Authorities issued warrants for the arrest of Michael Crabtree, 47, and his wife, Susan Crabtree, 44, following a federal grand jury's return of a seven-count indictment against the couple. At press time, the Crabtrees were believed to be residents of Buckeye, Ariz.

According to the Department of Justice, Michael Crabtree started working at Northrop Grumman’s El Segundo, Calif., plant in August 2004, and he was responsible for ordering material and supplies for various Defense Department programs, including the F-18 Hornet and F-35 Joint Strikeforce Fighter programs.

The indictment alleges that Michael Crabtree, from soon after he was hired at Northrop Grumman until he left in early 2007, ordered approximately $2.6 million of composite material—specifically, carbon fiber tape and silicone rubber damming material—from a Santa Ana, Calif.-based company called Advanced West, intending that the materials would never be delivered to Northrop Grumman.

According to the indictment, the bogus orders prompted Northrop Grumman to pay for the materials, and Michael Crabtree directed the proceeds of the fictitious sales to himself. The indictment alleges that the Crabtrees spent their ill-gotten gains on luxury items such as a new home, a race car, a recreational vehicle, a luxury box at the Honda Center in Anaheim, jewelry and electronics.

The fraudulent expenses incurred by Northrop Grumman were passed onto the United States under the F-18 and F-35 contracts. According to the Department of Justice, Northrop Grumman has since refunded the amounts to the United States government.

Crabtrees allegedly set up shell company called Driscoll Enterprises

Susan Crabtree allegedly used her maiden name to set up a shell company called Driscoll Enterprises. According to the indictment, Michael Crabtree convinced the proprietor of Advanced West to serve as an intermediary on contracts between Northrop Grumman and Driscoll Enterprises, telling the owner of Advanced West that Northrop Grumman could not directly do business with Driscoll Enterprises because Crabtree’s brother-in-law owned the company.

According to the Department of Justice, Michael Crabtree directed contracts to Advanced West, which returned most of the contract proceeds to Susan Crabtree, doing business as Driscoll Enterprises, which never delivered any materials to Northrop Grumman.

Michael Crabtree allegedly tricked Northrop Grumman personnel into believing that the materials had been delivered by claiming that he had personally received the materials prior to other Northrop Grumman personnel arriving at work.

Crabtrees allegedly concocted competitive bidding scheme

To make it appear that there was competitive bidding, Michael Crabtree allegedly directed subordinates to seek bids from Advanced West and a Houston company called Delta Composites. With Advanced West already allegedly playing a role in the scheme, according to the Justice Department, Michael Crabtree modified a Northrop Grumman database so that the requests for bids to Delta Composites were sent to his residence, which was located in Irvine, Calif., and later in Newport Coast, Calif.

Susan Crabtree allegedly then submitted proposals under Delta Composites’ name to Northrop Grumman. Because the Crabtrees controlled the “competitive” bidding process, they ensured that Advanced West always received the contract.

Crabtrees each face up to 125 years in prison

The indictment charges the Crabtrees with one count of conspiracy, three counts of wire fraud and three counts of money laundering. If convicted of all the charges alleged in the indictment, each of them would face a maximum statutory penalty of 125 years in federal prison.