Owners of Chesterfield Township Auto Parts Supplier Plead Guilty to Wire Fraud

The owners of Davalor Mold Corporation, an automotive parts supplier located in Chesterfield Township, Michigan pleaded guilty today in federal court to charges of wire fraud, announced United States Attorney Barbara McQuade. Ms. McQuade was joined in the announcement by Andrew G. Arena, Special Agent in Charge, Federal Bureau of Investigation.

Entering the guilty pleas before United States District Judge Victoria Roberts were David Bernhardt, 64, former President of Davalor, and Orman Bernhardt, age 56, former Director of Operations.

The information presented to the court at the time of the pleas established that from March 2008 through April 2010 employees of Davalor, under the direction of both David and Orman Bernhardt, executed a scheme to defraud its customers and auditors by substituting materials and submitting false and fraudulent testing reports relating to its manufacturing of plastic components of seat belt assemblies.

Under contracts with Tier 1 automotive suppliers, Davalor was subject to specific quality control requirements, including periodic quality testing of specified samples of parts and annual revalidation testing and reports on parts in production. As part of the scheme to defraud its customers, Davalor sometimes substituted less expensive materials for those that were specifically required; used regrind plastic in larger proportions than were permitted; ceased or decreased required quality testing and revalidation testing; and had employees create false and fraudulent testing reports for submission to customers and to auditors, and submitted those false reports.

Special Agent Arena stated, "Michigan, as well as the rest of the United States, is significantly impacted by the auto industry. Auto suppliers who provide substandard products to the automotive manufacturers negatively impact the quality of products and the automotive industry. The FBI will continue to aggressively pursue these cases of fraud."

“When an auto supplier uses inferior materials and procedures, it creates an unacceptable public safety risk,” McQuade said. “We hope this prosecution will deter other suppliers from illegally cutting corners to increase their profits.”

Under the terms of the plea agreement, each defendant faces up to 15 ½ months in prison as well as any applicable fines and restitution.

A sentencing date has been set for October 21, 2011 at 2 p.m. The charges arose from an investigation by agents of the Federal Bureau of Investigation.

The case is being prosecuted by Assistant U.S. Attorney Sheldon N. Light.