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Would Boeing murder a whistleblower? My name is James Lee, and you're watching Beyond the Headlines on Breaking.
Points this morning.
Police in Charleston, South Carolina tel NBC News they are aware of the death of a former Boeing employee turned whistleblower, John Mitchell Barnett, a notable whistleblower known for his substantial safety and quality reports to the Federal Aviation Administration concerning Boeing's production of the seven eighty seven Dreamliner, who also appeared in the twenty twenty two Netflix documentary Downfall the case against Boeing, tragically passed away on March ninth, twenty
twenty four. The mainstream media have mostly reported his death as an apparent suicide. Barnett was found dead in his car in the parking lot of his hotel on the final day of depositions in his whistleblower case against Boeing. The curious timing of his death have sparked some suspicions of foul play, and adding to that mystery, reports also indicate that he had previously cautioned a family friend not to accept any official narratives about his death as a suicide.
He wasn't concerned about, thank you, because I asked him. I said, aren't you scared?
And he said in his boy and hit the.
Way he which are I ain't scared? He said, but if anything happens to me, it's not suicide.
Joining us today is mode tactic. She is the investigations editor at The American Prospect who has done some fantastic reporting on Boeing. Thank you for being here.
Thanks for having me. I really appreciate it.
All right, we're not going to bury the lead today. Did Boeing put out a hit on whistleblower John Barnett? Obviously everything is still under investigation, but I know in your recent article you mentioned talking to a few of his old colleagues. Also, a former Boeing executive. What are their thoughts also at this point, what do we know for sure?
Well, what we know for sure is that John Barnett was found dead in his Dodge Ram in the parking lot of a hotel where he was staying in Charleston, South Carolina, to give a deposition that had lasted.
It was a three day deposition.
He was on the third day and he was founded in his car from an apparently self inflicted gunshot wound. He was holding a silver pistol. My sense is that the pistol did belong to him, but that that hasn't been confirmed one way or the other. And there was something that was in the driver's seat that looked like something like a note. Again, the details of that have
not really released yet, you know. So my first impression was that, oh, this, you know, this guy must have killed himself, right, I mean it kind of doesn't you know it? Really Like, I'm always open to the idea that, you know, you know, foul play might be there.
I started to change my mind when I think.
A lot of a lot of workers for former boat Boeing workers in both the factories and in the executive offices, were completely open to the notion that Boeing might have done it. I spoke to uh one of his former co workers in particular, who was very terrified. This person did not want to be identified, didn't want you know, anything that they told me to be you know, to
make them identifiable. But this person told me that in this person and had you know, blow in the whistle at this same Boeing factory and dealt with a lot of fallout as a result of that. And this person told me straight up, if I die, you know, please like I'm There's no way I would ever commit suicide, like even if it is a car accident, like, please like get it investigated. I mean, that was just not
what I expected. I didn't I did not expect anybody who worked at Boeing to think that Boeing would do this. There's incredibly bad morale within that company. Everybody who cared about the company for decades, sometimes a half century, you know, the people who have you know, I've written about Boeing for about five years on and off, and most of my sources you know, worked there for at least thirty years.
They it was very close to their heart.
And that's why, you know, when you hear when you talk to the old Boeing heads, they always bring up the McDonald Douglas merger. You know, this is twenty six years ago, but it feels like yesterday to a lot of these because that is when everything changed. And learning more about John Barnett, he was at this point in his in his case where the home stretch was in sight. He was really excited. He was thinking about writing a book. He was thinking about trying to, you know, do some
sort of a podcast. He was thinking about, you know, finally enjoying his retirement for once. He was slated to likely you know, receive a fair bit of money because he'd been kind of pushed out of the company early. He had no real motive to kill himself, especially on day three of a three day deposition. On the other's hand.
Of course, again, they did a very good job. Anyone who's seen the Octopus murders, you know, if somebody assassinated him, they weren't sloppy about it, you know, they they really did a very good job at making it look like a potential suicide. Of course, you know, there's a lot that we don't know. We don't know what that note looks like, that's extremely important evidence. We don't know what the you know, what the wound looks like. All of that has yet to come out.
Yeah, do we have a I'm wondering if we have a timeline for the investigation. So you said it was the Charleston Police Department that's involved. Is it just them or they're federal agencies getting in on the action.
No federal agencies as of yet.
I you know, again, the law enforcement has has been, you know, repeatedly said hey, it's still under investigation, and everybody who knows anything, like his family and his lawyer, they've been pretty tight lipped because they don't want to antagonize the thing that I you know, that is a little bit bit troubling. I spoke with I'm a medical examiner in Jacksonville.
