John H. Durham, United States Attorney for the District of Connecticut, announced that a father and son who pleaded guilty to offenses stemming from the fraudulent sale of titanium to a Connecticut defense subcontractor were sentenced today in Bridgeport federal court.  U.S. District Judge Stefan R. Underhill sentenced JOHN J. PALIE, JR., 64, of Tiverton, Rhode Island, to 10 months of imprisonment and two years of supervised release, and JOHN J. PALIE III, 43, of Plymouth, Massachusetts, to six months of imprisonment and two years of supervised release.  Judge Underhill also ordered Palie Jr. to pay a $10,000 fine.

According to court documents and statements made in court, John Palie, Jr. is the owner and Chief Executive Officer of A&P Alloys, Inc. (“A&P”), a company in West Bridgewater, Massachusetts, that acquired and sold specialty metals, including titanium.  John Palie III was a manager at A&P, having responsibilities for, among other things, the purchase and sale of titanium, and the preparation of titanium orders for shipment and delivery to customers.  Palie Jr. and Palie III have admitted that they arranged two separate titanium sales to Lewis Machine, a Connecticut-based aircraft parts manufacturer, that involved false representations about the source and quality of the titanium.  Lewis Machine supplies titanium parts to Pratt & Whitney, which manufactures aircraft engines, including engines for U.S. Air Force fighter jets.

In April and May 2012, Palie Jr. and Palie III arranged a sale of 11 pieces of titanium to Lewis Machine, representing that the titanium had been certified as meeting an advanced aerospace quality standard when, in fact, it had never been certified as such.  The order listed Pratt & Whitney as the end buyer of the titanium.

In 2013, Palie Jr. and Palie III arranged another sale of titanium to Lewis Machine with Pratt & Whitney as the end buyer.  In August 2013, Palie III arranged for 400 pieces of titanium, along with certificates stating that the titanium originated from a particular mill and satisfied an advanced aerospace quality standard, to be delivered to Lewis Machine.  Due to concerns about the quality of the titanium, Pratt & Whitney directed Lewis Machine not to accept the titanium.  Palie III agreed to replace the 400 pieces with other titanium that satisfied the quality standard in question.  However, instead of replacing the titanium, he arranged for the returned 400 pieces to be sandblasted and re-stamped with the manufacturer’s mark of a different titanium mill so that they appeared to be replacements for the returned pieces.  In November 2013, Palie III had the falsely labeled pieces, along with false certificates, shipped back to Lewis Machine.

According to documents filed in the criminal case, John Palie Jr. and A&P settled a related civil lawsuit by agreeing to pay Pratt & Whitney $690,000 for losses Pratt & Whitney incurred in remediating problems caused by the uncertified titanium.

On June 27, 2018, Palie Jr. and Palie III each pleaded guilty to two counts of mail fraud.

This is Palie Jr.’s second federal conviction.  In January 2004, he was sentenced in the District of Massachusetts to two years of probation for failing to pay income taxes on more than $249,000 in business revenues that he diverted into a personal bank account.

“This prosecution and sentences that involve periods of incarceration send the message that suppliers of material to be used in military equipment face a very real possibility of prison time if they cut corners, cheat the system and potentially put members of our military at risk,” said U.S. Attorney Durham.

“Ensuring the integrity of the U.S. Department of Defense’s (DoD) procurement process is a top priority for the Defense Criminal Investigative Service (DCIS),” said Leigh-Alistair Barzey, Special Agent in Charge of the DCIS Northeast Field Office.  “Supplying substandard and non-conforming material disrupts the DoD supply chain, endangers the lives of U.S. service members and betrays the public’s trust.  Today’s sentencing is the direct result of a joint investigative effort and demonstrates our commitment to work with partner law enforcement agencies and the U.S. Attorney’s Office to investigate and prosecute individuals and companies that engage in fraudulent activity impacting the DoD.”

“Today's sentencing sends a clear signal that ensuring the safety of the Nation’s air transportation system remains a priority for the Department of Transportation Office of Inspector General (DOT-OIG),” said Douglas Shoemaker, DOT-OIG Regional Special Agent-in-Charge.  “Working with our law enforcement and prosecutorial colleagues, we will continue to pursue and prosecute those whose illegal actions compromise the integrity of the Department’s safety programs and potentially endanger the travelling public.”

This matter was investigated by the Defense Criminal Investigative Service, the U.S. Department of Defense Office of Inspector General, the U.S. Air Force Office of Special Investigations, and the U.S. Department of Transportation, Office of Inspector General.  The case was prosecuted by Assistant U.S. Attorney Henry Kopel.

John H. Durham, United States Attorney for the District of Connecticut, announced that JOHN J. PALIE, JR., 62, of Tiverton, Rhode Island, and JOHN J. PALIE III, 42, of Plymouth, Massachusetts, waived their right to be indicted and pleaded guilty today before U.S. District Judge Stefan R. Underhill in Bridgeport to fraud offenses stemming from their having sold titanium to a Connecticut defense subcontractor.

According to court documents and statements made in court, JOHN PALIE, JR. is the owner and Chief Executive Officer of A&P Alloys, Inc. (“A&P”), a company in West Bridgewater, Massachusetts, that acquired and sold specialty metals, including titanium.  JOHN PALIE III was a manager at A&P, having responsibilities for, among other things, the purchase and sale of titanium, and the preparation of titanium orders for shipment and delivery to customers.  In pleading guilty, PALIE JR. and PALIE III admitted that they arranged two separate titanium sales to a Connecticut-based aircraft parts manufacturer that involved false representations about the source and quality of the titanium.  The aircraft parts manufacturer supplies titanium parts to a company that manufactures aircraft engines, including engines for U.S. Air Force fighter jets.

In April and May 2012, PALIE JR. and PALIE III arranged a sale of 11 pieces of titanium to the Connecticut aircraft parts manufacturer, representing that the titanium had been certified as meeting an advanced aerospace quality standard when, in fact, it had never been certified as such.  The order listed the engine manufacturer as the end buyer of the titanium.

In 2013, PALIE JR. and PALIE III arranged another sale of titanium to the Connecticut aircraft parts manufacturer with the engine manufacturer as the end buyer.  In August 2013, PALIE III arranged for 400 pieces of titanium, along with certificates stating that the titanium originated from a particular mill and satisfied an advanced aerospace quality standard, to be delivered to the aircraft parts manufacturer.  Due to concerns about the quality of the titanium, the engine manufacturer directed the aircraft parts manufacturer not to accept the titanium.  PALIE III agreed to replace the 400 pieces with other titanium that satisfied the quality standard in question.  However, instead of replacing the titanium, he arranged for the returned 400 pieces to be sandblasted and re-stamped with the manufacturer’s mark of a different titanium mill so that they appeared to be replacements for the returned pieces.  In November 2013, PALIE III had the falsely labeled pieces, along with false certificates, shipped back to the aircraft parts manufacturer.

The government contends that the losses sustained by the multiple victim companies that purchased fraudulently misrepresented titanium total $1,328,000.

PALIE JR. and PALIE III each pleaded guilty to two counts of mail fraud, an offense that carries a maximum term of imprisonment of 20 years on each count.  Judge Underhill scheduled sentencing for September 19, 2018.

PALIE JR. and PALIE III are released pending sentencing.

This matter is being investigated by the Defense Criminal Investigative Service, the U.S. Department of Defense Office of Inspector General, the U.S. Air Force Office of Special Investigations, and the U.S. Department of Transportation, Office of Inspector General.  The case is being prosecuted by Assistant U.S. Attorney Henry Kopel.