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Leading Maker of Aircraft Bolts Charged with Inspection Fraud

May 10, 1990

SEATTLE (AP) _ A phantom ″Inspector 11″ was part of a scheme to falsify test reports by the biggest maker of aerospace fasteners and two managers over 15 years, the government has charged.

A complaint filed Wednesday in U.S. District Court against VSI Corp. is the largest to date in a two-year investigation of the integrity, testing and inspection of bolts and other parts used to hold engines, wheels and other key aircraft components in place, assistant U.S. attorney Bruce D. Carter said.

″The integrity of these products is often essential to the safe operation of the aircraft on which they are installed,″ the complaint said.

VSI, a Fairchild Industries Inc. subsidiary, is accused of skimping on tests and inspections, sometimes even delivering substandard parts to boost profits.

Carter said an initial hearing before a federal magistrate is likely Friday.

Eight previous defendants have pleaded guilty, and the investigation is continuing, he added.

The probe against VSI was triggered by a complaint from whistleblower Tom Runion shortly after he left his job in the metallurgical laboratory at VSI’s Voi-Shan plant in Chatsworth, Calif., Carter said. Some bolts made at the plant are intended to bear loads exceeding 200,000 pounds per square inch.

Inadequate Voi-Shan parts were found during aircraft assembly and installation and were returned to the manufacturer, but investigators do not know whether others were not caught in time, Carter said.

″No accidents have been traced to Voi-Shan bolts,″ he said.

Federal investigators learned that of the government and civilian buyers of Voi-Shan fasteners, The Boeing Co. and Northrop Corp. especially had been rejecting substantial deliveries after making their own tests.

Boeing said in a news release Wednesday that use of Voi-Shan materials ″has not compromised the integrity of Boeing products.″

A key development in the case was a raid on Voi-Shan last year in which more than 50 boxes of test report packets stamped by a fictitious ″Inspector 11″ were seized, Carter said.

James E. Ryan, a former Voi-Shan quality assurance manager, and Aram Marderian, a former metallurgical laboratory supervisor for Voi-Shan, also were named as defendants. Each faces a maximum sentence of five years in prison and a $250,000 fine if convicted.

The company and managers are charged with conspiracy to commit mail fraud, to make false statements to the government and to cheat the United States.

The company faces liability for false claims to the government, plus a maximum fine of twice the gross gain or loss, U.S. Attorney Mike McKay said.

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