nor defendants typically want to go to court and have a jury trial with an essentially random high-stakes outcome. Both sides usually want to reach an acceptable compromise.
Disbandment also means very little from a punitive perspective, unless you consider disbandment to include seizure of the company's assets. Disbandment is unfavourable because it destroys the value embodied by the company's association: it's customer relationships / brand value, its employee relationships, etc. The cases where disbandment or breakup makes sense are where that association is bad for the rest of society, such as monopolies (e.g. AT&T's antitrust settlement https://en.wikipedia.org/wiki/United_States_v._AT%26T)
This isn't true (a counterexample: https://www.justice.gov/usao-ndca/pr/pge-found-guilty-obstru... ). The reason for plea deals is that neither prosecutors nor defendants typically want to go to court and have a jury trial with an essentially random high-stakes outcome. Both sides usually want to reach an acceptable compromise.
Disbandment also means very little from a punitive perspective, unless you consider disbandment to include seizure of the company's assets. Disbandment is unfavourable because it destroys the value embodied by the company's association: it's customer relationships / brand value, its employee relationships, etc. The cases where disbandment or breakup makes sense are where that association is bad for the rest of society, such as monopolies (e.g. AT&T's antitrust settlement https://en.wikipedia.org/wiki/United_States_v._AT%26T)
I am quite a bit more cynical and see these DPAs as a way for the corporation to be absolved of the nebulous liability that comes from "We did bad stuff, we're still waiting to see if anyone notices" with a slap on the wrists. A DPA seems like literally the closest you can get to pardoning without actually slapping the corporation on the back and publicly saying "Good job buddy, do some more of that"
A measure of how unjust our culture is is whether crimes that violate these DPAs go unpunished or not... compared to first time drug offenders that get decades behind bars for possession.
A measure of how unjust our culture is is whether crimes that violate these DPAs go unpunished or not... compared to first time drug offenders that get decades behind bars for possession.
> You can't send a corporation to jail, but you can disband it entirely, or prevent it from operating
Just "disbanding" a corporation would be pointless. The shareholders (most likely, someone in senior management) could just purchase back (or replicate) the assets and keep going.
The proper ways to "kill" companies include revoking their licenses (see Arthur Anderson), fining them into bankruptcy and possibly liquidation and sanctioning them (for foreign SOEs). None seems to apply in this case, where a prohibition on federal contracting and securing an admission of guilt, which lets other customers who were harmed seek redress through the courts, seem to cover all bases.
Just "disbanding" a corporation would be pointless. The shareholders (most likely, someone in senior management) could just purchase back (or replicate) the assets and keep going.
The proper ways to "kill" companies include revoking their licenses (see Arthur Anderson), fining them into bankruptcy and possibly liquidation and sanctioning them (for foreign SOEs). None seems to apply in this case, where a prohibition on federal contracting and securing an admission of guilt, which lets other customers who were harmed seek redress through the courts, seem to cover all bases.
All of the things you mentioned above are less penalizing then disbanding a corporation and seizing their outstanding assets, revoking licenses in particular - the shareholders and employees of the company could just re-incorporate under a different name and carry on with business as usual - I'd call this "Pulling a Blackwater" but this happens extremely frequently across a lot of sectors.
And what conditions imposed by Mr. Balius' leadership contributed to this situation?
I'd like to see the federal debarment applied to all individuals within the company's executive team. There's nothing preventing them from perpetrating the same fraud tomorrow by forming a new corp or LLC. Having them named on a debarment will stop them from committing fraud against the American taxpayer in the future.
I'd like to see the federal debarment applied to all individuals within the company's executive team. There's nothing preventing them from perpetrating the same fraud tomorrow by forming a new corp or LLC. Having them named on a debarment will stop them from committing fraud against the American taxpayer in the future.
But you can send the executives who designed or oversaw a reward and evaluation schema that incentived this kind of behavior.
Instead, we seem pretty comfortable with passing off the responsibility to rank and file employees / middle managers while the majority of the benefits from the bad behavior accrue to the executives and shareholders.
Edit: I get that the criminal intent needed under our current laws means that those charges may not be feasible. That just means we need new laws that hold Executives and Managers criminally responsible for the criminal actions of their subordinates that are committed as part of their work duties.
Instead, we seem pretty comfortable with passing off the responsibility to rank and file employees / middle managers while the majority of the benefits from the bad behavior accrue to the executives and shareholders.
Edit: I get that the criminal intent needed under our current laws means that those charges may not be feasible. That just means we need new laws that hold Executives and Managers criminally responsible for the criminal actions of their subordinates that are committed as part of their work duties.
I fully support this. If you, a manager, are aware of illegal activity within your organization and do not take steps to stop it, you are as responsible as the individuals doing the illegal activity.
I think more than that is required. I think that they should be held liable even if they do not know. I think it should be their responsibility to to find out and to design corporate structures that don't incentive and conceal illegal activity by their subordinates.
That's fair, although at a certain point (e.g. international holding company with several large subsidiaries) it becomes impossible to police every activity by every department of every subsidiary.
I wonder how a testing supervisor could be motivated to falsify the tests?
this is a good question everybody seems to ignore?
>> it’s shocking nobody is going to jail in relation to a fraud guilty plea.
> They are though. From the justice.gov article:
> "Dennis Balius, the SPI testing lab supervisor, led a scheme to alter tests within SPI’s computerized systems and provide false certifications with the altered results to customers...Balius pleaded guilty in July 2017 and was sentenced to three years in prison and ordered to pay over $170,000 in restitution."
Was he the instigator of this scheme, or were his superiors aware?
I'm not seeing the incentive for someone in testing to fake results on their own. I would imagine the motivation would either come from sales (to close a deal to sell product they couldn't actually produce) or manufacturing (to cover up costly quality problems). Balius seems like a fall guy.
> They are though. From the justice.gov article:
> "Dennis Balius, the SPI testing lab supervisor, led a scheme to alter tests within SPI’s computerized systems and provide false certifications with the altered results to customers...Balius pleaded guilty in July 2017 and was sentenced to three years in prison and ordered to pay over $170,000 in restitution."
Was he the instigator of this scheme, or were his superiors aware?
I'm not seeing the incentive for someone in testing to fake results on their own. I would imagine the motivation would either come from sales (to close a deal to sell product they couldn't actually produce) or manufacturing (to cover up costly quality problems). Balius seems like a fall guy.
> I'm not seeing the incentive for someone in testing to fake results on their own.
There's a lot of missing details, so it's hard to know. From the description of what he did, it seems the interest was not so much in generating false results, but cutting corners, such as running the tests quicker than was allowable. This could have been to make up for some shortfall in lab throughput, for instance.
Also, it sounds like he was in charge of the lab, so fairly high up. That position may have come with substantial performance related incentives.
There's a lot of missing details, so it's hard to know. From the description of what he did, it seems the interest was not so much in generating false results, but cutting corners, such as running the tests quicker than was allowable. This could have been to make up for some shortfall in lab throughput, for instance.
Also, it sounds like he was in charge of the lab, so fairly high up. That position may have come with substantial performance related incentives.
The Supreme Court disagrees: companies are people, and as so have all the rights of them. That means they should be subject to the same penalties: all members of the executive management should be in jail. Until that happens there’s no reason for them to stop. And it needs to be all so that other executives ensure that no one is breaking the law.
> Satellites are usually insured. (Not sure about NASA protocol, though.)
All government missions (including NASA) are “self insured”. If they fail, they fail, with no way to recoup the cost.
All government missions (including NASA) are “self insured”. If they fail, they fail, with no way to recoup the cost.
Does then should allow the insurance company to go after SPI and its directors to recoup the payout.
so insurance company sues and recovers? Is that the rationale?
Deferred prosecution is fairly new in Canada but that's what we're going through now with a company called SNC Lavalin. It's a Canadian-based world-wide engineering company famous for bribes, hookers to win contracts, possible mafia involvement. Yet the executives are escaping prosecution because the company employs so many people.
> Yet the executives are escaping prosecution because the company employs so many people.
The DPA doesn't prevent criminal proceedings against individual executives, in fact the entire point of it is to focus the punishment on those that made and oversaw the criminal decision making, rather than the company as a whole, which would unduly punish innocent employees and shareholders.
In the case of SNC-Lavalin's conduct in Libya, alongside the criminal case against the company itself, at least one VP was also criminally charged. Subsequently those charges were dropped due to delays (nothing to do with a DPA, which by the way still hasn't happened): https://www.cbc.ca/radio/day6/episode-430-snc-lavalin-in-cou...
I'm not going to advocate for SNC-Lavalin, they're slimy and have been for decades, but the reason the PM pressured for a DPA was so that they didn't incur the automatic penalty of not being able to bid on government contracts, which if applied was thought to be enough to bankrupt the company or at least cause them to move out of Canada.
The DPA doesn't prevent criminal proceedings against individual executives, in fact the entire point of it is to focus the punishment on those that made and oversaw the criminal decision making, rather than the company as a whole, which would unduly punish innocent employees and shareholders.
In the case of SNC-Lavalin's conduct in Libya, alongside the criminal case against the company itself, at least one VP was also criminally charged. Subsequently those charges were dropped due to delays (nothing to do with a DPA, which by the way still hasn't happened): https://www.cbc.ca/radio/day6/episode-430-snc-lavalin-in-cou...
I'm not going to advocate for SNC-Lavalin, they're slimy and have been for decades, but the reason the PM pressured for a DPA was so that they didn't incur the automatic penalty of not being able to bid on government contracts, which if applied was thought to be enough to bankrupt the company or at least cause them to move out of Canada.
This is a worthwhile book that might help clear up some of your bewilderment at why corporate crime cases so often turn out so unsatisfactorily.
https://www.amazon.com/Chickenshit-Club-Department-Prosecute...
My personal TL;DR from a couple of years ago if you don't have the time to read the book:
- It's very hard for prosecutors to secure a criminal conviction even in the most blatant cases of wrongdoing.
- Prosecutors care too much about their win rate to risk trials.
