May 12. 2004 – LAWFUEL – A former Boeing Company engineer was charged today in two separate conspiracies involving the theft of trade secrets from rival Lockheed Martin Corporation, which was competing with Boeing to secure an Air Force rocket contract.
Larry Satchell, a 65-year-old Newport Beach resident, was named in a criminal complaint that alleges a conspiracy to steal trade secrets, a second conspiracy to violate the Procurement Integrity Act and a third charge of obstruction of justice. A United States Magistrate Judge in Los Angeles issued an arrest warrant for Satchell, who is expected to surrender himself to federal authorities tomorrow.
Satchell was a manager in the Boeing’s Evolved Expendable Launch Vehicle (EELV) program, which was based in Huntington Beach. In 1997, the United States Air Force announced that it would procure EELV services from both Boeing and Lockheed Martin. The Air Force decided that it wanted both Boeing and Lockheed Martin to invest their own money in the EELV program because it believed the contractors would make money by selling rockets to commercial interests. The Air Force agreed that it would provide both Boeing and Lockheed $500 million for development costs associated with their respective EELV program.
Satchell was promoted in Janaury 1997 to be the leader of Boeing’s Strategic Planning and Market Analysis group, also known as the “Capture Team.” The Capture Team was directed to acquire intelligence, as well as technical and cost data, regarding Lockheed Martin’s EELV proposal to the Air Force.
The complaint alleges that from approximately early 1997 through April 1998, coconspirator Kenneth Branch, an engineer who at the time was working on the Lockheed Martin EELV program, traveled regularly between Florida and the Boeing EELV headquarters so that Branch could pass on proprietary or competitive sensitive information and documents relating to the Lockheed Martin EELV program to Satchell and other managers of the Boeing EELV program. Branch was allegedly recruited by another Boeing engineer, William Erskine.
According to the Satchell complaint, Matthew Jew, a former Boeing parametrician, or cost estimator, recently told investigators that Satchell approached him in March 1997 with cost data that Satchell wanted Jew to use on projections of the Lockheed Martin EELV costs. It was one of about a dozen occasions that Satchell allegedly gave Jew data about Lockheed Martin rocket designs to be used for cost comparisons. According to the affidavit, Jew performed the calculations and provided the results to Satchell.
According to Jew, Satchell approached him in 1999, around the time that defendants Branch and Erskine were caught with Lockheed Martin proprietary EELV data. At that time, Satchell allegedly admitted to Jew that the cost data provided by Satchell to Jew in 1997 was “tainted” and that Satchell had destroyed his copies of the data. Satchell asked Jew to locate any records related to the calculations Jew performed on the Lockheed Martin EELV data and to destroy the evidence. Jew told investigators that he destroyed the documents as Satchell had requested, but he recently discovered a copy of the electronic data on his computer.
Air Force officials overseeing the EELV program have told investigators that more than two dozen of the Lockheed Martin documents found at Boeing had either a moderate or high chance of affecting the competitive bidding process. If Air Force personnel were aware that Boeing had even one of those two dozen-plus documents, they would have immediately suspended the competition and conducted a thorough investigation into whether the procurement competition should have been terminated.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
If he were to be convicted of the three counts in the indictment, Satchell faces a maximum penalty of 25 years in federal prison.
Branch and Erskine are scheduled to go on trial in their case on October 12.
This case against all three former Boeing employees is the result of an ongoing investigation by the Defense Criminal Investigative Service and Air Force Office of Special Investigations.