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Defense Contractor Employee Aids Phony Parts Probe

Tue, 09/25/2012 - 8:57pm
Jeff Barnard, Associated Press Writer

GRANTS PASS, Ore. (AP) -- Court records made public Tuesday show that a new search of an Oregon defense contractor accused of providing phony helicopter and truck parts to the military was prompted by testimony from a purchasing agent who is helping investigators.

An affidavit filed in U.S. District Court in Eugene says investigators went looking at Kustom Products Inc. in Coos Bay last week for purchase orders and sample parts used as prototypes for phony parts.

Department of Homeland Security Special Agent J. W. King wrote that the search was prompted by three interviews in the past two months with former company purchasing agent Josh Kemp, who faces federal charges along with company owner Harold Ray Bettencourt II, and several members of Bettencourt's family.

The indictment alleges they supplied counterfeit parts to the military in hundreds of contracts totaling $7.5 million. Authorities are also asking a judge to authorize the seizure of profits and goods such as pickup trucks and boats bought with profits.

Trial is set for Jan. 26.

Bettencourt's lawyer, Marc Blackman in Portland, did not immediately return a telephone call and email for comment.

The investigation was triggered when Kentucky Army National Guard mechanics noticed that replacement lock nuts for the rotor assembly of Kiowa attack helicopters did not meet specifications. They noted that failure of the nuts could cause the helicopters to crash.

According to the affidavit, Kemp told investigators that he reviewed the allegations and considered them accurate.

He also told investigators that the Bettencourts' explanation for the phony parts — that an employee simply pulled the parts from the wrong bin - was an obvious lie because parts were never kept in bins. They were shipped to KPI, repackaged and labeled, and shipped to the U.S. Department of Defense.

Kemp also told investigators that he feared for his safely, due to comments from Bettencourt and his family, so authorities kept the affidavit sealed long enough to set up protection for him and his family.

Before quitting in late August, Kemp said he noticed that 12 to 15 boxes of purchase orders for phony parts that had not been seized by investigators in a 2010 search, and were still at KPI. He added that he had seen a Humvee catalytic converter and battery covers that had been ordered to use as prototypes to make or locate low-cost substitutes for genuine parts, as well as documents used to disguise the true source of the phony parts.

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