New York man put SpaceX rockets in jeopardy by forging inspection reports, feds say

ROCHESTER, N.Y. – A New York man forged inspection reports for critical products that were used by a major aerospace business, the U.S. Attorney’s Office announced Wednesday. 

James Smalley, 41, of Penn Yan is charged by criminal complaint with falsifying inspection reports for space parts. The charge carries a maximum sentence of 10 years in federal prison.

While working as a quality assurance engineer at PMI Industries in Gates, New York, Smalley allegedly forged the signature of an inspector on reports for products that were sold to California-based SpaceX.

“James Smalley took the act of forgery to a new level,” FBI Special Agent Gary Loeffert, who is in charge of the agency’s western New York district, said in a statement. “A potentially catastrophic level with the potential to not only cost millions of dollars, but also jeopardize years of irreplicable work.”

PMI makes critical parts used to build space flight vehicles by SpaceX and Department of Defense contractors, authorities said in a release.

PMI made structural rocket parts, according to the criminal complaint. That includes the nosecone fairing, which is a “fracture critical part,” and if this part were to malfunction, “it could result in catastrophic failure of the mission,” the complaint said.

The investigation revealed that Smalley allegedly falsified 38 source inspection reports for parts purchased by SpaceX for the manufacturing of the Falcon 9 and Falcon Heavy series of space vehicles. 

A SpaceX Falcon 9 rocket sits on the pad at Cape Canaveral Air Force Station Wednesday, May, 15, 2019. (Photo: Craig Bailey / FLORIDA TODAY)

And at least 76 individual parts had falsified inspection reports, were never inspected, and then were shipped to SpaceX, prosecutors said.

Smalley started working at PMI on March 6, 2017. One of his bosses said Smalley was hired to oversee quality operations and instructed to be a document control manager, the person responsible for overseeing audits. This was required by all parts manufactured for SpaceX, the complaint said. SpaceX’s subcontractor “physically examined the products and certified all processes were properly conducted,” the complaint continued.

He worked specifically on contracts for SpaceX, which has produced the Falcon launch vehicle series and the Dragon spacecraft line. Both deliver payloads into orbit for NASA, the Air Force, other government agencies and some private companies. 

SQA Services, a SpaceX subcontractor, “provides multiple quality assurance functions within the aerospace and defense manufacturing industries,” a release said.

In January 2018, an internal audit by SQA, which was ordered by SpaceX, found a number of instances of falsified source inspection reports and non-destructive testing certifications from PMI for Falcon 9 and Falcon Heavy flight critical parts, the criminal complaint alleges.

Representatives from SpaceX then told PMI of the issues.

Smalley told investigators he forged the signatures of at least three SQA employees, the complaint said. He also used their quality stamps without permission. Smalley admitted he didn’t sign the signatures himself or use their quality stamps. Instead, he used his company-issued laptop to “copy and paste the signatures and stamps onto the falsified source inspection reports,” the complaint said.

Then on Feb. 16, 2018, the NASA Launch Services Program alerted NASA’s Office of Inspector General about the forged reports from PMI. Some of the reports were linked to space launch vehicle components that were to be used for an upcoming mission, which launched from a SpaceX Falcon 9 rocket on April 18, 2018.

Seven NASA space flight missions, two Air Force space missions, and one National Oceanic and Atmospheric Administration space flight mission were identified as impacted by parts purchased by SpaceX from PMI.

SpaceX then ended its partnership with PMI and PMI subsequently closed. That resulted in 35 people losing their jobs, the complaint said.

When one of his bosses asked him why he allegedly did this, Smalley said that “he wanted to ship more product for the company,” the complaint said.

“The success of America’s reinvigorated space program depends not just on American ingenuity but on American integrity as well,” U.S. Attorney James P. Kennedy said in a release.  “Such fraudulent conduct jeopardizes no only the success of the program but the lives of the brave men and women who rely on the integrity of not just the space vehicles themselves but all those who help to design and build them.”  

Smalley is scheduled to make an initial appearance Thursday in U.S. District Court in Rochester.

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