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John J. Palie, Jr., 64, of Tiverton, Rhode Island was sentenced to 10 months in prison and two years of supervised release, and his son, John J. Palie III, 43, of Plymouth, Massachusetts was sentenced to six months in prison followed by two years of supervised release. Palie Jr. must also pay a $10,000 fine.
The two pleaded guilty in June last year to two counts of mail fraud.
John Palie, Jr. is the owner and CEO of A&P Alloys, Inc. in West Bridgewater, Massachusetts, that acquired and sold specialty metals, including titanium. John Palie III was a manager at A&P, having responsibilities for 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.
U.S. Attorney John Durham said that Lewis Machine supplies titanium parts to Pratt & Whitney, which manufactures aircraft engines, including engines for U.S. Air Force fighter jets.
In 2012, Palie Jr. and Palie III arranged a sale of 11 pieces of titanium to Lewis Machine, alleging that the titanium had been certified as meeting an advanced aerospace quality standard, when it never had been certified.
The following year, the two arranged another sale of 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, Lewis Machine was cautioned 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.
Durham noted that 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,” Durham said.
“Ensuring the integrity of the U.S. Department of Defense’s procurement process is a top priority for the Defense Criminal Investigative Service,” Leigh-Alistair Barzey, Special Agent in Charge of the DCIS Northeast Field Office added. “Supplying substandard and non-conforming material disrupts the Department of Defense supply chain, endangers the lives of U.S. service members and betrays the public’s trust.“
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