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Another Boeing Employee Charged

May 12, 2004|Peter Pae | Times Staff Writer

Federal prosecutors filed criminal charges against a third former Boeing Co. employee Tuesday, broadening an investigation into allegations that the company stole trade secrets from rival Lockheed Martin Corp. to win a multibillion-dollar rocket contract.

Larry Satchell, 65, a former rocket manager at Boeing's Huntington Beach facility, was charged with obstruction of justice, conspiracy and theft of trade secrets. The charges stemmed from the federal probe into Boeing's use of Lockheed materials to win a $5-billion contract in the late '90s to build a new generation of rockets known as Evolved Expendable Launch Vehicles, or EELV.

Last year, prosecutors filed criminal charges against former Boeing employees Kenneth Branch and William Erskine, both of whom worked with Satchell.

"He is innocent of these charges," Satchell's attorney, Michael W. Fitzgerald, said Tuesday. "Mr. Satchell enjoyed a distinguished career in aerospace for 40 years, and throughout his career he has contributed to our national defense."

Imposing one of the stiffest penalties ever levied against a defense contractor, the Air Force last summer stripped Boeing of about $1 billion of rocket contracts and indefinitely suspended the company from seeking future rocket work.

The rocket investigation is being led by the U.S. attorney's office in Los Angeles.

Prosecutors claim that Branch, who previously worked for Lockheed, illegally possessed proprietary Lockheed documents and that Erskine hired Branch because he had the documents.

Branch and Erskine have pleaded not guilty.

According to the charges filed Tuesday, Satchell led Boeing's "capture team," a group directed to "acquire intelligence, technical and cost data" on Lockheed Martin's proposal for the EELV rocket contract.

The charges against Satchell appear to rely significantly on the testimony of another former Boeing employee, Matthew Jew, who was given immunity from prosecution in April.

Jew worked at Boeing as a cost estimator. In an affidavit, he told investigators that Satchell had given him documents that "appeared to be cost-data-associated with Lockheed Martin lift vehicles" that Boeing used to calculate an estimate of its rival's rocket costs.

Then, in the summer of 1999, as Boeing lawyers were concluding an internal investigation into the alleged theft, Satchell told Jew to destroy the documents he had been given, which Jew did, according to court papers. In March, Jew was able to recover some electronic data he had stored in his laptop computer.

Satchell told Jew that they could "lose their jobs and that 'if this were to come out ... Boeing could lose the entire EELV program,' " according to the affidavit.

The charges against Satchell came nearly five years after Boeing fired Branch and Erskine and reprimanded Satchell for possessing the proprietary documents and then destroying them. Satchell retired from Boeing in 1999.

Shortly after they were fired, Branch and Erskine filed a wrongful-termination lawsuit that Boeing eventually won. But during the discovery stage of the lawsuit, information surfaced that led the Air Force and Justice Department to investigate the Lockheed case.

Boeing has maintained that the document pilfering involved only a handful of employees and that they acted on their own. No other Boeing senior officials or the company itself have been named in the criminal charges.

The Lockheed case is one of two major ethics scandals that have rocked the aerospace giant in the last year.

Boeing also is facing the loss of a $23-billion Air Force deal for 100 aerial tankers. The tanker deal is under review by the Pentagon partly because of allegations that Boeing was talking to a Pentagon acquisition official about a job at the company while the official was negotiating the tanker deal.

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