RI Father & Son Sentenced to Prison for Making Fraudulent Titanium Sales to Defense Subcontractor

RI Father & Son Sentenced to Prison for Making Fraudulent Titanium Sales to Defense Subcontractor

A father and his son have been sentenced to prison for making fraudulent titanium sales to a defense subcontractor, announced United States Attorney for the District of Connecticut John Durham.

John Palie Jr, 64, of Tiverton was sentenced to ten months in prison followed by two years of supervised release.

Palie Jr. was also ordered to pay a $10,000 fine.

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His son, John Palie III, 43, of Plymouth, Massachusetts, was sentenced to six months in prison and two years of supervised release.

“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 Durham.

The sentencing comes after Palie Jr. and Palie III each pleaded guilty to two counts of mail fraud on June 27 of 2018.

The Investigation

According to court documents and statements made in court, Palie, Jr. is the owner and Chief Executive Officer of A&P Alloys, Inc, a company in West Bridgewater, Massachusetts, that bought and sold specialty metals, including titanium. 

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.

According to the U.S. Attorney's office, in April and May of 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. 

According to the U.S. Attorney's office, in August of 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.