- Prosecutors have fallen into a trap where they're so dependent on the policy of offering generous non-prosecution or deferred-prosecution agreements if the company comes forward and volunteers evidence, they've become incapable of actually executing on a complex criminal investigation anymore.
- There's intense political pressure to not punish shareholders for management's misdeeds.
https://www.amazon.com/Chickenshit-Club-Department-Prosecute...
My personal TL;DR from a couple of years ago if you don't have the time to read the book:
- It's very hard for prosecutors to secure a criminal conviction even in the most blatant cases of wrongdoing.
- Prosecutors care too much about their win rate to risk trials.
- Prosecutors have fallen into a trap where they're so dependent on the policy of offering generous non-prosecution or deferred-prosecution agreements if the company comes forward and volunteers evidence, they've become incapable of actually executing on a complex criminal investigation anymore.
- There's intense political pressure to not punish shareholders for management's misdeeds.
But the civil case seems so easy - failure to deliver the right stuff over most of a decade. Should be possible to bankrupt this company over contract fraud?
One thing to add, the majority of the population supports this outcome (if you measure actions as more important than words).
> There's intense political pressure to not punish shareholders for management's misdeeds
Rightly so, IMO. I invest almost exclusively in index funds, which means there's a good chance I'm a shareholder and don't even know it. I like to think that it wouldn't make sense for me to be held responsible.
Rightly so, IMO. I invest almost exclusively in index funds, which means there's a good chance I'm a shareholder and don't even know it. I like to think that it wouldn't make sense for me to be held responsible.
You're not held responsible. The company is. You just made a bad investment through bad fortune. You get to sue the company for losing you money.
The reason your index funds return so much is that you're buying a share of ownership in the company. That includes upside but it also includes downside. If there were no downside you'd be getting exactly money market-like returns.
The downside of equities is not being sued as a shareholder of a crooked company, it's the risk and long-term exposure you bear from your share of ownership and the future cash flow of the company.
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It makes little sense to go after the company if the penalty costs will bankrupt it. I bet that's the rationale. Had they felt they could have gotten more then they would have gone for more.
The next steps, they might have done it already, for the government is to go after the people that did the fraud and punish them. Depending on how certain the government feels about how strong the case is they will get jail time, fines and be ban from ever dealing with the government- one or all three.
I know what you mean sometimes punishment feels light versus the crime. But I know that it's a system the works better than one based the other way so we take the good with the bad.
The next steps, they might have done it already, for the government is to go after the people that did the fraud and punish them. Depending on how certain the government feels about how strong the case is they will get jail time, fines and be ban from ever dealing with the government- one or all three.
I know what you mean sometimes punishment feels light versus the crime. But I know that it's a system the works better than one based the other way so we take the good with the bad.
To me, DPAs looks like a legal way to allow corruption to run without real penalties.
Probably "jobs". :(
When interviewing for a job at a company making pressure sensors primarily for the oil industry, I got a look at their testing rooms. The sensors were usually placed deep in some well or at the bottom of the ocean, so had to function for ages without maintenance. Switching out a faulty sensor is either very expensive or impossible.
The final testing room had a window with a couch and table in the adjacent room. The interviewer said most customers would have a representative fly over to overlook the final tests in person before accepting the sensors.
The final testing room had a window with a couch and table in the adjacent room. The interviewer said most customers would have a representative fly over to overlook the final tests in person before accepting the sensors.
They missed a great opportunity to stick a porta power on the wall and let the customer choose to apply the test pressure themselves. That says "we're so confident it will work you can test it yourself."
the best thing is how the "company" (or corporation) is to blame.
so none of the actual individual humans who did this is at fault here. at worst they would be fired and go to work somewhere else. which is compeletely fine.
and with a fine like that, this is just a "cost of doing business" for the corporation.
maybe one day terribly criminal corporations should be forcefully disbanded as punishment.
so none of the actual individual humans who did this is at fault here. at worst they would be fired and go to work somewhere else. which is compeletely fine.
and with a fine like that, this is just a "cost of doing business" for the corporation.
maybe one day terribly criminal corporations should be forcefully disbanded as punishment.
This is completely inaccurate. Corporate liability protection only extends to civil financial issues, any real property crimes (ie. fraud, murder, etc) 'pierces the corporate veil' and ultimately are filed against the people who performed it.
According to other comments here the company plead guilty to (criminal) fraud. So no it is not completely inaccurate.
See here: https://www.legalmatch.com/law-library/article/corporate-lia...
"When a corporation is criminally liable, the responsibility also falls on individuals. The board of directors, officers, and other high-ranking officials will almost always be criminally liable as well (just look at the Enron fiasco). A individual can be held criminally liable for another employee's illegal act under the accomplice liability theory."
"When a corporation is criminally liable, the responsibility also falls on individuals. The board of directors, officers, and other high-ranking officials will almost always be criminally liable as well (just look at the Enron fiasco). A individual can be held criminally liable for another employee's illegal act under the accomplice liability theory."
I think you missed the point. The "company" can plead anything you want to because noone has ever put a "company" behind the bars. "Companies" are fictitious entities.
[deleted]
In this case, another commenter suggests it's because of the number of people employed. But I don't see why they can't punish everyone proved to be personally responsible (and perhaps the leadership wants to move people who are suspected but can't be proved deserving of criminal charges). And then at worst the assets (including the supply chain, infrastructure and all the employees required to operate it all) can continue under different ownership, but maybe mostly new leadership, or whatever. Surely some impact to the innocent still, but not nearly as much and justice is still done as much as can be proved.
I don't think this problem is unique to private corporations, though. If government projects blow through their budget and achieve almost nothing, they're usually able to get more funding, because if you don't give them more funding, "who would build the roads"? If an agency keeps having corruption issues, there's often a scapegoat or a review board put in place until the PR shitstorm blows over, and then nothing really changes. Very rarely will the general consensus be, "maybe giving people this much power and authority on this issue just does more harm than good".
I don't think this problem is unique to private corporations, though. If government projects blow through their budget and achieve almost nothing, they're usually able to get more funding, because if you don't give them more funding, "who would build the roads"? If an agency keeps having corruption issues, there's often a scapegoat or a review board put in place until the PR shitstorm blows over, and then nothing really changes. Very rarely will the general consensus be, "maybe giving people this much power and authority on this issue just does more harm than good".
> so none of the actual individual humans who did this is at fault here. at worst they would be fired and go to work somewhere else.
From the actual criminal complaint:
> Dennis Balius, the SPI testing lab supervisor, led a scheme to alter tests within SPI’s computerized systems and provide false certifications with the altered results to customers. Balius also instructed employees to violate other testing standards, such as increasing the speed of the testing machines or cutting samples in a manner that did not meet the required specifications. Balius pleaded guilty in July 2017 and was sentenced to three years in prison and ordered to pay over $170,000 in restitution.
https://www.justice.gov/opa/pr/aluminum-extrusion-manufactur...
From the actual criminal complaint:
> Dennis Balius, the SPI testing lab supervisor, led a scheme to alter tests within SPI’s computerized systems and provide false certifications with the altered results to customers. Balius also instructed employees to violate other testing standards, such as increasing the speed of the testing machines or cutting samples in a manner that did not meet the required specifications. Balius pleaded guilty in July 2017 and was sentenced to three years in prison and ordered to pay over $170,000 in restitution.
https://www.justice.gov/opa/pr/aluminum-extrusion-manufactur...
The rot is not excised from the company -- the corrupt processes, institutions, habits and culture which led to the fraud remain in place. The corporation does not go to jail and have its life ruined.
The corporation encapsulates and protects the worst behaviors of the individuals behind its shield, giving them the opportunity to continue profiting from it unless there is enough direct evidence to convict them as individuals.
The corporation encapsulates and protects the worst behaviors of the individuals behind its shield, giving them the opportunity to continue profiting from it unless there is enough direct evidence to convict them as individuals.
Cost of doing business? See this:
> ...also agreed to plead guilty to one count of mail fraud and is barred from U.S. federal government contracting
Norsk Hydro just got new CEO. Immediatelly struck by virus, shutting down operations. Now this. From the article wording, looks like thay admit things. Good for them. But I can guess CEO todo list for this and next year.
> ...also agreed to plead guilty to one count of mail fraud and is barred from U.S. federal government contracting
Norsk Hydro just got new CEO. Immediatelly struck by virus, shutting down operations. Now this. From the article wording, looks like thay admit things. Good for them. But I can guess CEO todo list for this and next year.
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this kind of fraud is absolutely rampant in the automotive industry for example.
Speaking from experience as an engine mechanic, Ive had to replace transmission parts for a certain well-known japanese SUV maker. They also make a "luxury" version of this SUV with more horsepower and a turbocharger setup. The transmissions however are virtually identical with a very major exception: the M5PVL transmission gear for the luxury SUV has 15% more nickel than the non-luxury. These parts are not interchangeable, but shadier parts dealers will often interchange them. placing the regular gear in the luxury SUV has life-threatening consequences, and this has been documented in recall data from the manufacturer.
under turbo-load, once the gear is engaged, it basically explodes. These failures often exit the transmission case, breach the cockpit of the vehicle and wound the occupants.
Speaking from experience as an engine mechanic, Ive had to replace transmission parts for a certain well-known japanese SUV maker. They also make a "luxury" version of this SUV with more horsepower and a turbocharger setup. The transmissions however are virtually identical with a very major exception: the M5PVL transmission gear for the luxury SUV has 15% more nickel than the non-luxury. These parts are not interchangeable, but shadier parts dealers will often interchange them. placing the regular gear in the luxury SUV has life-threatening consequences, and this has been documented in recall data from the manufacturer.
under turbo-load, once the gear is engaged, it basically explodes. These failures often exit the transmission case, breach the cockpit of the vehicle and wound the occupants.
I'm scratching my head as to the possible identity of the mystery SUV. Luxury SUV, Japanese, uses a turbo... maybe the Acura RDX? And the transmission housing is not stout enough to contain gear shrapnel?
Toyota / Lexus ?
He's referring to Toyota. They are globally recalling Toyota Corollas for failing torque converters.
https://www.cnet.com/roadshow/news/toyota-2019-corolla-hatch...