And he said, you know, like in suicide.
And one thing about suspected suicides is that generally the in a lot of you know, bigger areas these days, they don't actually have medical examiners doing the autopsies. Those autopsies are oftentimes performed by corner assistants. And I spoke to some a criminal profile or from you know, who haven't been with the FBI for a long time worked on the UNI bomber case, and this guy, Jim Fitzgerald, told me that.
It seemed like it was the type of.
The type of thing that, you know, if you were going to look at it as a potential assassination. The whole aspect, you know, that the whole saga made him think that it was like a warning sign. That it wasn't necessarily that they were trying to prevent him from testifying, since he had already given two days of depositions, but that they were trying to send out a warning to anybody else who might think about, you know, potentially blowing and the whistle themselves.
Yeah, I wanted to ask you about There's one interesting quote that I read in your article. I believe it was an anonymous quote from a former Boeing executive and you wrote or he said that it's a top secret military contractor remember there are spies everywhere. And more importantly, there is a principle in American law that there's no such thing as an accidental death during the commission of a felony. I was wondering if you could expand on that, what did he mean by this?
So here's the thing. And this is the broader context here. Boeing has been extraordinary lucky up till now. You know, three hundred and three hundred and forty six people passenger and crew died on seven thirty seven Max crashes in twenty eighteen and twenty nineteen, four and a half months apart unless identical crashes, and after the first one hundred and eighty nine died on a liner accident, they knew that there was something wrong. Everybody in Boeing knew that
this was going to happen again. It was just a matter of when not if they did not. They should have obviously grounded the plane after the first one hundred and eighty nine passengers and crew died, That is obvious. They did not do that. Instead of doing that, they authorized twenty billion dollars in additional share buybacks and introduced
a program to eliminate quality control. Essentially, so when they talk about the commission of a felony, they're talking about that the murder of those one hundred and fifty seven additional passengers. And this is a felony that required a lot of, you know, a pretty vast conspiracy to actually get away with because Boeing was under criminal investigation after the first mcast crash in twenty eighteen. The criminal investigation widn't understandably, after the second crash, it WI didn't to
include the seven eight seven factory. It WI didn't to include an investigation that involved in you know, extensive interviews of John Barnett, and then didn't narrow. Then sometime in twenty twenty, the prosecutors that were handling the case against Boeing got changed and the case got transferred to Texas from New York Fraud Department, and Boeing ended up on January sixth, twenty twenty one. Understandably, this knit never made
any headlines. But on January sixth, twenty twenty one, Boeing stein what is in as a deferred prosecution agreement, and the Justice Department essentially agreed to not prosecute Boeing because, as it said, you know, the problems that they found in the company were not systemic and they involved very few people. So while Boeing got away with it, you know, with this this real I mean, you can't even call it a slap on the wrist. It's it's like a risk massage.
Yeah, I think you compared that, Yeah, I think you compared that to in one of your articles as like similar to the sweetheart deal that Jeffrey Epstein got in two thousand and seven. So I'm wondering, how how is Boeing able to secure such a deal from the DOJ.
Well, it's it's not simply similar. It involves a lot of the same people. It involves, you know, very senior partners at the mega law firm kirk Ellis. Crucially, Boeing's chief criminal defense attorney in this case was the Deputy Attorney General under I believe it was mckayzy during the Bish administration who is the highest known official to sign off on Jeffrey Epstein's two thousand and seven non prosecution agreement.
Both of those agreements were very similar in that they required lies, right, you know that the government actually lies, and it's the third prosecution agreement on Boeing saying that you know, there were no systemic problems everything that we found. You know, this is this is a solidly ethical company.
Nothing happened. This is just provably false. And similarly with Epstein, you know, the I forget what the exact phrasing was, but that agreement actually indemnified all of his conspirators, even those who were not even named. Both agreements drafted by senior partners at Kirkland and Ellis and put together by a lot of there's a lot of cross pollination in those two agreements. In fact, the Merrick Garlands DOJ made
the case that they aren't actually victims. The four people who died on Ethiopia three oh one, they were not actually the victims of the crime. The only victim of Boeing's crime is the FAA.
Yeah. Yeah, it's a lot of disturbing details coming out right now. But before we wrap, I just I wanted to ask or I wanted to talk about Boeing's future for a minute, because I think it's important that maybe it's in America's best interest to have a competent commercial airline manufacturer. And we did see some leadership reshuffle after the Max crashes you were talking about in twenty eighteen twenty nineteen, and now we're also seeing another leadership reshuffle
with Dave Calhoun. He's stepping down along with some other executives at the end of the year with some pretty robust exit packages. And then it all depends on it's like tied to the company's stock price in the coming years. So my question is can Boeing actually course correct you if stock performance is still the number one incentive that's driving executive compensation.
