Feds Say Oregon Company Sold Defective Parts To Defense Department

Counterfeit parts entering the supply chain are a growing problem, and the US government is throwing the book at a southern-Oregon company it claims has sold "nonconforming, defective and counterfeit products" to the Department of Defense on at least 392 separate occasions.

Harold Ray Bettencourt Jr., his ex-wife and three of the couple's adult children had not-guilty pleas entered on their behalf Tuesday by a federal judge. They and two employees of the family's Kustom Products, Inc. face charges including conspiracy to commit wire fraud and money laundering. The truck parts and accessories company, based in Coos Bay, OR, is accused of accepting payments of more than $7.5 million in exchange for parts that didn't meet standards. The feds say the parts in question were sold at profit margins ranging from 22 to over 3,700 percent, for use in both ground vehicles and aircraft.

All seven of the accused remain free for now. The Eugene Register-Guard reports the government seized almost $350,000 from 20 family bank accounts and more than a dozen boats and vehicles in September, 2010. The Bettencourts say they are not guilty of the charges and have challenged the seizures, claiming searches of their homes and offices were made illegally.

The investigation started in 2008, when Army mechanics reported defects in nuts used to secure the rotor systems to Kiowa helicopters file photo above). The government also charges Kustom Products won a bid to supply 200,000 clamp loops for use on C-5 transport planes by saying they'd be manufactured by Pacific Industrial Components, Inc. of Eugene, OR, but substituted a product made in China with numerous defects.

FMI: www.defense.gov