Portland man indicted for defrauding NASA worked for Sapa Extrusion

The same company admitted to defrauding NASA in 2015. 

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The Portland man indicted for defrauding NASA and the Missile Defense Agency for nearly a decade worked for aluminum supplier Sapa Extrusion, a company spokesperson confirmed this morning.

Dennis Merkel, 71, was indicted April 18 on two counts of major fraud against the U.S. government.

Sapa would not comment beyond confirming Merkel’s employment.

The indictment, which does not name the company, alleges that between May 1996 and December 2006, Merkel falsified test results on hundreds of occasions. The aluminum extrusions he allegedly certified at Sapa, an Oslo based company, were part of government contracts for NASA and the Missile Defense Agency.

Three other employees are also included in the indictment, identified only by their initials.

The same company came under NASA’s microscope a year ago for selling 251 customers $6.8 million of product that failed to meet quality standards. That case centered around former Sapa Lab manager Denny Balius, who admitted to falsifying test results.

Sapa provided the falsely tested aluminum extrusions to subcontractors for two major government projects, the indictment alleges. In 1998, NASA awarded a contract of over $1 million to Sapa. A few years later, in 2001, the missile defense agency also contracted with Sapa for an amount over $1 million.

According to the indictment, Merkel was seeking higher profits for the company and personal bonuses. He falsified test results to cut costs and avoid delays in production. Merkel’s bonuses, the indictment says, were partly tied to production metrics.

The aluminum made its way into “frangible” joints on rockets and missiles designed to intercept Intercontinental Ballistic Missiles. A frangible joint is designed to break open upon detonation of a mild explosive. It might be used to break away a stage of a rocket or release a payload, such as a satellite.

Merkel allegedly falsified certifications showing the aluminum met NASA’s mechanical property standards. The three key features are yield strength, ultimate tensile strength, and elongation.

According to the indictment the scheme worked this way. Sapa sent its aluminum to one of its internal labs for testing. The lab tested the aluminum, then faxed the results to Merkel back at Sapa’s Portland plant. Merkel and two of the other indicted employees decided if the results met certain standards.

The indictment alleges that the employees penciled in passing scores, and whited out failing numbers. They did it hundreds of times.

Then they sent the results to the fourth employee, who typed the information onto a certificate. Sapa provided that certificate of quality to customers along with its invoice.

If the aluminum did not meet standards, it had to be scrapped and the processed started over again.

In 2015 Sapa admitted to the earlier fraud allegations and said the company was implementing measures to ensure similar violations don’t occur again. A spokesperson told The Oregonian, “we are pleased to see the government’s progress in this case. Since learning of this misconduct and reporting it to the government and customers, Sapa has undertaken aggressive actions over the past two and a half years to prevent this kind of misconduct in the future.”

Now Sapa is back in the spotlight. Merkel is scheduled to be arraigned on April 30, before U.S. District Judge Marco A. Hernández of the District of Oregon.

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