Clearly Toyota didn't know it was happening in their supply chain, but now they do.
Clearly Toyota didn't know it was happening in their supply chain, but now they do.
That article is for CVT's, which don't use shiftable gears. Google-fu leads to this forum post from 2009, which references Acura directly:
https://hardware.slashdot.org/comments.pl?sid=1473068&cid=30...
https://hardware.slashdot.org/comments.pl?sid=1473068&cid=30...
Not to jump to any conclusions, but judging by the common user name, it seems possible that that's the same poster as the GGGP.
If you’re engineering to protect against fraud then maybe you would make them different sizes? Or only make one kind of part?
That would be my first instinct as well. Atleast when I interned metallworking, the supervisor did have atleast one lesson where they talked about making sure components don't fit into places they shouldn't. If two gears on a machine have different requirements then they should be made to not fit into eachother's places. It makes maintenance easier since there is only 1 correct way to build the machine from any set of spare parts.
Sometimes that is not enough:
In this rocket malfunction, a part was installed upside down. It had arrows indicating the direction and only fit in its place in one orientation. Still, on finding that it didn't immediately fit a technician forced it in:
http://www.russianspaceweb.com/proton_glonass49.html#culprit
By July 13, investigators simulated the improper installation of the DUS angular velocity sensors on the actual hardware. As it turned out, it would be very difficult to do but not impossible. To achieve that personnel would need to use procedures and instruments not certified either by the design documentation or the installation instructions. As a result, the plate holding the sensors sustained damage. Yet, when the hardware recovered from the accident was delivered to GKNPTs Khrunichev, it was discovered that the nature of the damage to the plate had almost exactly matched the simulated version.
In this rocket malfunction, a part was installed upside down. It had arrows indicating the direction and only fit in its place in one orientation. Still, on finding that it didn't immediately fit a technician forced it in:
http://www.russianspaceweb.com/proton_glonass49.html#culprit
By July 13, investigators simulated the improper installation of the DUS angular velocity sensors on the actual hardware. As it turned out, it would be very difficult to do but not impossible. To achieve that personnel would need to use procedures and instruments not certified either by the design documentation or the installation instructions. As a result, the plate holding the sensors sustained damage. Yet, when the hardware recovered from the accident was delivered to GKNPTs Khrunichev, it was discovered that the nature of the damage to the plate had almost exactly matched the simulated version.
You can't do much against an engineer willing to weld and cut their way through the parts.
Similarly, we can't do anything about people using a soldering iron to make customizations to their motherboards. Everything that happens, it's on them.
Similarly, we can't do anything about people using a soldering iron to make customizations to their motherboards. Everything that happens, it's on them.
Wonder if Hydro in turn will file criminal charges. They bought the business unit at fault here in 2000[1]. Surely they could hold someone accountable for fraud that way? They thought they bought a business capable of producing quality parts, but didn't end up getting that.
Like the other posters in this thread I feel like the $46m fine shouldn't be the end of this.
[1] https://www.hydro.com/no-NO/media/news/2019/hydro-reaches-ag...
Like the other posters in this thread I feel like the $46m fine shouldn't be the end of this.
[1] https://www.hydro.com/no-NO/media/news/2019/hydro-reaches-ag...
I think that's why it was only $46m... Sure they agreed to take on responsibility for any prior debts and obligations as part of the purchase, but at this point you're not really punishing the people who were responsible for it, just those who were left holding the bag.
I'm not sure what legal recourse Hydro has against the prior owners, executives, managers, etc. that were actually responsible, but 19 years after the acquisition I'd be surprised if anything ever came of it.
I'm not sure what legal recourse Hydro has against the prior owners, executives, managers, etc. that were actually responsible, but 19 years after the acquisition I'd be surprised if anything ever came of it.
Only governments can file criminal charges.
As a blanket statement this is incorrect. Many common law jurisdictions permit private prosecution of criminal cases.
> many
Isn't it basically just the UK?
Isn't it basically just the UK?
Only if you think Canada and various American states are in the UK.
Where in the US can a non governmental entity charge someone with a crime?
Texas, Virginia, North Carolina, and Idaho among other jurisdictions.
Interesting, I wonder how that even works. Can anyone just "charge" someone with a crime? I always thought the district attorney or someone similarly qualified and presumably unbiased had to vet the evidence and decide whether or not to charge someone.
Some relevant Wikipedia links that add color to the lost vehicles:
https://en.wikipedia.org/wiki/Minotaur-C
https://en.wikipedia.org/wiki/Orbiting_Carbon_Observatory
https://en.wikipedia.org/wiki/Glory_(satellite)
https://en.wikipedia.org/wiki/Orbital_Sciences_Corporation
https://en.wikipedia.org/wiki/Minotaur-C
https://en.wikipedia.org/wiki/Orbiting_Carbon_Observatory
https://en.wikipedia.org/wiki/Glory_(satellite)
https://en.wikipedia.org/wiki/Orbital_Sciences_Corporation
Interesting. Extruded aluminum profile is one of the items that is under anti-dumping tariffs to discourage Chinese imports. There's a lot of rhetoric from US suppliers like this one about why we need high quality US aluminum.
We need to build with high-quality American fakes, not high-quality Chinese fakes!
On the other hand, at least the American supplier was fined and someone went to prison. Fraudulent Chinese suppliers routinely escape justice altogether because they largely operate outside of US jurisdiction.
That's the essence of the issue exactly. There is fraud everywhere, but in most of the world fraud isn't a successful business model. In the PRC, it kind of is.
Although fraud is no doubt rampant in Chinese industry, the penalties are... rather more severe. You had better make sure your scheme doesn't piss off the wrong people. The PRC's military and aerospace supply chains are probably in pretty good shape.
Agreed, but the scenario we’re discussing is a US company sourcing parts from a Chinese company. The PRC’s stiff penalties don’t protect the consumer in this scenario.
> We need to build with high-quality American fakes, not high-quality Chinese fakes!
It's entirely possible that American manufacturers are forced to compromise quality like that due to the competitive pressure of low-cost Chinese fakes.
It's entirely possible that American manufacturers are forced to compromise quality like that due to the competitive pressure of low-cost Chinese fakes.
Mo question, Chinese fakes and theft are an enormous problem, and I'll be among the first to speak against it.
However, no one was forced to compromise quality.
One can always step away from that business or project, stating that if they cannot do it right (or cannot do it right at the demanded cost structure), they will not do it.
I've stepped away from deals for the same reason -- I'm not going to compromise quality and performance to compete with lesser Chinese junk at their prices. Moreover, it is a losing game, as there are a billion of them, and producing cheap low-quality stuff is what they are best at (and in some cases they are rising above that).
They fell to the temptation to compete with the inferior grade materials by providing inferior grade materials with false test results, but they were not forced to do so.
However, no one was forced to compromise quality.
One can always step away from that business or project, stating that if they cannot do it right (or cannot do it right at the demanded cost structure), they will not do it.
I've stepped away from deals for the same reason -- I'm not going to compromise quality and performance to compete with lesser Chinese junk at their prices. Moreover, it is a losing game, as there are a billion of them, and producing cheap low-quality stuff is what they are best at (and in some cases they are rising above that).
They fell to the temptation to compete with the inferior grade materials by providing inferior grade materials with false test results, but they were not forced to do so.
Definitely.
And when one knows it won't work?
Say that, say why, decline and cite cost to make it a success exceeds client expectations and or ability to pay.
When they do it on the cheap, fail hard, know that cost exceeds just doing the right work with the right materials every time.
When they come back, quote them with confidence.
And when one knows it won't work?
Say that, say why, decline and cite cost to make it a success exceeds client expectations and or ability to pay.
When they do it on the cheap, fail hard, know that cost exceeds just doing the right work with the right materials every time.
When they come back, quote them with confidence.
You and the parent are saying the same thing. You're just mincing the word "force". You're insisting on using it in a different figurative sense than the parent, but the parent's meaning is perfectly clear.
> One can always step away from that business or project, stating that if they cannot do it right (or cannot do it right at the demanded cost structure), they will not do it.
Do that too much, and you may just go out of business yourself (or have to radically reduce operations).
Do that too much, and you may just go out of business yourself (or have to radically reduce operations).
Of course you might.
Or, you might have to work harder and smarter to find better options.
If you are not sufficiently diligent and intelligent, it may seem that when things get tough because one sector is in a race to the bottom, that because <we could go out of business if we don't>, it's ok to just cut corners, falsify tests, etc.
Once you start doing that, you have decided that you'd rather be a rich fraud than a poor honest person.
You may think that is OK. I do not.
Or, you might have to work harder and smarter to find better options.
If you are not sufficiently diligent and intelligent, it may seem that when things get tough because one sector is in a race to the bottom, that because <we could go out of business if we don't>, it's ok to just cut corners, falsify tests, etc.
Once you start doing that, you have decided that you'd rather be a rich fraud than a poor honest person.
You may think that is OK. I do not.
SpaceX also had failed a mission due to a 3rd party strut failing the spec.
> The strut that we believe failed was designed and material certified to handle 10,000 lbs of force, but failed at 2,000 lbs, a five-fold difference.
https://www.spacex.com/news/2015/07/20/crs-7-investigation-u...
> The strut that we believe failed was designed and material certified to handle 10,000 lbs of force, but failed at 2,000 lbs, a five-fold difference.
https://www.spacex.com/news/2015/07/20/crs-7-investigation-u...
A closer analogy was the Proton launch failure and subsequent suspension of launches in 2017, after it turned out that Voronezh Mechanical Plant had switched materials in the engines and falsified the documentation.
https://arstechnica.com/science/2017/01/russia-recalling-doz...
https://arstechnica.com/science/2017/01/russia-recalling-doz...
That is a more charitable explanation than the one from NASA's independent review team. They categorized the problem as a design flaw since SpaceX didn't take into account the part manufacturer's recommended safety margin and other limitations
They really should be held accountable for the amount of loss that their fraud caused, not just what they gained from the fraud.