I I don't really understand the stock I you know, I would say no, I would say that gowing that the stock price, there needs to be some sort of extreme management overhaul. When they did a point, I mean, it was very obvious. Calhoun was like it was like when Tim Geitner was nominated for Treasury Secretary. Pretty much everyone who knew who Tim Geitner was was like, oh God, this is nothing's gonna happen. No one's gonna get in trouble city for everybody is just going to get away
with it. And that's what happened. And David Calhoun is a similar figure. He was the lead, you know, director of the board. He was the biggest. I mean he's a guy who worked at ge and Blackstone. He doesn't actually show up to the office ever. He changed where the office was. He you know, uses the perch to fly his plane around. I mean it's completely worthless piece of shit. You know, I say that without knowing it.
But the latest trinity. Thing to say about Boeing is that what they really need is Larry Culp, the current
CEO of GE. A sort of an irony because Boeing's three out of their last four CEOs have come from GE has been protegees of Jack Welch, and they've absolutely fucked the you know, Boeing just the same way that Jack Welch ultimately fucked GE by completely financializing it and refusing to grapple with the fact that building something that involves four million parts is not the same thing as you know, like manufacturing light bulbs or post it notes,
which is what you know Narnie used to do. So I think that there is a real effort within the sort of you know, dog bos set to say hey, no, you know that actually the market can take care of this, and if they just hire the right guy, the right MBA, this guy Larry Culp, who maybe isn't as much a sociopath, who believe in building companies and putting them on the
road to growth and who believe in quality. Because it has been such a you know, total it's very clear to like everyone in aviation now that Boeing actually can't build a plane that they have lost the ability to competently build an airplane, and that is like an existential problem and it's not reflected in the stock price. I think a lot of that stuff is, you know, the product of algorithms and and you know this sort of conspiracy of algorithms and fraud. Yeah.
As a as an MBA myself, I can confirm a lot of sociopathic behavior that I see and they don't know. They don't think that's it's that way, but it is from outside looking in, it definitely is. Anyways, this is obviously developing stories, so I hope to have you back on really quick anywhere you want to point the audience too, if they want to find or if you want them to find more of your work.
If you look at prospects dot org again and search for Boeing, I think you'll find a lot of my stories. I also write a lot about healthcare and you know.
All kinds of things.
So anything that involves the intersection of organized crime and finance, I like to sniffer out on those cases.
Awesome, Well, everybody go follow mo. Thank you so much for coming on the show today.
Awesome, Thank you so much for having me.
That is it for me this week. If you're looking for more documentary style deep dives on various topics related to business, politics and society, you can follow me on my YouTube channel fifty one forty nine with James Lee. The link will be in the description below. As always, keep on tuning into breaking points and thank you for your time today.
Hi, I'm author of monopoly focused newsletter Big and an anti trust policy analyst. In this Big breakdown, I'm going to ask the question, is Live Nation Ticketmaster, the company that controls most of the live entertainment industry, in fact a criminal conspiracy. You might think that's a bold question, and it is, But some explosive new documents just came to light that suggests that, well, it's a question worth asking.
Let's dive in.
In twenty ten, the live entertainment industry was in shock when Live Nation, the nation's leading concert promoter, bought Ticketmaster, which basically had a monopolist a monopoly over ticketing software
and was a major player in artist management. It was a very controversial deal, and Ticketmaster had already bought out most of its other competitors in ticketing software and really upset Pearl Jam in the nineteen nineties was well known market power problem, but the government's Anti Trust Division under Obama allowed the deal to go forward anyway. In fact, seems like they were sort of proud of doing that.
Let's take a look at this public picture that was put on the DJ's website, So that publicly released photo shows the head of the Anti Trust Division, Christine Varney, her number two William Cavanaugh, and their advisor Gene Kimmelman announcing that they were allowing that merger and talking to reporters about it.
Now.
