Military Contractor Put U.S. Service Members at Risk With Bogus Aircraft Repairs, Investigators Say

Sept. 2, 2009— -- A Louisville military contractor potentially jeopardized the lives of untold U.S. service members by conducting faulty repairs on key flight systems used on military aircraft, sources tell ABC News.

Keith Shaw, the owner of Shaw Aero in Louisville, KY, has been the target of a three-year federal investigation for allegedly billing the U.S. military for "fraudulent" and "defective" repairs on critical aircraft parts, according to an affidavit unsealed in federal court last week.

Shaw ordered his employees to "fraudulently repair" solid state rate gyros, which are used on Army Blackhawk and Navy Seahawk helicopters, according to an affidavit prepared by Jared Camper, an investigator with the Defense Criminal Investigative Service (DCIS) of the U.S. Department of Defense.

Blackhawk helicopters are a staple of the U.S. military and have flown nearly a million flight hours in Iraq and Afghanistan. Gyros are a critical element of safe flying experts say, letting a pilot know whether an aircraft is level, climbing, or descending.

Shaw is also under investigation for allegedly billing aircraft supplier Rockwell Collins for uncompleted repair work on laser navigation systems for the C-130 Hercules transport aircraft. In addition, Shaw allegedly conducted defective repairs on inertial navigation units for F-5 jet fighter planes used by the U.S. Navy to train pilots.

Because military aircraft often operate in less than ideal flying conditions, taking off without any of these instruments functioning properly can result in disaster, said Hans Weber, an aviation expert at Tecop International Inc. in San Diego.

"The horrible thing about what this sort of thing is, people have to rely on the instruments," Weber said. "The first rule of learning to fly is you have to rely on the instruments. Whatever you see out the window, don't believe it. Believe the instruments. That's an essential element of training people to learn how to fly under difficult visibility conditions."

A source close to the investigation told ABC News that the military kept Shaw Aero under tight surveillance to ensure that the alleged faulty repairs did not compromise air safety. According to the source, "As far as we know, the aircraft were intercepted before they were used in the field."

The details of the alleged contractor fraud were revealed after Shaw was charged with attempted murder last week for allegedly plotting to kill two of his former colleagues for cooperating with the investigation. According to the affidavit, Shaw offered his 21-year-old son nearly $100,000 to kill former business partner Dean Dickinson and former employee Andy Brown for cooperating with the investigation.

One witness told investigators that Shaw traveled to Tennessee to buy high-powered fireworks with the intention of placing them in the wings of Dickinson's plane. Shaw aimed to attach pressure switches to the fireworks so that when the plane flew above a certain altitude the switches would be activated, igniting the fireworks, Camper wrote.

Another witness told investigators that Shaw considered killing Dickinson by using a hypodermic needle to inject poison into bottles of his wine collection and that he fantasized about kidnapping Dickinson and his adult daughter and forcing them to have sex with each other while he videotaped it, the affidavit said.

Shaw's attorney, Thomas Clay, told ABC News that alleged murder plot was nothing more than "talk" on the part of his client. "The actions that Mr. Shaw allegedly took according to the testimony of the special agent, in my opinion, do not amount to an attempt to kill anybody," said Clay.

However, in a hearing last Friday, U.S. Magistrate Judge Dave Whalin found the charges credible and ordered Shaw held in custody pending indictment and trial. "It's truly disturbing, it's not just talk. A weapon was bought," said Whalin.

While the military has not yet taken action against Shaw over the allegations of aircraft repair fraud, a source says investigators believe charges are "fairly imminent." Shaw's attorney says the alleged fraud stems from a mix-up over paperwork and that his client will be exonerated.

Click Here for the Blotter Homepage.