What they did was despicable but that's not really fair either. If defective aluminum they sold was direct cause of 2 billion bridge collapse would they be liable for that amount?
Generally, yes.
Put yourself on the other side. Someone breaks into your house, steals a painting and pawns it off for $500. Unbeknownst to them, it was worth $10,000. Breaking in, they broke a window. Unbeknownst to them, you're traveling, and that leads to $50,000 in flood damage. Guess who is liable: the crook or you?
It might be unfair that they took on a $60,000 liability for $500 worth of gain, but it's far more fair than if you took on a $60,000 liability.
Base damages are usually the greater of the damages caused to the victim and the gains to the culprit. There are exceptions (treble damages, statutory damages, etc.), but that's a fine baseline.
Put yourself on the other side. Someone breaks into your house, steals a painting and pawns it off for $500. Unbeknownst to them, it was worth $10,000. Breaking in, they broke a window. Unbeknownst to them, you're traveling, and that leads to $50,000 in flood damage. Guess who is liable: the crook or you?
It might be unfair that they took on a $60,000 liability for $500 worth of gain, but it's far more fair than if you took on a $60,000 liability.
Base damages are usually the greater of the damages caused to the victim and the gains to the culprit. There are exceptions (treble damages, statutory damages, etc.), but that's a fine baseline.
If there was fraud involved why shouldn’t they be held liable?
Why wouldn't the QC at NASA include testing at independent labs for anything mission critical? That seems like a failure on NASA's part as much as it is fraud by the supplier.
It may be that actually fully stressing the parts is avoided, as it may risk weakening the part.
I've heard of various non destructive testing methods being used to check the integrity of metals in aerospace, such as ultrasound and radiography. This may well be enough if the part is actually made of what it's supposed to be.
I've heard of various non destructive testing methods being used to check the integrity of metals in aerospace, such as ultrasound and radiography. This may well be enough if the part is actually made of what it's supposed to be.
> It may be that actually fully stressing the parts is avoided, as it may risk weakening the part.
Couldn't they just buy an extra and destructively test that?
Couldn't they just buy an extra and destructively test that?
+1 Make that part of the deal. We only need 2 items, but you will produce 4. We will then randomly pick 2 of them for testing, and then and only then if those 2 pass will we actually use the remaining 2 as needed.
This happens all the time in construction of multistory buildings. When the floors of concrete are poured, they also produce smaller sections of concrete from the same batches. As the concrete cures, it's strength is tested. This ensures that the concrete can support the weight designated in the plans. Better to watch a test pour fail than the building collapsing when cheap concrete fails under load.
[edit] oops, just read comments later in the thread stating the same thing
This happens all the time in construction of multistory buildings. When the floors of concrete are poured, they also produce smaller sections of concrete from the same batches. As the concrete cures, it's strength is tested. This ensures that the concrete can support the weight designated in the plans. Better to watch a test pour fail than the building collapsing when cheap concrete fails under load.
[edit] oops, just read comments later in the thread stating the same thing
The failures may not be normally distributed amongst samples.
A similar issue stopped NASA from perfectly end-to-end testing the LEV before the moon landing.
A similar issue stopped NASA from perfectly end-to-end testing the LEV before the moon landing.
Maybe the reason they didn't is that doing so is expensive, should have already been done by the supplier, this was for an unmanned mission (which have significantly looser safety requirements), which was insured (I assume), and costs to some extent recoverable by lawsuits.
According to the DoJ article: "the replacement cost of frangible joints provided to the MDA that included SPI extrusions is approximately $15.3 million, and NASA incurred approximately $9 million in investigative and other costs to determine the impact of SPI extrusions on NASA operations."
For economic reasons, some compromise needs to be reached between assurance and insurance.
According to the DoJ article: "the replacement cost of frangible joints provided to the MDA that included SPI extrusions is approximately $15.3 million, and NASA incurred approximately $9 million in investigative and other costs to determine the impact of SPI extrusions on NASA operations."
For economic reasons, some compromise needs to be reached between assurance and insurance.
This is what I am wondering. In construction, we have third party testing of every major material in use, like daily concrete testing for new pours, weld inspections on steel, graded lumber, etc. hard to believe that NASA didn’t test their aluminum for a decade.
It was material that went into a frangible rail built by one company for a fairing built by another company, integrated into a rocket built by yet another company. Where would NASA have the time to test each and every bit of material going into the many-tiered parts of the design? NASA is relying on the prime contractor to make sure their vendors are on the up and up. The prime is making sure their vendors do their due diligence as well. The failure in this chain of trust comes about when someone is blatantly lying about results. The lab manager was instructing his technicians to lie about results and also speed up testing equipment between customer visits.
Testing everything yourself works out well since you are receiving most of the raw material and doing the assembly either yourself or on site with a contractor. NASA doesn't built a lot of stuff themselves. Components can be so deep in levels of subcontracting that all NASA can do is just make sure everyone is adhering to proper engineering and manufacturing principles. The company that originally bought the aluminum I'm sure tested all of their finished components the right way but testing might not have been sufficient enough against how much stress the part is actually under during flight. Or testing weakened the part to the point where a failure was imminent but not obvious. Or the vendor doesn't really test their stuff extensively and relies on the customer to handle that. Either way, the part passes tests and gets sent to the customer where the they would integrate the part into their design and test it as well. Or not fully test it based on the idea that the next customer would test it. Who knows? Maybe they didn't test it hard enough or maybe it was most of a length of testing problem. The point is that NASA has neither the time or money to independently test parts and materials, they rely on their experienced contractors and subcontractors to do it.
If there isn't already, there needs to be some additional laws with government contractors to make sure those in a position of trust (like test lab technicians and their managers) receive no compensation based on whether or not material passes inspection or how much they test. Or force these kinds of labs to do independent 3rd party testing.
Testing everything yourself works out well since you are receiving most of the raw material and doing the assembly either yourself or on site with a contractor. NASA doesn't built a lot of stuff themselves. Components can be so deep in levels of subcontracting that all NASA can do is just make sure everyone is adhering to proper engineering and manufacturing principles. The company that originally bought the aluminum I'm sure tested all of their finished components the right way but testing might not have been sufficient enough against how much stress the part is actually under during flight. Or testing weakened the part to the point where a failure was imminent but not obvious. Or the vendor doesn't really test their stuff extensively and relies on the customer to handle that. Either way, the part passes tests and gets sent to the customer where the they would integrate the part into their design and test it as well. Or not fully test it based on the idea that the next customer would test it. Who knows? Maybe they didn't test it hard enough or maybe it was most of a length of testing problem. The point is that NASA has neither the time or money to independently test parts and materials, they rely on their experienced contractors and subcontractors to do it.
If there isn't already, there needs to be some additional laws with government contractors to make sure those in a position of trust (like test lab technicians and their managers) receive no compensation based on whether or not material passes inspection or how much they test. Or force these kinds of labs to do independent 3rd party testing.
For my projects, I’m buying the concrete structure, but it’s my general contractor hiring a subcontractor to place the concrete, and the architect reviews the third party laboratory tests. It’s a complicated for commonplace construction. NASA should have it figured out.
Chinese suppliers did this to a mining company in Australia.
Put fucking asbestos brakes on the ore cars (train). Cost a fortune to clean up.
Put fucking asbestos brakes on the ore cars (train). Cost a fortune to clean up.
Many cheap knockoff chinese automotive brake pads still contain it. Buy name brand on brakes, for more reasons than that. Its also good if the compound actually stops the car in time.
Living near mountains I witness brake failures (usually fires!) daily, its no joke. Check your pads, change your brake fluid every 3-5 years. Its cheap and can save lives, including your own. No feeling is more heartsinking than the brake pedal going to the floor with no resistance when you need it most.
Living near mountains I witness brake failures (usually fires!) daily, its no joke. Check your pads, change your brake fluid every 3-5 years. Its cheap and can save lives, including your own. No feeling is more heartsinking than the brake pedal going to the floor with no resistance when you need it most.
Chinese everything they make seems to be like this. The landfill now holds nearly everything I've bought from China over the decades, I now realize.
After reading the excellent book "How Asia Works," I went around my place inventorying the source of my possessions recently thinking it'd be full of stuff from China. But no.
True, I do have several things that are only one or two years old from China that aren't dead yet, and a number of older steel items from China that have in fact lasted ('cause you can't fake consumer steel - I always try to bend that stuff in the store. If it bends it gets bent back and goes back on the store shelf.) The exception: one ancient Neo2.
The vast majority of what I own now - other than clothes - isn't Chinese and is 30 or more years old. These are all items that predate the Chinese goods invasion in fact. Quality goods.
For example it turned out that all my (surviving) dishes were American Corelle, glasses French Duralex, Swedish chair, etc. etc. Yet I mostly bought Chinese goods all along. Nothing, except the Neo2 lasted, (except for all-steel items) and I bought that Neo2 used recently. The rest of what I wasted money on is Chinese landfilled junk now.
I grew up admiring China (my Grandmother saw Mao in person, at a banquet she attended in the Great Hall of the People, and liked everything about China she saw except for his wife's speech at that banquet.) No more. Please, let's just drop trade with China. For so many reasons. The race to the bottom is won and done.
I know, the original article was about defective American aluminum testing; and yes there are occasional problems with goods from everywhere, but China takes the cake - and its goods crowd out better, greener, more durable competition.
After reading the excellent book "How Asia Works," I went around my place inventorying the source of my possessions recently thinking it'd be full of stuff from China. But no.
True, I do have several things that are only one or two years old from China that aren't dead yet, and a number of older steel items from China that have in fact lasted ('cause you can't fake consumer steel - I always try to bend that stuff in the store. If it bends it gets bent back and goes back on the store shelf.) The exception: one ancient Neo2.
The vast majority of what I own now - other than clothes - isn't Chinese and is 30 or more years old. These are all items that predate the Chinese goods invasion in fact. Quality goods.
For example it turned out that all my (surviving) dishes were American Corelle, glasses French Duralex, Swedish chair, etc. etc. Yet I mostly bought Chinese goods all along. Nothing, except the Neo2 lasted, (except for all-steel items) and I bought that Neo2 used recently. The rest of what I wasted money on is Chinese landfilled junk now.