The Biden Anti Trust Division is very different than the Obama Anti Trust Division, and they have been investigating Live Nation Ticketmaster, the firm that the Obama administration allowed to form. They've been investigating it for years. And when firmsby are being investigated, they tend to lawyer up, and so that's what Live Nation did, hiring an old anti trust lawyer named Dan Wall to represent them against potential monopolization charges
that could be coming from the Anti Trust Division. Wall defended Live Nation publicly as part of a PR campaign earlier last month. In a blog post, he wrote that you might think that Live Nation charges a lot for tickets, but that's really just supply and demand for popular artists. The corporation itself charges low prices, not high ones. He even put up a comparison of commissions charged by online marketplaces from Twitch to Airbnb to Uber to show how little Live Nation charges.
Let's take a look.
You see Live Nation charges less than Twitch, stub Hub, Uber, Airbnb, etc.
Etc.
Concert promotion, Wall wrote, is not a highly profitable business, even for a Live Nation end quote. So look at that commission. It's a measly seven percent for Live Nation ticketmaster. No sure, Live Nation charges consumers a lot of money and doesn't pay much to artists. And this is Wall's argument, But they don't, he wrote, set the ticket price and even worse for Live Nation shareholders.
At least, it's just not a very good business.
Wall concluded, quote The narrative that ticketmaster fees are responsible for high ticket prices makes no sense. According to Wall, the middleman giant affects at most two percent of the price of a ticket for its trouble. Still, all of that that argument from Dan Wall from Live Nation ticketmaster feels weird. It sounds like it's not true, considering that Live Nation CEO Michael Rapino made one hundred and thirty
nine million dollars in twenty twenty two. That's a lot of money for someone in just such a terrible business.
Well, the reason it sounds.
Like it's not true is because, well it's not true, or at least it's not true, according to new documents released by Congressman Bill Pascrell from litigation in twenty nineteen, based on Live Nation's own financial data. These documents are from a court case involving a concert at the New Jersey State Fair in twenty eleven. Now, I just want to tell you where these documents came from, because it's
kind of funny. We often think about Monopolis as sort of dominant and powerful and all knowing, and that litigation has been going on for thirteen years. At a certain point, the plaintiff's hired an expert. His name is Richard Barnett.
He's one of the top scholars in the business, and he looked at Live Nation's confidential records and he wrote about how the corporation actually works in the blinktiffs then submitted that report to the court, and the judge unfortunately ordered it sealed so that no one could read it, saying, oh, it's got confidential information or whatnot, and that should have been that except and here's where the stupidity of a
monopolist comes in. Live Nation or someone's on Live Nation's legal team or Dan Wall's team or someone like that, they screwed up and they accidentally uploaded the report to a public court site pacer where Pascrell got his hands on.
He just downloaded. Then he sent it out at.
A press release and that's how we have the documents. Okay, so what's the case all about? That shows how Live Nation really works. Well, it starts with a concert. In twenty eleven, the head of the New Jersey State Fairs, names Al Dorso, hired a company called Juice Entertainment run by two experienced concert promoters to put on a concert. Now Live Nation. They told Live Nation, do you want
to do this? Live Nation wasn't interested. But as soon as I got win that Jeuwice Entertainment was doing it and started to book acts, Live Nation demanded to co produce the show and end Doorso, who was running the state Fair, was just like, hey, you guys, work it out, and he later put it.
You know, Live Nation.
They were the eight hundred pound gorilla I said, go see if you can work out a deal.
That's what he was saying to Juice.
Now Juice and Live Nation couldn't work out a deal, and then Live Nation managed to get Juice fired. How well, the smaller firm sued Live Nation, claiming the giant coerce performers into not signing with Jews to appear at the fair and threaten to withhold its ticketing services to the venue the state owned Metalands Sports Complex if it were not allowed to be a partner.
That's from public reporting.
In other words, Live Nation used dominance in other lines of business artists, promotion, and ticketing software to thwart arrival, which exactly why the Obama staffers like Gene Kimmelman should have blocked the merger in the first place. But this situation leaves a question why didn't Jews consent to let Live Nation co produce the event? I mean, half the
profit is still better than no profit, right. Well, the reason is, according to Jews, that Live Nation offered a deal that would have saddled the firman and artists with the costs, while Live Nation itself took the profits. In this purported arrangement, Live Nation and juice would have split the cost of putting on the event, like renting the venue, the sound stage, and so forth. They would have also shared profits from ticket sales with artists and with each other.
And that sounds good so far. The problem is what came next in the accounting. Here's the expert report. Live Nation negotiated third party expenses like rental costs with the venues directly with vendors in exchange for exclusive financial gains not disclosed to their artists or their agents, managers or
independent co promoters in the form of rebates. So, in other words, Live Nation had secret side deals with vendors to inflate costs by overpaying those vendors and venues, which meant that any profit from the event would evaporate.
It would look like a loss.
