Last week, investigators searched the premises of an Oregon company, Kustom Products, Inc., suspected of selling to the Defense Department counterfeit and defective aviation locknuts for the OH-58 A/C Kiowa helicopter. Illicit sales of this critical part are suspected of taking place between 2005 and 2010. The company and its employees were indicted in December 2011 on charges of wire fraud, fraud and money laundering related to the locknuts.
Non-spec parts on main rotor assembly
The alleged scheme was uncovered when an Army National Guard Maintenance technician found non-spec replacement lock nuts that were intended for use on the main rotor assemblies of Kiowa Warrior helicopters. A former employee, acting as a whistleblower, told investigators that he considered the allegations accurate.
In a sworn affidavit, he also is said to have accused the company of selling to the Defense Department fabricated catalytic converters or exhaust systems for Humvees, vehicle battery box covers, vehicle mounting brackets, and metallic non-skid tread frame sections for a fifth-wheel ramp.
Kustom Products is said to have played the role of a go-between for counterfeiters. The owners of the company, the Bettencourt family, or their employees would allegedly order one of the genuine parts. They then would hire another company — often based in Mexico — to counterfeit the part for a lower price.
The company is described as making very large profits from twenty-two contracts with the Army to provide truck parts and other components.
OH-58 A/C Kiowa helicopters staged in hangar.
The case reveals yet another route by which seemingly legitimate suppliers can in fact be a conduit for counterfeit parts sold to the military. The owners of Kustom Products, in effect, are accused of operating a "counterfeit parts laundering" ring. The ring casts light on a current problem in military parts supply, where, too often the need for post-production or scarce parts forces military suppliers to reach out to unauthorized distributors and brokers, where bad actors, like Kustom Products, lurk. Legitimate independents have stepped up their vetting of suppliers to counter this, and some have brought on line extraordinarily rigorous testing and inspection.
Urgency for new technologies, such as SigNature DNA
The case is an example of the urgency in adopting new methods and technologies to authenticate parts and combat counterfeits. Applied DNA Sciences’ SigNature DNA is one such technology, and is now required by the Defense Logistics Agency for certain military-bound parts.
Counterfeiting of the locknut in this case is a particularly malicious piece of trickery. A locknut used to secure the helicopter’s rotor to its body is sometimes called the "Jesus nut" or "Jesus bolt" by war fighters. Responsible for securing a helicopter rotor to its mast, a failure in flight could easily be catastrophic.
The term “Jesus nut” might have first been used by American soldiers in Vietnam since helicopters were used during the Vietnam War in a central role for the first time. More recently, engineers and supply chain techs have begun to use the word to mean any single component of a system whose failure would have catastrophic impact on an entire system. Mountain bikers sometimes use this phrase to describe the screw that secures the rear wheel pivot bar on a rear suspension mountain bike.
Information via The World, news website. Thanks to the "Counterfeit Parts" blog for highlighting this important story.