I grew up admiring China (my Grandmother saw Mao in person, at a banquet she attended in the Great Hall of the People, and liked everything about China she saw except for his wife's speech at that banquet.) No more. Please, let's just drop trade with China. For so many reasons. The race to the bottom is won and done.
I know, the original article was about defective American aluminum testing; and yes there are occasional problems with goods from everywhere, but China takes the cake - and its goods crowd out better, greener, more durable competition.
NASA published an investigative summary of the failures of the Taurus XL T8 and T9 rockets that goes into further depth [0].
[0] https://www.nasa.gov/sites/default/files/atoms/files/oco_glo... (PDF)
[0] https://www.nasa.gov/sites/default/files/atoms/files/oco_glo... (PDF)
You are kidding me, right? Years of hard work of scientists are lost. The scientific loss is huge if not quantifiable. You defraud the best and richest space research agency on earth for years. And you are getting away with just paying a fine?
A justice system where the Rich pays their way out, and only the Poor get punished.
A justice system where the Rich pays their way out, and only the Poor get punished.
Which satellites? I presume OCO and some other one?
And how do journalists so frequently fail to include core facts in their articles?
And how do journalists so frequently fail to include core facts in their articles?
OCO and Glory, according to space.com.
> A metals manufacturer faked test results and provided faulty materials to NASA, causing more than $700 million in losses
...
> the current parent company of Sapa, agreed to pay $46 million to NASA, the Department of Defense and others to resolve criminal charges and civil claims related to the fraud
...
> the current parent company of Sapa, agreed to pay $46 million to NASA, the Department of Defense and others to resolve criminal charges and civil claims related to the fraud
Lucky it was only a $700million satellite
in another application people could have died
in another application people could have died
If you value human time by $1 million per year then that is a waste of 700 man years or 8 people's worth. Of course they got paid and received "free" training for their job so it wasn't a complete waste but there certainly are better things to use those man years on, like a functioning satellite.
You can't extrapolate from the price of a human spending 8 hours following limited corporate instructions to the value of their other 16 hours.
First of all, value and price diverge for many reasons all the time. Secondly, most people on Earth produce more value after work than during, but that value is not fully priced or marketed yet (try as captains of industry may).
That used to be more true in the colonial powers as well (most value was not marketed, and stayed on homestead).
Humans do exist now whose labor is fully marketed but they are rare, mostly men, mostly rich. And even them, they still produce a lot of extra-economic value in most cases.
Many humans labor is entirely unpriced, like full-time parents or schoolteachers, social workers, artists, and other "passion professions.
Humans are invaluable.
First of all, value and price diverge for many reasons all the time. Secondly, most people on Earth produce more value after work than during, but that value is not fully priced or marketed yet (try as captains of industry may).
That used to be more true in the colonial powers as well (most value was not marketed, and stayed on homestead).
Humans do exist now whose labor is fully marketed but they are rare, mostly men, mostly rich. And even them, they still produce a lot of extra-economic value in most cases.
Many humans labor is entirely unpriced, like full-time parents or schoolteachers, social workers, artists, and other "passion professions.
Humans are invaluable.
> Humans are invaluable.
They're really not, as far as managing risk goes. If you try to avoid assigning a value, you're going to do a worse job, and more people will probably die.
They're really not, as far as managing risk goes. If you try to avoid assigning a value, you're going to do a worse job, and more people will probably die.
It may be better to use the statistical value of a human life defined by safety/enivronmental organizations, which for the US is currently about $10 million per citizen.
Going by that the satellite was worth about 70 lives, which is a bit under the amount of people killed by venomous animals each year in the US.
Edit: More random morbid facts - Annual automobile deaths amount to only 6% of Wyoming's population, but do economic damage equal 10x Wyoming's GDP.
Going by that the satellite was worth about 70 lives, which is a bit under the amount of people killed by venomous animals each year in the US.
Edit: More random morbid facts - Annual automobile deaths amount to only 6% of Wyoming's population, but do economic damage equal 10x Wyoming's GDP.
[deleted]
It's amazing how companies in the US can cause a billion in damage, wasting years of highly talented people, put climate science years behind, and get a slap on the wrist. Yet, some kid carries a few grams of weed and goes to jail or gets killed by the cops.
Both of your assertions are exaggerations.
1) It is far from certain that the falsified test results "cause[d] a billion in damage." Press releases about settlements are not court judgments. At trial, the government would have to prove "but-for causation." For one of the failures, for example, the government would have to prove that the launch vehicle's faring would have opened fully had the aluminum met specifications. If the government cannot prove that, they recover zero. Even if the government proved that, if anything else went wrong in the launch too, it would have to rebut the defendant's case that some other component, not the out-of-spec aluminum, was the primary cause of the launch failure.
2) It's not typical for "kid[s]" to be put in prison for carrying "a few grams of weed." It might happen sometimes (in a country of 330 million people, everything that can happen will happen sometimes) but it's not typical.
The government settles cases for a reason. Often, it's because the case isn't a slam dunk for trial. Sometimes, it's because the company wouldn't be able to pay the judgment anyway. In government contracting, there is also the consideration that if you put a company out of business for something that was the fault of lower-level employees (as here), that reduces competition going forward. (There's probably not a ton of options for space-worthy aluminium fabrication.)
(Conversely, the government usually settles drug cases on very favorable terms because they're easy to prove at trial. You should see the police reports that accompany these plea agreements. "The accused tried to sell drugs to an undercover officer. After arrest, the officers searched his car and found more drugs. Then they searched his house and found still more drugs. A search of the accused's text messages revealed extensive records of drug sales." In such cases, the government has no need to put an expert on the witness stand to convince the jury what would have happened to a rocket launch in a counter-factual scenario.)
1) It is far from certain that the falsified test results "cause[d] a billion in damage." Press releases about settlements are not court judgments. At trial, the government would have to prove "but-for causation." For one of the failures, for example, the government would have to prove that the launch vehicle's faring would have opened fully had the aluminum met specifications. If the government cannot prove that, they recover zero. Even if the government proved that, if anything else went wrong in the launch too, it would have to rebut the defendant's case that some other component, not the out-of-spec aluminum, was the primary cause of the launch failure.
2) It's not typical for "kid[s]" to be put in prison for carrying "a few grams of weed." It might happen sometimes (in a country of 330 million people, everything that can happen will happen sometimes) but it's not typical.
The government settles cases for a reason. Often, it's because the case isn't a slam dunk for trial. Sometimes, it's because the company wouldn't be able to pay the judgment anyway. In government contracting, there is also the consideration that if you put a company out of business for something that was the fault of lower-level employees (as here), that reduces competition going forward. (There's probably not a ton of options for space-worthy aluminium fabrication.)
(Conversely, the government usually settles drug cases on very favorable terms because they're easy to prove at trial. You should see the police reports that accompany these plea agreements. "The accused tried to sell drugs to an undercover officer. After arrest, the officers searched his car and found more drugs. Then they searched his house and found still more drugs. A search of the accused's text messages revealed extensive records of drug sales." In such cases, the government has no need to put an expert on the witness stand to convince the jury what would have happened to a rocket launch in a counter-factual scenario.)
> It's not typical for "kid[s]" to be put in prison for carrying "a few grams of weed." It might happen sometimes (in a country of 330 million people, everything that can happen will happen sometimes) but it's not typical.
First, this shouldn't be a "sometimes" thing, it should be a "never" thing. You get convicted for drugs, regardless of how much, and your life is forever changed.
Second, for all the made, think about how many times police used the bullshit excuse of "I smell weed" to violate and harass citizens.
OP was right, this country's justice system is broken but it's not beyond repair. We are finally seeing changes in the political landscape that will address many long standing injustices.
First, this shouldn't be a "sometimes" thing, it should be a "never" thing. You get convicted for drugs, regardless of how much, and your life is forever changed.
Second, for all the made, think about how many times police used the bullshit excuse of "I smell weed" to violate and harass citizens.
OP was right, this country's justice system is broken but it's not beyond repair. We are finally seeing changes in the political landscape that will address many long standing injustices.
None of this changes the grandparents analysis that drug crimes are easy to prove vs the countefactual “but for” argument about satellites.
Regardless of drug laws’ justice, proving things about them are fairly easy. Proving things about what happened outside the atmosphere is hard.
Regardless of drug laws’ justice, proving things about them are fairly easy. Proving things about what happened outside the atmosphere is hard.
>First, this shouldn't be a "sometimes" thing, it should be a "never" thing. You get convicted for drugs, regardless of how much, and your life is forever changed.
A lot of things should "never" happen but do. Life isn't fair. Some people have really bad luck.
A lot of things should "never" happen but do. Life isn't fair. Some people have really bad luck.
homonculus1(2)
> First, this shouldn't be a "sometimes" thing, it should be a "never" thing. You get convicted for drugs, regardless of how much, and your life is forever changed.
Communities have the right to declare certain things unacceptable and police their citizens accordingly. The regulation of vice and harmful substances is one of the core functions of state and local governments. In a country of 330 million people, that means that "sometimes" people will exercise that right in a way that you or I think is undesirable or even unjust. But the self-determination of communities is a more fundamental right than the right to consume whatever substances you want.
Communities have the right to declare certain things unacceptable and police their citizens accordingly. The regulation of vice and harmful substances is one of the core functions of state and local governments. In a country of 330 million people, that means that "sometimes" people will exercise that right in a way that you or I think is undesirable or even unjust. But the self-determination of communities is a more fundamental right than the right to consume whatever substances you want.
No one is attacking a community's right to self-determination. It's the soundness of what the community has determined that is debated.
> But the self-determination of communities is a more fundamental right than the right to consume whatever substances you want.
Pretty sweeping statement there. What if a majority of a "community" decides its residents shouldn't eat meat?
Pretty sweeping statement there. What if a majority of a "community" decides its residents shouldn't eat meat?
Like many states in India forbidding the consumption of beef? Or many entities forbidding dog/cat/horse meat? It happens all over, all the time.
