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Portland's Mark O. Hatfield U.S. Courthouse.
(The Oregonian file)
A federal judge on Friday sentenced key figures in a Coos Bay defense contracting company to prison for their roles in a multimillion-dollar conspiracy to buy cheaply made truck and aircraft parts – some from Mexico and China – and pass them off at premium prices to the U.S. military.
"It was a long series of lies," U.S. District Judge Michael W. Mosman said as he prepared to sentence members of the Bettencourt family, who headed Kustom Products Inc. and once were considered pillars of the community in Coos County. "Their integrity was like the Platte River – a mile wide and an inch deep."
Mosman pointed out that the parts Kustom Products sold weren't pencils or toilet seats, but military parts – including some used in the rotor mechanisms of Army helicopters. And he called the defendants down for undercutting honest defense contractors – the "poor schmuck" who, unlike the Bettencourts, didn't get to buy Jet Skis or remodel his kitchen.
One by one, six defendants and a lawyer representing the company stood before Mosman in his Portland courtroom to apologize and accept the consequences.
The first of them was Harold R. Bettencourt II, the company's 60-year-old founder and owner, who apologized to the court, the government, federal agents who investigated him, his employees, "but especially my family."
Mosman sentenced him to 3 years, 9 months in prison.
Bettencourt's two oldest sons, described as sales managers – 34-year-old Harold R. "Bo" Bettencourt III and 32-year-old Nick Bettencourt – were sentenced to a little more than two years in prison for their roles in the conspiracy to defraud the United States.
Their younger brother, 28-year-old salesman Peter Bettencourt, was sentenced to 1 year and 1 day in prison, which with good behavior would likely put him back on the street in less than 11 months. Office manager Margo Antonette "Toni" Densmore, 43, also drew a 1 year, 1 day sentence.
Mosman placed Kustom Products, also charged in the conspiracy, on 5 years probation and ordered the company to pay $5 million in restitution and a $150,000 fine. A lawyer for the company said KPI has reinvented itself and is committed to staying afloat as its principle players serve their prison terms.
The last person sentenced in the case, which originated in 2010, was Josh Kemp, a parts department worker who admitted guilt for his role in the conspiracy very early in the government's investigation.
Kemp, sentenced to 5 years probation, offered substantial cooperation to federal agents and prosecutors, who dug through Department of Defense contracts and exposed a conspiracy in which parts that were unapproved – and in some cases inferior – found their way into such military aircraft as C-5 transport planes and OH-58 Kiowa helicopters.
Six federal agents working for the FBI, Department of Defense, Internal Revenue Service and Homeland Security pored through 750 contracts, said Assistant U.S. Attorney Scott E. Asphaug, who prosecuted the case.
"It has taken law enforcement officers thousands of hours to review this many fraudulent contracts that put our service men and women at risk," he said.
The government and defense lawyers hammered out a deal in which Kustom Products could remain open and make yearly payments on the $5 million it owes the U.S. in restitution. As long as the company makes its payments on time, those sent to prison on Friday won't be required to chip in.
Mosman agreed to recommend to the U.S. Bureau of Prisons that company founder Harold Bettencourt and his three sons serve their sentences at the federal prison complex in Sheridan.
The judge ordered them to report to prison on Jan. 22.
-- Bryan Denson
This story will be updated.