Ex-Boeing CFO Sears expected to plead guilty

Monday, July 26, 2004

By JEFF ST. ONGE
BLOOMBERG NEWS

Former Boeing Co. Chief Financial Officer Michael Sears has agreed to plead guilty to conspiring to deceive the U.S. government about negotiations on a $23 billion contract, says a person familiar with the matter.

Sears asked the federal court in Alexandria, Va., to schedule a hearing in the first week of August to enter his guilty plea to a single count of aiding and abetting, the person said. A criminal case was entered in the court docket on Wednesday.

Sears, 57, is likely to serve little or no jail time and is cooperating with federal prosecutors investigating negotiations he had with a former Pentagon official, Darleen Druyun, to whom he offered a job, the person said.

Druyun pleaded guilty to the same charge in April, and made a statement that she received the job offer while negotiating for the Air Force.

The investigation may delay the awarding of the contract to provide the Air Force as many as 100 planes that refuel fighters and bombers.

The agreement to hire Boeing was suspended pending review in November, when Druyun and Sears were fired from Boeing, the No. 2 U.S. defense contractor.

"The prevailing view when Darleen Druyun pled was the case was over," said Jacob Frenkel, a former federal prosecutor. "The latest case shows that the government will take on both sides, both the person responsible within the government and the counterparty in the private sector."

Boeing "does not know of Mr. Sears' plan" to plead guilty, Boeing spokesman John Dern said.

"It is important to note that the facts associated with his case were first discovered and voluntarily reported by Boeing to the U.S. attorney last November, and the company terminated Mr. Sears' employment at that time. Boeing has cooperated fully during the government's investigation, and will continue to cooperate through its conclusion," Dern said.

Boeing's agreement with the government would have included the Air Force buying and leasing 100 planes over eight years.

Druyun pleaded guilty April 20 to conspiracy and has been cooperating in the government's investigation. She will be sentenced Aug. 6.

Sam Dibbley, a spokeswoman for U.S. Attorney Paul McNulty in Alexandria, declined comment. A lawyer for Sears, James Wareham, also declined comment.

This report includes material from The New York Times.

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