You mean like how most of the US has a de facto ban on horse meat consumption, despite the fact that horses are (apparently) delicious?
> Communities have the right to declare certain things unacceptable and police their citizens accordingly.
No, they don't; communities don't have rights, individuals do. Communities have the legitimate power to do what you describe so long as no individual rights are violated.
> The regulation of vice and harmful substances is one of the core functions of state and local governments.
No, it's not. It may in some cases be an aspect of a legitimate core function (the protection of public health, for instance) so long as the manner of regulation is actually consistent with that function and with individual rights.
No, they don't; communities don't have rights, individuals do. Communities have the legitimate power to do what you describe so long as no individual rights are violated.
> The regulation of vice and harmful substances is one of the core functions of state and local governments.
No, it's not. It may in some cases be an aspect of a legitimate core function (the protection of public health, for instance) so long as the manner of regulation is actually consistent with that function and with individual rights.
Isn't this analysis pretty much ancap-complete? All sorts of things communities have agreed to forbid impinge in some way on individual rights.
> Isn't this analysis pretty much ancap-complete?
That kind of depends on whether you agree with ancaps on the scope and definition of individual rights; it is, certainly, ancap-consistent.
That kind of depends on whether you agree with ancaps on the scope and definition of individual rights; it is, certainly, ancap-consistent.
Is there another rebuttal to Rayiner you might have that would be persuasive to someone who is not sympathetic to ancap philosophy?
The idea that rights are the sole domain of individuals and that groups (whether constituted as states or otherwise) have powers, but not rights (powers which are legitimate only so far as they extend from and do not contradict individual rights), is fundamental to classical liberalism, not a belief unique to those “sympathetic to ancap philosophy”.
No, you said "Communities have the legitimate power to do what you describe so long as no individual rights are violated." That is not in fact a principle of classical liberalism, which favors individual rights but is not controlled by them. American conservatism draws from classical liberalism, for instance.
> No, you said "Communities have the legitimate power to do what you describe so long as no individual rights are violated." That is not in fact a principle of classical liberalism, which favors individual rights but is not controlled by them.
You missed a “not”, and yes it is a core principle of classical liberalism; indeed, classical liberals tended to see powers of government as legitimate exactly to the extent they served individual rights, as they perceived those rights. Locke, for instance saw the realization of the rights to life, liberty, and estate (which he collectively labeled as “property”, thought that term often is used equivalently to how Locke used the “estate”) as both the motivation for entering into government by the people and the function whose service defined the legitimate role of government.
> American conservatism draws from classical liberalism, for instance.
Both Americans conservatism and American liberalism draw from classical liberalism, without being entirely within it, but I'm not sure what your point is in raising that about American conservatives, since explicitly echoing Locke’s position on the legitimate role of government (with perhaps a narrower understanding of property and thus individual rights than Locke stated) is a central refrain of American conservatives, especially those most likely to explicitly cite continuity with classical liberalism.
You missed a “not”, and yes it is a core principle of classical liberalism; indeed, classical liberals tended to see powers of government as legitimate exactly to the extent they served individual rights, as they perceived those rights. Locke, for instance saw the realization of the rights to life, liberty, and estate (which he collectively labeled as “property”, thought that term often is used equivalently to how Locke used the “estate”) as both the motivation for entering into government by the people and the function whose service defined the legitimate role of government.
> American conservatism draws from classical liberalism, for instance.
Both Americans conservatism and American liberalism draw from classical liberalism, without being entirely within it, but I'm not sure what your point is in raising that about American conservatives, since explicitly echoing Locke’s position on the legitimate role of government (with perhaps a narrower understanding of property and thus individual rights than Locke stated) is a central refrain of American conservatives, especially those most likely to explicitly cite continuity with classical liberalism.
> something that was the fault of lower-level employees (as here)
Ah, yes, some ‘lower-level employees’ just got together to falsify metals tests because… they have a fetish for falsifying metals tests? They get to brag to their pals at the pub about falsifying metals tests? They have a betting pool to see who can falsify the most metals tests? It must be something like that.
Ah, yes, some ‘lower-level employees’ just got together to falsify metals tests because… they have a fetish for falsifying metals tests? They get to brag to their pals at the pub about falsifying metals tests? They have a betting pool to see who can falsify the most metals tests? It must be something like that.
Far from certain doesn't make it unlikely.
I think it's far more likely that falsified test results could have caused a billion in damage. Over the course of 19 years? Substandard parts being used in the shuttle is just one data point. Who knows how many substandard parts went into other products' increased failure modes whose burdens were borne by third parties (including US and foreign citizens).
> It's not typical for "kid[s]" to be put in prison for carrying "a few grams of weed.
Maybe not where you're at.
I think it's far more likely that falsified test results could have caused a billion in damage. Over the course of 19 years? Substandard parts being used in the shuttle is just one data point. Who knows how many substandard parts went into other products' increased failure modes whose burdens were borne by third parties (including US and foreign citizens).
> It's not typical for "kid[s]" to be put in prison for carrying "a few grams of weed.
Maybe not where you're at.
At trial, the government would have to prove that, more likely than not, specific sub-standard aluminium caused a specific launch to fail. (Sometimes, where there may be many occurrences of failures, you can create a statistical model showing that some defect caused an X% increase in failures. That doesn't seem applicable here, where there were a handful of failures that happened in different ways.)
> 2) It's not typical for "kid[s]" to be put in prison for carrying "a few grams of weed." It might happen sometimes (in a country of 330 million people, everything that can happen will happen sometimes) but it's not typical.
Alabama Police Ruined a Couple's Lives Over $50 of Weed. Now the Charges Against Them Have Been Dropped
Greg and Teresa Almond filed a federal civil rights lawsuit against the Randolph County Sheriff's Department after it raided their house and seized their savings for a misdemeanor pot offense.
https://reason.com/2019/04/16/alabama-police-ruined-a-couple...
Alabama Police Ruined a Couple's Lives Over $50 of Weed. Now the Charges Against Them Have Been Dropped
Greg and Teresa Almond filed a federal civil rights lawsuit against the Randolph County Sheriff's Department after it raided their house and seized their savings for a misdemeanor pot offense.
https://reason.com/2019/04/16/alabama-police-ruined-a-couple...
Seriously, how is the penalty only $46 million? Should be multiple billions of dollars. And the employees who faked the tests should be in prison.
I’m not suggesting prison but some kind of charge, even if it’s a misdemeanor, is needed. Whoever faked the test result needs a record that would hopefully follow them.
Would you rather hire someone who was busted with a small amount of drugs or someone who faked test results for NASA?
Would you rather hire someone who was busted with a small amount of drugs or someone who faked test results for NASA?
Destruction of $700m property due to negligence certainly seems jailworthy to me. At the very least, this company should be paying a fine which actually recovers the damages.
Negligence? That's outright fraud.
Last time I was up for jury duty, I was asked to consider a sentence of up to 20 years in prison for the crime of receiving a stolen Xbox.
That's the kind of crowd you end up running with if you do things like trying marijuana in college.
edit: Real question, though. I'm often called to report for jury duty but have yet to actually sit on a jury. My understanding is the jury is explicitly charged to reach a "guilty of accusation" or "not guilty" decision. And sentencing is a whole separate phase of the trial in which the jury is not involved. I'm sure this varies with types of charges and with locale, but... am I missing something about how you were asked as a juror to consider that sentence?
edit: Real question, though. I'm often called to report for jury duty but have yet to actually sit on a jury. My understanding is the jury is explicitly charged to reach a "guilty of accusation" or "not guilty" decision. And sentencing is a whole separate phase of the trial in which the jury is not involved. I'm sure this varies with types of charges and with locale, but... am I missing something about how you were asked as a juror to consider that sentence?
> am I missing something about how you were asked as a juror to consider that sentence?
It was probably asked during the "voir dire" phase; that's where if you actually perform jury duty and have to go down to the court, your group might be called in to sit for "voir dire", where the lawyers for each side (prosecution and defendant) ask each potential jury member certain questions regarding the case.
The questions are meant to allow the lawyers to pick from the group a pool of jurors - those that make it through voir dire perform the actual jury duty of being the jury. Those who don't, go home.
And if you ever want to never serve on a jury, or never be called again for jury duty, mention that you support FIJA or the concept of a "fully informed jury".
It's like a poison pill for ever serving on a jury again, but usually, if you are anything like a software engineer or similar (which they do ask your profession in voir dire), they will generally skip you (they really, really don't want anyone with that kind of mindset of extreme logic, reasoning, rationality, process flow, etc).
But if you mention FIJA - there's a chance they'll not only let you go, plus strike you from the "call list" - but that any other potential juror in the room will get the same treatment.
FIJA is not against the law. It's your right as a citizen to understand and be "fully informed", but the courts (or our justice system) have made it so that most people aren't (for instance, most people don't know or understand anything about "jury nullification", and the system plays to this ignorance). They will say such things prior to the jury leaving to decide the case that the jury can only consider the "guilty or not guilty" according to the law, etc - which is a complete lie. A juror or jury can decide "not guilty" even if it is clear that the law was broken, if they feel the law is unjust. But they don't want you to know that you can do that as a juror or jury. So they don't "fully inform" you of that option.
If you really want to get them into a tizzy, print out 500 business cards with the FIJA info on them, and put them on cars in the parking lots around the courthouse...note that you might need a permit for this, or they might have made it "illegal" to do this to cars around a courthouse (it might be considered jury tampering or something - amazing that by informing people of their rights as a juror and citizen, that would be considered "tampering"...), so understand that, too.
It was probably asked during the "voir dire" phase; that's where if you actually perform jury duty and have to go down to the court, your group might be called in to sit for "voir dire", where the lawyers for each side (prosecution and defendant) ask each potential jury member certain questions regarding the case.
The questions are meant to allow the lawyers to pick from the group a pool of jurors - those that make it through voir dire perform the actual jury duty of being the jury. Those who don't, go home.
And if you ever want to never serve on a jury, or never be called again for jury duty, mention that you support FIJA or the concept of a "fully informed jury".
