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Oregon contractor pleads guilty to defrauding US


An Oregon defense contractor has pleaded guilty to selling $10 million worth of phony parts for attack helicopters and military vehicles to the U.S. government, including a locknut that secures the rotor on the Kiowa attack helicopter.

According to court records, the company Kustom Products Inc., a longtime seller of truck and RV parts based in Coos Bay; owner Harold Ray Bettencourt II, and four employees pleaded guilty Friday in U.S. District Court in Portland to conspiracy to defraud the United States.

"These crooks took deliberate actions to supply defective equipment to our military, putting our service men and women in harm's way during a time of war," Kenneth Hines, special agent in charge of Internal Revenue Service Criminal Investigation, said in a statement. "Then, they spun a web of complex lies to cover it all up."

Bettencourt, his sons Harold "Bo" Bettencourt III, Nicholas Ryan Bettencourt and Peter Tracy Bettencourt, and office manager Margo Antoinette Densmore remained free pending sentencing scheduled for two days starting Dec. 10.

At that time, a full description of the crimes will be presented, federal prosecutor Scott Asphaug said.

Authorities said the company lied to the Defense Department to secure 750 contracts worth $10 million from 2006 through 2010. They were able to undercut bids from other companies by substituting phony parts for genuine parts, and produced phony records to cover up the substitution, the government said.

The case was based on emails and purchasing records seized by investigators, Asphaug said.

Defense attorneys did not immediately respond to telephone calls and emails asking for comment.

The investigation was triggered in 2008 when mechanics for the Kentucky Army National Guard found that eight locknuts that were supposed to secure the main rotor assembly on an OH-58 A/C Kiowa attack helicopter did not meet specifications, according to court documents. The defective locknuts were found as far away as Kuwait.

In an affidavit, James McMaken, a special agent with the Defense Department Inspector general and Defense Criminal Investigative Service, wrote: "The military field terminology for this locknut is the 'Jesus nut,' which is a colloquialism for the main rotor retaining nut that holds the main rotor to the mast of some helicopters. The failure of this part can be catastrophic, resulting in possible death or serious injury to military personnel."

According to court documents, the Bettencourts sold the phony parts for between 22 percent and 3,754 percent more than they paid for them.

As part of their guilty pleas, the defendants agreed to forfeit $365,503.26 seized from 20 bank accounts, eight vehicles, a boat, two boat trailers, two jet skis, and three all-terrain vehicles, which were derived from proceeds of the fraud.

Purchasing agent Josh Kemp, who was a cooperating witness in the case, was scheduled to appear in court July 24 to plead guilty to the same charge, Asphaug said.

Harold Bettencourt's ex-wife, Kathy Sue Bettencourt, has gone into a diversion program, Asphaug said. If she successfully completes it, there will be no criminal charges.

Join the discussion

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ade5348618 July 19 2014 at 7:41 AM

They should be charged with treason.

Flag Reply +19 rate up
tgarcia201 July 18 2014 at 11:35 PM


Flag Reply +17 rate up
jbuff67 July 19 2014 at 1:31 AM

Hand over the business and assets to qualified Vets

Flag Reply +16 rate up
bostonbizsales July 19 2014 at 3:29 AM

Life in prison sounds goods for putting our military personnel in grave danger.

Flag Reply +14 rate up
Dave July 18 2014 at 11:27 PM

I smell the old, "if it's a white collar crime let's go easy" trick. These dirt bags need to do a lot of hard time for what they did.

Flag Reply +12 rate up
2 replies
vaygollybum1 Dave July 19 2014 at 7:56 PM

Send thrm to the front lines with their own equipment. Do not allow them back into the US. Strip them of ALL of their assects.

Flag Reply 0 rate up
cavkchas Dave July 19 2014 at 8:17 PM

Permanent HARD TIME !

Flag Reply 0 rate up
Nanu-Nanu July 19 2014 at 12:13 AM

I used to investigate contract frauds for the U.S. Government. In most ases the fine is low or the government declines to prosecute. This is unacceptable and the AUSA needs to slame dunk all involved. This had probably been going on with this vendor for sometime.

Flag Reply +12 rate up
2 replies
Richard Nanu-Nanu July 19 2014 at 12:06 PM

Agree, as a retired QA I cant count how many bogus bolts we had to replace on space vehicle components alone. I see greed is still alive and well. They need to spend time, not just fines.

Flag Reply +1 rate up
vaygollybum1 Nanu-Nanu July 19 2014 at 7:59 PM

Ever since there has been armies, there are suppliers that have screwed the leaders and the soldiers.

Flag Reply 0 rate up
1 reply
ghayesgsco vaygollybum1 July 19 2014 at 9:49 PM

...BUT! If your sorry tail gets caught, God help you!

Flag 0 rate up
bloodss July 18 2014 at 10:14 PM

Don't sentence them. Just execute them.

Flag Reply +11 rate up
ronda July 18 2014 at 11:57 PM

Put them all in a Helicopter with thier manufactured Jesus Nut holding the rotor on. Life with out parole!!!!!!!!!!!

Flag Reply +8 rate up
1 reply
Granny ronda July 19 2014 at 6:21 PM

Oh my God! My son just died in a helo crash in January. If I find out these aholes were the cause of his death, the courts won't be their biggest worry. I am SO MAD right now. DAMN THEM!!!!!

Flag Reply 0 rate up
1 reply
ghayesgsco Granny July 19 2014 at 9:47 PM

My sentiments exactly granny

Flag 0 rate up
NoOneHere2 July 19 2014 at 9:56 AM

one of the many reasons the GOP wants an increase in defense spending, to feed the contributors to their campaign , corporate welfare to them is far more important than human welfare

Flag Reply +7 rate up
5 replies
bphom July 19 2014 at 12:58 AM

These guys are doing the same thing the US goverment does to the American public every day screwing the American tax payers with no concern who gets hurt.To bad they dont have Eric Holder covering their butts no charges would of been filed.

Flag Reply +6 rate up
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