Oregon Defense Contractor Charged with Providing Counterfeit Parts

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An Oregon defense contractor is under indictment for allegedly defrauding the military of at least $10.5 million by supplying counterfeit and defective truck and helicopter parts

Kustom Products, Inc., a Coos Bay, Ore., company as well as its owner Harold Ray Bettencourt and other family members and employees are charged in an indictment filed last week in U.S. District Court in Portland.

According to the indictment, Bettencourt, obtained substandard parts from unapproved sources then gave false information to the Department of Defense and federal investigators. He also directed others to provide fictitious invoices and purchase orders, the government alleges.

All of the alleged criminal offenses took place before Dec. 1, 2010, prosecutors said.

Among the charges related to the alleged fraud are conspiracy to commit wire fraud, conspiracy to traffic in counterfeit good and conspiracy to commit money laundering.

Many of the bids made by the company were through web-based programs, according to the indictment.

The latest charges raises the value of contracts covered from $7.5 million listed in a 2011 indictment. Arraignment has been set for April 30.

Defense attorneys for Bettencourt could not be reached.

The defendants all pleaded not guilty to the earlier indictment.

The investigation into Kustom Products, Inc., began when Army National Guard mechanics found defects in a critical nut that secures the rotor on the Kiowa armed scout helicopter in 2008.

Later, investigators said they determined that crucial clamps needed for military transport planes, which were required to be sourced from a U.S. company, instead were outsourced by Kustom Products to an unapproved Chinese supplier.

— Jeff Black, with The Associated Press