It's like a poison pill for ever serving on a jury again, but usually, if you are anything like a software engineer or similar (which they do ask your profession in voir dire), they will generally skip you (they really, really don't want anyone with that kind of mindset of extreme logic, reasoning, rationality, process flow, etc).
But if you mention FIJA - there's a chance they'll not only let you go, plus strike you from the "call list" - but that any other potential juror in the room will get the same treatment.
FIJA is not against the law. It's your right as a citizen to understand and be "fully informed", but the courts (or our justice system) have made it so that most people aren't (for instance, most people don't know or understand anything about "jury nullification", and the system plays to this ignorance). They will say such things prior to the jury leaving to decide the case that the jury can only consider the "guilty or not guilty" according to the law, etc - which is a complete lie. A juror or jury can decide "not guilty" even if it is clear that the law was broken, if they feel the law is unjust. But they don't want you to know that you can do that as a juror or jury. So they don't "fully inform" you of that option.
If you really want to get them into a tizzy, print out 500 business cards with the FIJA info on them, and put them on cars in the parking lots around the courthouse...note that you might need a permit for this, or they might have made it "illegal" to do this to cars around a courthouse (it might be considered jury tampering or something - amazing that by informing people of their rights as a juror and citizen, that would be considered "tampering"...), so understand that, too.
Your guess is correct, it was during the jury questions before the trial began. They mostly asked us stuff like whether we had anything going on that would be problematic if the trial ran long. (This being the DC area, several people said yes and then, when asked about the nature of the problem, answered with a polite version of "I could tell you but then I'd have to kill you." The judge, having presumably heard this a thousand times before, took it in stride.)
At one point, they asked if we would be able to consider the full range of punishment during sentencing. Naturally, we asked what that range was, and both lawyers and the judge all had to confer to decide whether or not we were allowed to know. (Apparently that question was new to them. Weird.) They finally decided we were allowed to know, and the answer was up to 20 years in prison. At that point I stated that I could not possibly consider 20 years in prison for the crime of receiving stolen property. I was subsequently cut from the jury, probably because of that, although of course they didn't say why.
Incidentally, one of the guys who had important classified stuff going on at work that would pose a big problem if the trial ran long ended up serving on the jury. I hope for his sake that it didn't actually run long.
At one point, they asked if we would be able to consider the full range of punishment during sentencing. Naturally, we asked what that range was, and both lawyers and the judge all had to confer to decide whether or not we were allowed to know. (Apparently that question was new to them. Weird.) They finally decided we were allowed to know, and the answer was up to 20 years in prison. At that point I stated that I could not possibly consider 20 years in prison for the crime of receiving stolen property. I was subsequently cut from the jury, probably because of that, although of course they didn't say why.
Incidentally, one of the guys who had important classified stuff going on at work that would pose a big problem if the trial ran long ended up serving on the jury. I hope for his sake that it didn't actually run long.
I find your comments about FIJA maddening. Providing alleged victims and the accused a fair trial is one of the only things I think government should be involved in, but ours can't even get that right.
In Virginia, which I believe is the only state like this, a jury which renders a guilty verdict then reconvenes to determine the sentence. Everywhere else sentencing is done by the judge.
Was it in the USA? I'm surprised there would be a jury on a theft case. Where I am from, I heard jury are limited to criminal courts where the minimal case is something like manslaughter.
Yes, in the US. The Constitution guarantees the right to a jury trial for any “serious” offense, which apparently means anything where the potential sentence is greater than six months. Individual states can grant the right to a jury trial for lesser offenses as well if they wish.
That's insane.
Was that under a three strikes law?
No, that’s just the maximum punishment prescribed for felony receiving stolen property.
That can only be done if first, it can be proven that it was poor materials that caused the failure, and two, it's only useful if the company can actually afford a fine like that.
You also have to consider what your motivation behind punishment is; is it re-education? Is it compensation of damages? Or is it to just completely bankrupt the company because Never Again? I mean in that last case, NASA and the US as a whole may find itself at a disadvantage in the aluminum industry.
You also have to consider what your motivation behind punishment is; is it re-education? Is it compensation of damages? Or is it to just completely bankrupt the company because Never Again? I mean in that last case, NASA and the US as a whole may find itself at a disadvantage in the aluminum industry.
Funny how these are never a consideration when it’s an individual’s life on the line.
Edit: on second thought, these often are considered for individuals, as long as they’re sufficiently sympathetic/rich. See for example Brock Turner. I should say, funny how these are often not considered for individuals, depending on who they are.
Edit: on second thought, these often are considered for individuals, as long as they’re sufficiently sympathetic/rich. See for example Brock Turner. I should say, funny how these are often not considered for individuals, depending on who they are.
Prison serves the purpose of deterrence, while the fine serves the purpose of compensation. Some amount of forgiveness is actually better for everyone, but that doesn't excuse the responsibility for restitution.
How does being able to afford the fine have anything to do with it!?
The company caused 700M damage to the US tax payers (assuming the proof part), they should be on the hook to repay that, if they can't they should go bankrupt like anyone else who owes more money than they have.
The company caused 700M damage to the US tax payers (assuming the proof part), they should be on the hook to repay that, if they can't they should go bankrupt like anyone else who owes more money than they have.
Depends on the details of the situations. The dude who tried to sneak coke past border security has poor judgement. The dude who rubber stamped the Friday at 4:55 test after every test that week passed is just human.
it's really hard to push onto employees as it's hard to determine if they were acting on their own or being pressured into doing such things. (as even acting on one's own can be motivated by unhealthy stress or such things which can be outside of their control / responsibility.)
that being said, for the incurred loss, 46 million is tiny.
that being said, for the incurred loss, 46 million is tiny.
If it was an individual, then the company itself should have discovered it years ago through an internal audit or a secondary check / re-certification - they didn't do that. They had fifteen years or however long it was to find that out.
They didn't catch it themselves, they didn't take care of it themselves; that means the company as a whole is responsible.
They didn't catch it themselves, they didn't take care of it themselves; that means the company as a whole is responsible.
Personally, I think it should be the board + CEO who goes to prison when it is a corporation that does something like this. Don't trust someone enough? Don't hire!
Disclosure: My ulterior motive is that I think corporations are way too big and also I found the Sun Tzu story of killing a general very interesting.
> Sun Tzu said: "If words of command are not clear and distinct, if orders are not thoroughly understood, then the general is to blame." So he started drilling them again, and this time gave the order "Left turn," whereupon the girls once more burst into fits of laughter. Sun Tzu: "If words of command are not clear and distinct, if orders are not thoroughly understood, the general is to blame. But if his orders ARE clear, and the soldiers nevertheless disobey, then it is the fault of their officers."
> So saying, he ordered the leaders of the two companies to be beheaded. Now the king of Wu was watching the scene from the top of a raised pavilion; and when he saw that his favorite concubines were about to be executed, he was greatly alarmed and hurriedly sent down the following message: "We are now quite satisfied as to our general's ability to handle troops. If We are bereft of these two concubines, our meat and drink will lose their savor. It is our wish that they shall not be beheaded." Sun Tzu replied: "Having once received His Majesty's commission to be the general of his forces, there are certain commands of His Majesty which, acting in that capacity, I am unable to accept." Accordingly, he had the two leaders beheaded, and straightway installed the pair next in order as leaders in their place. When this had been done, the drum was sounded for the drill once more; and the girls went through all the evolutions, turning to the right or to the left, marching ahead or wheeling back, kneeling or standing, with perfect accuracy and precision, not venturing to utter a sound.
Disclosure: My ulterior motive is that I think corporations are way too big and also I found the Sun Tzu story of killing a general very interesting.
> Sun Tzu said: "If words of command are not clear and distinct, if orders are not thoroughly understood, then the general is to blame." So he started drilling them again, and this time gave the order "Left turn," whereupon the girls once more burst into fits of laughter. Sun Tzu: "If words of command are not clear and distinct, if orders are not thoroughly understood, the general is to blame. But if his orders ARE clear, and the soldiers nevertheless disobey, then it is the fault of their officers."
> So saying, he ordered the leaders of the two companies to be beheaded. Now the king of Wu was watching the scene from the top of a raised pavilion; and when he saw that his favorite concubines were about to be executed, he was greatly alarmed and hurriedly sent down the following message: "We are now quite satisfied as to our general's ability to handle troops. If We are bereft of these two concubines, our meat and drink will lose their savor. It is our wish that they shall not be beheaded." Sun Tzu replied: "Having once received His Majesty's commission to be the general of his forces, there are certain commands of His Majesty which, acting in that capacity, I am unable to accept." Accordingly, he had the two leaders beheaded, and straightway installed the pair next in order as leaders in their place. When this had been done, the drum was sounded for the drill once more; and the girls went through all the evolutions, turning to the right or to the left, marching ahead or wheeling back, kneeling or standing, with perfect accuracy and precision, not venturing to utter a sound.
> Don't trust someone enough? Don't hire!
This is 100% impossible to carry out at the scale of a corporation. You don't have enough data about a person staging in front of you to bet a prison sentence on their never ever doing anything wrong, maybe unless you've been friends with them for years. The board+CEO have even less visibility and control over hiring decisions made by middle managers. You would make every leadership position a game of Russian roulette.
This is 100% impossible to carry out at the scale of a corporation. You don't have enough data about a person staging in front of you to bet a prison sentence on their never ever doing anything wrong, maybe unless you've been friends with them for years. The board+CEO have even less visibility and control over hiring decisions made by middle managers. You would make every leadership position a game of Russian roulette.
I think his point is that this type of environment would discourage or essentially ban the type of huge corporation that depends on unaccountable middle managers to offload liability.
The DOJ press release linked elsewhere in the thread says at least one employee was jailed:
"Second, from in or about 2002 through September 2015, Dennis Balius, the SPI testing lab supervisor, led a scheme to alter tests within SPI’s computerized systems and provide false certifications with the altered results to customers. Balius also instructed employees to violate other testing standards, such as increasing the speed of the testing machines or cutting samples in a manner that did not meet the required specifications. Balius pleaded guilty in July 2017 and was sentenced to three years in prison and ordered to pay over $170,000 in restitution."
