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Oregon Company Sentenced for Aircraft Parts Fraud

On July 19, 2023, the U.S. District Court for the District of Guam sentenced Spares, Inc., a machine shop located in Florence, Oregon, to 5 years of probation, a $8,500 fine, a $400 special assessment, and a forfeiture of $945,165.89 less the value of tools and equipment used to manufacture aircraft parts forfeited by Spares. On April 20, 2023, Spares pleaded guilty to one count of aircraft parts fraud.
In January 2021, a Federal grand jury returned a second superseding indictment that charged Spares with manufacturing unapproved aircraft parts along with Hansen Helicopters, Inc., and Hansen executives John Walker, Chief Executive Officer; Marvin R. Reed, Executive Vice President; Kenneth R. Crowe, Director of Operations; and Phillip T. Kapp, Director of Maintenance. From 2007 to at least 2018, Spares received over $900,000 in payments from Hansen and produced at least 23 different types of unapproved aircraft parts without the required Federal Aviation Administration (FAA) parts manufacturer approval. Specifically, Spares produced unapproved tail rotor pitch change links (TRPCL)—which lacked manufacturing information and were packed and shipped improperly—and misrepresented the legitimacy of these parts on internal documents and purchase orders. Upon receipt of the unapproved TRPCLs, Hansen employees painted the parts black to mimic the coating of an approved part, improperly installed the bearings, then installed the parts on helicopters leased to Pacific Ocean boating companies. Post-installation images of the TRPCLs showed improper installation with zip ties and improper repairs with pieces of cloth fabric, as well as visible damage and degradation.
DOT-OIG conducted this investigation with the Internal Revenue Service-Criminal Investigation Division and the Federal Bureau of Investigation, with substantial assistance from FAA, the Defense Contract Audit Agency, and the Defense Logistics Agency.
Note: Hansen Helicopters, Inc., and John Walker were convicted in a jury trial on September 9, 2022. The criminal trials for Kapp and Crowe are pending. Indictments, informations, and criminal complaints are only accusations by the Government. All defendants are presumed innocent unless and until proven guilty.