Co promoters and artists who share in profits would lose out, but and would be told that the show just wasn't profitable. But the thing is those vendors those venues who had gotten extra money by being paid inflated costs, would in turn remit that money back to Live Nation in the form of secret rebates. In other words, JEUS would pay the inflated costs that would get furtively funneled back to
Live Nation along with all the profits from the show. Now, Live Nation didn't disclose any of this revenue diversion with the artists to whom it had a legal obligation to with whom it had contracts, which is why Jus's lawyer said that the corporation quote essentially defrauds everyone involved. Now, these kinds of secret kickbacks ensured what Jesus's lawyer called
the quote financial ruin end quote of co promoters. Now, of course Live Nation claimed it was losing money or not making very much money on any particular event, and it wasn't. But that's because the profit was coming in through rebates, which, according to this expert, Barnett went onto a line in the accounting statement called quote contribution margin
end quote. So Jus's experts found so interestingly, Barnett even found that Live Nation kept two sets of books, so in one case they posted an entry of ninety thousand dollars rent for settlement, but only seventy five thousand dollars internally for the same item.
They routinely put in profit and loss.
Statements large losses while admitting that events actually made money. So that's just one event, all right, as one a state fair in New Jersey. How much was this contribution margin across all of Live Nation. I don't precisely know, and you can throw other things into that accounting line,
but there are hints of amounts. So in the third quarter of twenty twenty one, which is the last time they used the term contribution margin that I can find, it was seven hundred and forty seven million dollars, probably in the billions today. And that's where CEO Michael Rappino's nine figure payday is probably coming from. Live Nation is generating a great deal of revenue which somehow shows low margins. Lots of events where they're not making money, somehow the cash.
Is coming in.
Now, that's just a price hike, right, It's a way of distracting more revenue, but it's also hidden. And hiding the price hikes is important because monopolization, which is about controlling a market and then extracting by your pricing power, is harder to prove if you show low margins, if you show that you're not charging very much. Their anti trust lawyer Dan Wall can just write, poor little Live Nation,
our business is terrible. Yeah, and we all know that you build by the hour, Dan on your lovely silk sheets. Now let's take a step back and recognize what we're really looking at.
It's not just an extractive scheme. This is about power.
Power over our culture, power over an entire industry. Basically, Live Nation can present venues or other people in the business, anyone in the business pretty much with a choice. If you cooperate quietly, you'll get extra hidden revenue, and that means cooperating with knowing dishonesty in the business. If not well, Live Nation will maybe work with your rival, or may just buy into the market to compete with you directly. May not let artists come to your shows at any
point too. I mean, it's not just the blunt instrument. At any point, Live Nation can dial up or down rebates to reward or punish. And that's increasingly true as Live Nation buys more and more corporations in and around the live event space, with each one presenting additional options for fees and rebates and what is essentially financial engineering. Okay, is this report true? I mean, why, like you know, Live Nation would say, oh, they got it totally wrong.
They didn't disprove it because I don't think they can. But you know, the question is reasonable. Is the report true?
We don't know.
It's the expert is well respected and he looked at Live Nation's financial data, and it is easy to believe the worst about Live Nation Ticketmaster. They have a really
bad reputation in the industry and then among consumers. But the reason I think it's true, and I'm not sure, but the reason I buy it is because this particular story is consistent with the behavior of a lot of firms, many dominant middleman firms in our economy, from pharmacy benefit managers to Amazon, and their relationship with third party sellers, how they mediate between third party sellers and consumers, to big banks who securitized mortgages in the financial crisis, to
the advertising technology industry and so on and so forth. Now they don't, most of them don't use two sets of books. That's kind of like, you know, that's a little bit, you know above the I'm not saying everyone's a criminal conspiracy. Two sets of books kind of a
red flag, But in general, it's a business model. Middlemen who have market power, they use fees and kickbacks, often hidden through a complex maze of subsidiaries or overlapping lines of business to extract in ways that are really hard to see. It's in a face, it's immoral, and more importantly, it creates a climate of fear. The problem is it's also just the way that we do business today. Fortunately, Live Nation is under investigation and there are a bunch
of companies that are under investigation. But this lesson if this is true, and I think it is. But if it's true, this is why Live Nation needs to be broken up, and more broadly, why we need to get rid of these this way of doing business, these secret kickbacks and rebates throughout the whole economy. Thanks for watching
this big breakdown on the Breaking Points channel. If you'd like to know more about how big business and our economy really works, go to the link in the description below and sign up for my market power focused newsletter.
Big Thanks and have a good one.