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Amanda Marshall, United States Attorney for the District of Oregon, emphasized the serious nature of the charges: “The allegation that military personnel were placed in harm’s way for the sole purpose of financial profit warrants vigorous investigation and prosecution.”
A criminal indictment is only an allegation and not evidence of guilt. All defendants are presumed to be innocent unless and until proven guilty.
The case is being investigated by the Department of Defense/Office of Inspector General/Defense Criminal Investigative Service, the Army Criminal Investigative Division Major Procurement Fraud Unit, the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigation Division, the Social Security Administration/Office of Inspector General, and Immigration and Customs Enforcement. The case is being prosecuted by Assistant U. S. Attorney Sean B. Hoar.
To highlight one contract, the United States set out the defendants’ actions related to the provision of aviation locknuts. In 2008, KPI was awarded contracts to supply aviation locknuts to the DOD, which were used to secure the blades to the main rotary assembly of the Kiowa Helicopter. The locknuts were flight critical and of proprietary design to be acquired from only two approved manufacturers, SPS or Bristol Industries. Rather than obtain the locknuts from one of the approved sources, Nicholas Bettencourt contacted Coloc Manufacturing in Texas and arranged with them to make and deliver thousands of non-conforming locknuts for fulfillment of the contract. Coloc was unaware that the parts they were contracted to manufacture were proprietary and were to be used in a flight-critical military application. In August 2008, the defective locknuts were detected throughout the military supply chain, which triggered the issuance of a DOD-wide safety alert, a worldwide inspection of all aircraft and stockpiles. After DOD notified KPI about the defective parts, Nicholas Bettencourt provided the DOD officials with false information in an attempt to cover up the acquisition of the defective locknuts.
KPI was also contacted by a DOD inspector, who requested KPI officials provide a written response as to the cause of the deficiency. KPI, through employee Josh Kemp, provided the DOD with a false explanation as to why the locknuts were not in compliance with the contract requirements, explaining that the parts were pulled from the wrong storage bin.
Even after the defendants were notified of the deficiency, instead of replacing the defective parts with authentic parts from the approved manufacturers, they went back to Coloc and directed them to re-machine another batch of non-conforming locknuts to more closely resemble the authentic part. The additional defective locknuts were shipped to the DOD, all with complete disregard for the contract specifications on this critical application and the potential for catastrophic failure to the helicopter and injury or death to the occupants as a result.
Again, when the second batch of defective locknuts were detected in the supply chain, DOD officials requested acquisition records from KPI. In response, Nicholas Bettencourt, in conjunction with Margo Densmore, created false records that reflected that the correct parts were ordered by KPI and supplied to the military. Several more requests for records were made by DOD officials, and in response to these requests, Harold Bettencourt II provided the DOD with falsified records and false explanations as to the origin of the defective locknuts. KPI, through Margo Densmore, altered purchase orders to indicate that the correct parts were ordered, and produced those altered documents to DOD officials and investigators. Harold Bettencourt II also provided DOD officials with these false purchase orders and provided DOD officials with a price quote from a parts dealer for authentic conforming parts that KPI never actually ordered. Harold Bettencourt II obtained this quote for the purpose of deceiving the DOD into believing that the correct parts had been ordered.