PROVIDENCE – A Rhode Island businessman and his son received prison terms Wednesday after pleading guilty to fraudulently selling substandard titanium to a Connecticut defense subcontractor.
John J. Palie Jr., 64, of Tiverton, was sentenced to 10 months in prison, two years of supervised release and a $10,000 fine by U.S. District Judge Stefan R. Underhill in Bridgeport, Conn.
His son, John J. Palie III, 43, of Plymouth, Mass., was sentenced to six months in prison and two years of supervised release.
According to court documents and statements made in court, John Palie Jr. is the owner and CEO of A&P Alloys Inc. in West Bridgewater, Mass. The company acquired and sold specialty metals, including titanium.
John Palie III was a manager at A&P Alloys, having responsibilities for the purchase and sale of titanium and the preparation of titanium orders for shipment to customers.
Father and son admitted that they arranged two separate titanium sales to Lewis Machine, a Connecticut-based aircraft-parts manufacturer, that included false representations about the source and quality of the titanium, according to United States Attorney for Connecticut John H. Durham.
Lewis Machine supplies titanium parts to Pratt & Whitney, which makes aircraft engines, including those for U.S. Air Force fighter jets, according to Durham’s office.
In 2012, Palie Jr. and Palie III arranged the 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, Durham’s office said.
The order listed Pratt & Whitney as the end buyer of the titanium.
In 2013, father and son arranged for another titanium sale to Lewis Machine with Pratt & Whitney as the end buyer.
Palie III arranged for 400 pieces of titanium, along with certificates stating the titanium originated from a particular mill and satisfied an advanced aerospace quality standard, to be delivered to Lewis Machine, Durham’s office said.
Due to concerns about the quality of the titanium, Pratt & Whitney directed Lewis Machine not to accept the titanium.
According to Durham’s office, Palie III agreed to replace the 400 pieces with other titanium that met the quality standard.
However, instead of replacing the substandard titanium, he arranged for it to be sandblasted and re-stamped with the manufacturer’s mark of a different mill, so the pieces appeared to be legitimate replacements.
According to other court documents, Palie Jr. and his company settled a related civil lawsuit by agreeing to pay Pratt & Whitney $690,000 for losses Pratt & Whitney incurred from problems caused by the uncertified titanium.
On June 27, 2018, Palie Jr. and Palie III each pleaded guilty to two counts of mail fraud, according to Durham’s office.
The case was Palie Jr.’s second federal conviction. In January 2004, he was sentenced in Massachusetts to two years of probation for failing to pay income taxes on more than $249,000 in business revenues he diverted into a personal bank account, according to Durham’s office.
“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 in a statement.
“Ensuring the integrity of the U.S. Department of Defense’s procurement process is a top priority for the Defense Criminal Investigative Service,” said Leigh-Alistair Barzey, special agent in charge of the agency’s Northeast field office.
Scott Blake is a PBN staff writer. Email him at Blake@PBN.com.