The penalty is only $46 million because they've yet to be able to determine (like in court) that the claimed loses (like the failed launches) were actually a consequence of SPI's fraud. The damages are likely on the scale of the orders actually made.
"Second, from in or about 2002 through September 2015, Dennis Balius, the SPI testing lab supervisor, led a scheme to alter tests within SPI’s computerized systems and provide false certifications with the altered results to customers. Balius also instructed employees to violate other testing standards, such as increasing the speed of the testing machines or cutting samples in a manner that did not meet the required specifications. Balius pleaded guilty in July 2017 and was sentenced to three years in prison and ordered to pay over $170,000 in restitution."
The penalty is only $46 million because they've yet to be able to determine (like in court) that the claimed loses (like the failed launches) were actually a consequence of SPI's fraud. The damages are likely on the scale of the orders actually made.
As with individuals, the measure of a society is how they treat those with no power over them.
A lab supervisor did go to prison over this last year, and it looks like there were charges against someone else
https://www.oregonlive.com/portland/2018/08/company_supervis...
https://www.oregonlive.com/portland/2018/08/company_supervis...
Exactly, I can't believe no one was sent to prison over this.
> Corporate and personal greed perpetuated this fraud against the government and other private customers, and this resolution holds these companies accountable for the harm caused by their scheme
Did he misspeak or are only the companies being held accountable? I don't think a company can exhibit "personal greed." Is he implying there are individuals responsible as well who aren't being held accountable?
Did he misspeak or are only the companies being held accountable? I don't think a company can exhibit "personal greed." Is he implying there are individuals responsible as well who aren't being held accountable?
As Nasa is a government agency, I wonder if lack of regulation and oversight played a hand in this.
This sort of scenario is exactly why I'm concerned about the recent trend towards rampant free market economics and libertarianism. Those ideas have merit in certain situations, but also increase risk to the public as witnessed here by losses that are proportionately much higher than any efficiency savings.
I'm also concerned about how many other agencies and companies might be affected by this sort of fraud that we haven't heard about yet. We saw the same thing happen with faulty (mostly imported) capacitors, insecure voting machines, increased healthcare costs, illness/financial hardship from GMOs and pesticides (again, mostly oversees), the list goes on.
It didn't used to be like this when I was growing up in the 80s and 90s. We had different fraud then (for example monopolies and duopolies that held back telecommunications, the savings and loan scandal, industrial waste superfund sites...), but also a stronger manufacturing base in our economy. I'm just going to throw the idea out there that we're seeing a link between deregulation, fraud, increased costs on the public sector, and a slowing economy.
This sort of scenario is exactly why I'm concerned about the recent trend towards rampant free market economics and libertarianism. Those ideas have merit in certain situations, but also increase risk to the public as witnessed here by losses that are proportionately much higher than any efficiency savings.
I'm also concerned about how many other agencies and companies might be affected by this sort of fraud that we haven't heard about yet. We saw the same thing happen with faulty (mostly imported) capacitors, insecure voting machines, increased healthcare costs, illness/financial hardship from GMOs and pesticides (again, mostly oversees), the list goes on.
It didn't used to be like this when I was growing up in the 80s and 90s. We had different fraud then (for example monopolies and duopolies that held back telecommunications, the savings and loan scandal, industrial waste superfund sites...), but also a stronger manufacturing base in our economy. I'm just going to throw the idea out there that we're seeing a link between deregulation, fraud, increased costs on the public sector, and a slowing economy.
NASA has a ton of regulation and oversight that their contractors abide by. However, if you are in a trusted position of testing materials and not only you but your entire lab is compromised by cheating, how is anyone going to really find out unless someone speaks up? They were speeding up the test equipment between customer visits of the lab. This wasn't just laziness or someone fudging the numbers because its close enough, this was straight up fraud. NASA can't afford to test every little bit of everything that goes into a rocket themselves. They rely on their contractors to do their due diligence and make sure their vendors do everything right. Maybe a lot of stuff slipped past. There's probably bits of deficient aluminum all over the place but it held up enough during testing so no one noticed.
Fraud is a crime. It has no place in a free (i.e. libertarian) society.
I believe fraud is seen by libertarians as a type of theft and theft is a crime in any society or body of thought that values property rights. Nonaggression towards others and respect for property rights are the top tenents of libertarianism.
Even Ayn Rand, queen of capitalism and profits said the purpose of the courts is:
> to protect your property and contracts from breach or fraud by others, and to settle disputes by rational rules, according to objective law.
I believe fraud is seen by libertarians as a type of theft and theft is a crime in any society or body of thought that values property rights. Nonaggression towards others and respect for property rights are the top tenents of libertarianism.
Even Ayn Rand, queen of capitalism and profits said the purpose of the courts is:
> to protect your property and contracts from breach or fraud by others, and to settle disputes by rational rules, according to objective law.
Honest questions:
1. Is there any compelling evidence that this incident is attributable to "free market economics"? It seems equally possible that it's attributable to notoriously poor incentive structures in government agencies. In my view it seems most likely that it's neither, in this particular case.
2. Is there evidence that there is a "recent trend towards rampant free market economics and libertarianism"? Again, this is an honest question; I've not seen a claim like this made before.
1. Is there any compelling evidence that this incident is attributable to "free market economics"? It seems equally possible that it's attributable to notoriously poor incentive structures in government agencies. In my view it seems most likely that it's neither, in this particular case.
2. Is there evidence that there is a "recent trend towards rampant free market economics and libertarianism"? Again, this is an honest question; I've not seen a claim like this made before.
I'm not sure about your first question, but for your second question the evidence is everywhere. My news feed is filled with multiple articles per day about cutting regulations on just about everything, but mostly impacting the environment, or social justice issues:
https://www.google.com/search?q=deregulate&tbm=nws
Part of the issue is geographic. Being born and raised in Idaho, I've found myself surrounded by libertarians. Conservative-leaning people tend to move here from more liberal states on the coasts.
Now where it really gets interesting is when libertarian think tanks do the opposite of what might be expected:
https://www.hjnews.com/montpelier/voter-initiatives/article_...
In this case Idaho Freedom Foundation (a local libertarian think tank) is against public voter initiatives (which may someday lead to the legalization of marijuana in Idaho) but is for getting public approval for urban renewal projects like the Boise city library teardown/rebuild and new stadium.
You just can't make this stuff up.
https://www.google.com/search?q=deregulate&tbm=nws
Part of the issue is geographic. Being born and raised in Idaho, I've found myself surrounded by libertarians. Conservative-leaning people tend to move here from more liberal states on the coasts.
Now where it really gets interesting is when libertarian think tanks do the opposite of what might be expected:
https://www.hjnews.com/montpelier/voter-initiatives/article_...
In this case Idaho Freedom Foundation (a local libertarian think tank) is against public voter initiatives (which may someday lead to the legalization of marijuana in Idaho) but is for getting public approval for urban renewal projects like the Boise city library teardown/rebuild and new stadium.
You just can't make this stuff up.
Do you really think Google search trends are indicitive of "recent trends" on political leanings on regulation?
If so, you might be interested to see that there is appears to actually be a relative swing toward regulation: https://trends.google.com/trends/explore?date=all&geo=US&q=r...
If so, you might be interested to see that there is appears to actually be a relative swing toward regulation: https://trends.google.com/trends/explore?date=all&geo=US&q=r...
I don't know man. That sounds more like you're in a media bubble than it sounds indicative of some broader trend. The media report the exceptional, not the norm. It doesn't mean you're wrong, but just that this evidence is about as weak as it gets.
Somebody at Sapa, probably somebodies, need to go to prison. For 19 years, to match the time of the fraud.
But why? They tested not sold metal. The only possible reason is the metal company paid them.
It's NASA, not Nasa.
amelius(1)
Not to stoke a fire, but I just wondered how the same failure would be viewed if it was done by a Chinese or Indian Manufacturer. Immediately it would have reinforced a stereotype of outsourcing being cheap and that being the issue. When in reality the truth is that there are frauds, lazy and useless people everywhere on the planet.
It's BAU for Chinese manufacturers. The question is not whether they will try to save costs on materials, it's when and on which parts.
If you're outsourcing production, you have to check the goods regularly.
If you're outsourcing production, you have to check the goods regularly.
How do you know India and China are exempt? It's the only place in the world that does smelting. Everything in the USA is second gen.
There's a lot of gamesmanship out there. Every part has different numbers for certs. Vendors go out of business because of some scheme with cold unit testing.
Imagine if people were straight with each other. Wow work would be really nice.
There's a lot of gamesmanship out there. Every part has different numbers for certs. Vendors go out of business because of some scheme with cold unit testing.
Imagine if people were straight with each other. Wow work would be really nice.
According to court documents, SPI has agreed to plead guilty to one count of mail fraud, and SEI has entered into a deferred prosecution agreement (DPA) in connection with a criminal information filed today charging the company with mail fraud. As part of the plea agreement, SPI has agreed to pay $34.1 million in combined restitution to NASA, the Department of Defense’s Missile Defense Agency (MDA), and commercial customers. SPI has also agreed to forfeit $1.8 million in ill-gotten gains. The plea agreement remains subject to acceptance by the court at a plea hearing currently scheduled for May 13, 2019, before U.S. District Judge Liam O’Grady. The DPA with SEI is conditioned on the court’s acceptance and SPI’s satisfaction of the plea agreement’s terms.
SPI also agreed to pay $34.6 million as part of a related civil settlement to resolve its liability under the False Claims Act for causing a government contractor to invoice MDA and NASA for aluminum extrusions that did not comply with contract specifications. Government contractors purchased aluminum extrusions for use on rockets for NASA and missiles provided to the MDA. Under the terms of the civil settlement agreement, SPI will satisfy the $34.6 million settlement through credits totaling $23.6 million for its restitution payments as part of the criminal plea agreement, plus additional payments of $6 million to NASA and $5 million to the MDA.
[0]: https://www.justice.gov/opa/pr/aluminum-extrusion-manufactur...