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Judge hears objections from crash victims' families

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DOJ defends plea deal as fair and just

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Families call plea agreement a 'sweetheart' deal lacking

accountability

(Recasts throughout, adds details from hearing)

By Mike Spector and Sheila Dang

FORT WORTH, TEXAS, Oct 11 (Reuters) -

A federal judge on Friday pressed U.S. Justice Department

officials to justify the terms of Boeing's ( BA ) agreement to plead

guilty to fraud in the wake of two fatal 737 MAX crashes but

stopped short of ruling on whether to accept the deal.

Attorneys for Boeing ( BA ) and federal prosecutors argued

to U.S. District Judge Reed O'Connor in Fort Worth, Texas that

he should accept the plea deal, while lawyers for relatives of

the crash victims urged him to reject it. The U.S. planemaker

agreed in July to plead guilty to conspiring to defraud

regulators.

Judge O'Connor said on Friday that he would issue a

ruling as soon as possible.

The judge has fielded hundreds of pages of legal briefs from

the parties over the past several weeks. In the courtroom on

Friday, Paul Cassell, one of the lawyers representing the

families of the 346 people who perished in the plane crashes,

which occurred in 2018 and 2019, said "there are eight reasons

to reject this rotten plea deal." They included his contention

that the agreement allows a cash-flush corporation to dictate

its punishments before sentencing, and that the deal failed to

go far enough in holding Boeing ( BA ) or its executives accountable

for the deaths of the families' loved ones.

Sean Tonolli, the Justice Department's senior deputy

chief of the criminal division's fraud section, defended the

agreement as "fair and just," and said that the government

modified its approach to the plea agreement to take into account

the families' concerns.

Prosecutors arrived at the plea agreement after an extensive

investigation and a series of meetings with the families,

prosecutors said. "Yet in the end," the prosecutors said in an

August court filing, DOJ officials have "not found the one thing

that underlies the families' most passionate objections to the

proposed resolution: evidence that could prove beyond a

reasonable doubt that Boeing's ( BA ) fraud caused the deaths of their

loved ones."

Boeing ( BA ) "regrets the unspeakable losses suffered by the

families," Mark Filip, a lawyer representing Boeing ( BA ), told the

judge. He argued the judge should accept the plea agreement. The

company previously said in a court filing that it was "prepared

to plead guilty and thereby accept ultimate responsibility for

the crime" of conspiring to defraud regulators. The planemaker

has significantly strengthened, and increased investment in, its

safety and compliance practices, Boeing ( BA ) said.

During the hearing, Judge O'Connor pressed Tonolli to

explain why the Justice Department was seeking a binding plea

agreement that limits his ability to impose punishments during

sentencing that go beyond the deal's current terms and

recommendations.

QUESTIONING THE PLEA DEAL

Boeing ( BA ) in July finalized the agreement with prosecutors

requiring the planemaker to plead guilty to fraud in connection

with the two fatal plane crashes.

The planemaker agreed to pay up to a $487.2 million fine and

spend at least $455 million on improving safety and compliance

practices over three years of court-supervised probation as part

of the plea deal. The agreement allows the judge to cut the fine

in half by crediting Boeing ( BA ) for money it previously paid in the

case.

Justice Department officials pushed Boeing ( BA ) to take the plea

deal after finding the company had violated the terms of a 2021

agreement that had shielded it from prosecution over the

crashes, which effectively reopened the case.

That finding followed a separate January in-flight blowout

that exposed ongoing safety and quality issues at Boeing ( BA ). A

panel blew off a new Boeing 737 MAX 9 jet during a Jan. 5 Alaska

Airlines flight, just two days before the 2021 agreement

shielding Boeing ( BA ) from prosecution over the previous fatal

crashes expired.

In the criminal case over the fatal crashes, prosecutors

contend they have extracted an agreement from Boeing ( BA ) to plead

guilty to the most serious charge they could prove, along with

payment of the maximum legally allowed penalty.

The two crashes at the center of the criminal case against

Boeing ( BA ) occurred in Indonesia and Ethiopia over a five-month

period.

A guilty plea, should the judge accept it, would brand

Boeing a convicted felon for conspiring to defraud the U.S.

Federal Aviation Administration (FAA) about problematic software

affecting the flight-control systems in the planes.

On top of the plea deal's financial implications, the

agreement also imposes a monitor to audit Boeing's ( BA ) safety and

compliance efforts and allows the judge at sentencing to force

the company to pay additional compensation to families whose

relatives died in the crashes.

Judge O'Connor, considered one of the most conservative

judges in the country, also questioned federal prosecutors about

a clause in the plea agreement that said the monitor would be

selected in keeping with the Justice Department's diversity and

inclusion commitments.

Tonolli responded that the provision "doesn't mean in

practice that we select less qualified monitors."

Victims' relatives want Boeing ( BA ) and its executives charged

with crimes holding them responsible for the deaths of their

loved ones and any evidence of wrongdoing presented in a public

trial. They have also argued Boeing ( BA ) should have to pay up to

$24.78 billion in connection with the crashes.

Polish national airline LOT also opposes the plea deal

and has argued it should have the same rights as the crash

victims' families.

Judge O'Connor has previously expressed strong sympathy for

the families of the 737 MAX crash victims and called the Boeing ( BA )

case "the deadliest corporate crime in U.S. history."