Dennis Balius, a former lab supervisor of a Portland manufacturing company who for more than a decade falsified tests on aluminum parts in a scheme discovered by NASA, was sentenced Thursday to more than three years in prison.

Balius, 61, stood between his lawyers, his hands clasped in front of him and shaking as U.S. District Judge Marco A. Hernandez rejected the defense request for a non-prison, probationary sentence, but called the prosecution's push for a nearly five-year prison term "unnecessarily harsh.''

Instead, Hernandez ordered Balius to surrender to prison on Sept. 24 to serve three years and one month in custody. He also must pay $170, 825.87 in restitution.

Prosecutors estimated the loss to at least 2,000 duped customers at $1.4 million.

Balius worked as a lab supervisor at Sapa Extrusions' Northeast Portland manufacturing plant, which supplied aluminum for use in airplane parts, rockets, missiles, window frames, ladders and highway guardrails.

From 2003 through 2015, he admitted he falsified and instructed lab techs to falsify strength certification test results over 4,000 times so there would be no slowdown in the company's production of aluminum extrusions being shipped to customers, allowing the company to gross over $6.8 million in sales based on the bad test results.

Sapa Extrusions already has paid out $2 million as refunds to affected customers concerned about the reliability of their products, allowing them to independently test the strength of the aluminum parts they had purchased.

The judge accepted a sentence enhancement for Balius' abuse of trust, though the judge said it did not affect the prison term he issued.

As a supervisor for 13 years, Balius was "his own man,'' whose dishonesty called into question the integrity of thousands of small businesses and large distributors of aluminum, said Emily Scruggs, a trial attorney in the U.S. Department of Justice's fraud division.

"The buck sort of stops with him,'' she said, adding that he wrote the manual on how to "override the system.''

Defense lawyer Whitney Boise countered that Balius was a blue-collar worker with a high school education who became "a company man,'' putting in 50-hour work weeks.

He said his client didn't deserve to face a stiffer sentence for abuse of trust.

"This case was driven by a company culture to get the metal out,'' and meet production goals, Boise argued.

Balius' lawyer attempted to liken his client's case to the 2010 federal prosecution of four managers of a company that supplied inferior concrete to the Big Dig highway construction project in Boston. In that case, a judge spared the managers any prison time, finding they didn't intend to do harm and didn't profit from their wrongdoing.

"Mr. Balius was just doing what the company had always done,'' Boise said. "He carried on what was already going on.''

Balius struggles with alcoholism and the onset of dementia, according to his lawyer and the judge. He was fired and remains unemployed. He sold his family home and now lives with his wife in a trailer, Boise said. In July 2017, he pleaded guilty to one count of mail fraud, accepting responsibility before facing an indictment.

"I'm guilty of what I took part in. I'm truly sorry,'' Balius told the judge. He then turned back to face his relatives seated in the front row of the public gallery, and added, "I'm truly sorry for my family.''

The judge said he wasn't persuaded that Balius was simply a "fall guy'' in a corporate culture of indifference. Hernandez noted Balius' role as a supervisor, who exercised discretion and even coached his subordinates to engage in the fraud and tried to cover it up for a lengthy period of time.

Balius instructed at least two other employees not to talk to anyone at the company about the bad tests, and had them alter the speed on a testing machine to bring it back to its proper level before customer visits or lab audits, Scruggs wrote in a sentencing memo. Based on his production levels, Balius also received bonuses from the company.

Sapa's former plant production manager, Dennis Merkel, is facing two counts of major fraud against the United States.

Between 1998 and 2001, NASA and the U.S. Missile Defense Agency had awarded Sapa millions of dollars in contracts to provide aluminum extrusions.

NASA uses them use as part of what's called a "frangible joint'' in rockets, into which a mild explosive charge is inserted after production. The joint breaks open upon detonation, allowing a portion of a rocket to break away or a payload, such as a satellite, to be deployed, according to court papers. The reliability of that joint depends on the mechanical properties of the aluminum part used.

While Scruggs, the federal prosecutor, said there were no "product failures'' in Balius' case, it was the failures of satellites deploying during NASA launches of unmanned spacecraft that turned investigators attention to Sapa's faulty aluminum tests.

The company conceded that its Portland manufacturing operation systematically concealed failed quality tests and altered test results so parts that didn't meet strength requirements were sold into the marketplace, including to NASA.

Investigators from NASA's Office of the Inspector General, the FBI and the Defense Criminal Investigative Service worked together in the case, leading to Balius' and Merkel's charges.

-- Maxine Bernstein

mbernstein@oregonian.com

503-221-8212

@maxoregonian