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FBI Raids Van Nuys Bearings Firm; Shuttle Supplier Also Probed

October 07, 1988|GREGORY CROUCH | Times Staff Writer

Alliance Bearing Industries in Van Nuys--which sold more than 2,000 allegedly counterfeit ball bearings installed in Boeing-made commercial jets--was raided by the FBI on Monday as part of a criminal investigation of the firm by the U.S. attorney's office.

The Federal Aviation Administration has said a preliminary investigation begun last month indicates that the allegedly counterfeit bearings pose no safety threat to passengers.

The bearings were placed in all of Boeing's model types manufactured from April, 1986, through January, 1988, including 737, 747, 757 and 767 models. "We are still monitoring the problems with the ball bearings," said David Duff, an FAA spokesman in Seattle, where Boeing is based.

FBI agents seized business records and bearings, according to Thomas A. Hagemann, an assistant U.S. attorney in the government fraud and public corruption section of the U.S. attorney's office.

Not a Surprise

The search warrant issued for the FBI raid is under seal in U.S. District Court in Los Angeles. "There is information in there we do not feel we can disclose to the public at this time," said Hagemann. He refused to elaborate.

Sources close to the investigation say Alliance is under investigation for wire fraud, mail fraud, making false statements to the government and other charges.

Alliance has denied allegations that it counterfeited parts but admits that some of the bearings it sold to Boeing were not the bearings that labels said they were. Alliance says the alleged counterfeiting was the work of one employee.

David Shaub, Alliance's attorney, said the criminal investigation did not come as a shock. "It wasn't any surprise," said Shaub. "We know for sure one employee was heavily involved in mismarking bearings."

The allegedly counterfeit parts were first mentioned publicly in a July 28 lawsuit filed by Torrington Co., a Torrington, Conn.-based ball bearings manufacturer, against Alliance, a parts distributor.

Torrington Co., which is owned by Ingersoll-Rand, sued Alliance for trademark counterfeiting among other charges.

Dispute Over Testing

Meanwhile, another Los Angeles area company is under investigation by a federal grand jury in Huntsville, Ala., for supplying potentially substandard parts used in the space shuttle Discovery, which ended a nearly flawless mission Monday.

The U.S. attorney's office in Alabama is investigating CBS Fasteners of Anaheim for allegedly failing to perform some safety tests on screws used in Discovery. CBS President Gerald Bozarth said more than 10 of CBS' customers have been issued subpoenas to appear in front of the grand jury.

Bozarth said CBS Fasteners isn't required to test its screws because the law requires that only government subcontractors perform such tests. CBS Fasteners is not a government subcontractor; it is a distributor that sells screws to anybody that wants them. "We don't know if our customers put them in a garbage can or a missile," he said.

Two San Fernando Valley firms are under investigation for selling substandard parts used in Discovery. A third company, A. O. Sammons, a Canoga Park parts manufacturer, was indicted in early September on charges related to allegedly substandard bolts used in a space laboratory that is part of the space shuttle scheduled for launch in March, 1990. The company is accused specifically of making false statements to NASA and of mail fraud stemming from bills sent for the parts.

NASA has been dismantling the space lab to remove the bolts. The agency estimates that it is spending about $1 million to remove Sammons bolts.

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