When an indictment against nine current and retired Navy officers in the “Fat Leonard” corruption scandal was unsealed in San Diego federal court last week, it seemed like another version of a now-familiar story of booze, bribes, prostitutes and fraud that has consumed the service for nearly four years.
There was the same litany of misconduct by naval officers of the U.S. Seventh Fleet, from booze-fueled parties in luxury hotels across Asia, expensive meals costing thousands of dollars and salacious details of nights with prostitutes.
And all of it paid for by Leonard Glenn Francis — aka “Fat Leonard” — a gregarious Malaysian whose Singapore-based company Glenn Defense Marine Asia bribed Navy officials over the course of a decade. In return, he got their assistance so he could defraud the Navy out of tens of millions of dollars.
Yet a closer look at the 78-page indictment reveals more than just sex and booze. Previous indictments in the probe — so far 25 people have been charged, with 20 of them current or former Navy officials — focused on one defendant or perhaps two and were more narrow in describing the interactions with Francis.
The latest indictment depicts a wider and more coordinated effort by both the officers and Francis, and the steps they took to advance his interests, keep the conspiracy going, and cover up their involvement.
Page after page, sometimes in meticulous detail, the indictment lays out a conspiracy that lasted more than seven years. It shows how this group of officers in the Navy’s Seventh Fleet worked together, accepting Francis’ lavish gifts and then many of them enthusiastically doing his bidding, sending him classified ship schedules for port visits, and using their influence to get ships to ports Francis preferred.
These were ports that GDMA controlled, and where Francis was able to inflate bills for the services he provided as a Navy contractor. Francis, who has pleaded guilty and has been cooperating with investigators, admitted defrauding the Navy of at least $35 million in this manner, though the total take is believed to be much higher.
Just how tight this conspiracy was is illustrated by one incident recounted in the indictment. In November 2008, Francis was angry about the Navy’s Ship Supply Office in Hong Kong.
For years, Francis had battled the staff at the small support office over charges his company submitted for payment for providing services to Navy ships. On more than one occasion the office had questioned the billings or held up payments.
A frustrated Francis wanted someone to press Navy officials to dramatically change the office’s authority — or close it down entirely. So he turned to a trusted associate: Capt. James Dolan, at the time the assistant chief of staff for logistics for the Seventh Fleet.
Dolan, known as “JD” to Francis and others, was only too happy to oblige.
According to the indictment, on Dec. 1, 2008, Dolan sent a long email to a top admiral in the Pacific Fleet, recommending a reduction in staffing at the Hong Kong office that had so angered Francis.
Then he forwarded a copy of the email to Francis with a telling greeting — “Who loves you, Brother?”
Dolan, now retired, is one of the nine people named in last week’s indictment. All are charged with bribery, conspiracy, and honest services wire fraud conspiracy. One defendant, Capt. David Lausman, is charged with obstruction of justice and making false statements to investigators.
The most prominent individual indicted is now-retired Rear Adm. Bruce Loveless, who was a captain during his involvement with Francis but eventually rose to the rank of admiral and the top-level position of director of naval intelligence operations at the Pentagon.
The indictment depicts him getting meals, fine wines, and rooms at luxury hotels that Francis paid for in 2007 and 2008, as well as participating in a “raging multi-day party with a rotating carousel of prostitutes” at a hotel in Manila. At the time, he was the assistant chief of staff for intelligence for the Seventh Fleet.
Last week, he pleaded not guilty in federal court in San Diego.
Playing a larger role was Capt. David Newland, the lead defendant in the indictment, who served as chief of staff to the commander of the Seventh Fleet. He was the senior officer for the fleet, overseeing all aspects of the operations.
One of the new elements in the indictment is the depiction of how the defendants at times targeted, vetted and recruited new members — including one from the Australian military — into their group. It was known as a “shaping operation,” according to email passages excerpted in the indictment.
In August 2007, Chief Warrant Officer Robert Gorsuch, also indicted, sent an email to Francis, addressed “Boss,” vetting unidentified members of the fleet for possible inclusion in the group. Gorsuch also said he would work up personality profiles for Francis on potential candidates.
A month later, Francis had a dinner with Loveless, Dolan and two other defendants, Capt. Donald Hornbeck and Capt. David Lausman. The purpose was to target and screen other members of the fleet staff into the conspiracy. (Newland had left for a new post in July of that year.) Francis was targeting replacements on the command staff who might be amenable to corruption and asking the group — they called themselves “Band of Brothers” and “Cool Kids” among other monickers — to assist.
Francis was confident, according to the indictment. In September 2009, Francis in an email to Cmdr. Jose Sanchez — who was indicted previously and has pleaded guilty to accepting bribes — suggested “studying” an unidentified captain.
”Every sailor has a weakness somewhere?” he wrote.
Members of the group also warned him off bad candidates. In May 2008, Francis emailed Lt. Cmdr. Steve Shedd, who was indicted last week. Francis wrote that an unidentified officer had been “very cautious around me last night.”
Shedd wrote back: “That officer is definitely poisoned. Now you can see why I haven’t attempted to bring him in.”
Communication with Francis was done via fake names on email accounts on a foreign email service called Cooltoad. That’s how he received many classified ship schedules. He also was sometimes handed compact discs that had information on schedules for months in advance.
The indictment said the defendants also made demands on Francis, including arranging for prostitutes and booking rooms, as well as other gifts.
In 2007, Capt. Hornbeck had Francis arrange an internship for a relative at a Malaysian culinary school in a Kuala Lumpur luxury hotel. Francis picked up the living expenses totaling $13,000.
Other requests were more personal. In 2008, Shedd, who was back in the United States, asked Francis in an email to bail him out of a large personal debt. He gave him an account number for a wire transfer. “I’ll get you whatever information you need,” he wrote.
It’s unclear if Francis paid the debt off. But he did ask Shedd for information on future ship moves.
Hornbeck, Newland and Marine Col. Enrico DeGuzman, who also was indicted last week, each pressed Francis for jobs with GDMA after they left the service.
Francis appears not to have acted on those requests, but he continued to rain down money on the “Band of Brothers.” He spent as little as $3,000 picking up a hotel tab in Singapore and as much as $55,000 for four nights for a group of sailors — including three of the defendants — at a hotel in Hong Kong. Prostitutes from Manila were flown in for the event.
“Lion King,” Sanchez wrote in an email after, using a nickname for Francis, “once again, the brotherhood is very thankful for everything you provided for this port visit.”
Published at Sun, 19 Mar 2017 21:00:00 +0000