Sex parties as bribes: 8 US Navy officers charged in ‘Fat Leonard’ scandal
Among those charged is Rear Admiral Bruce Loveless, recently retired from the Pentagon, as well as four retired navy captains, and a retired marine colonel.
The defendants were arrested across five states on Tuesday, according to authorities. They face charges including bribery, conspiracy to commit bribery, honest services fraud, and obstruction of justice and making false statements to federal investigators, according to a Tuesday release by the Department of Justice (DOJ).
The charges cover the period from 2006 to 2014, with the 79-page indictment listing the multitude of bribes allegedly provided to the defendants.
Those range from $600-per-night hotel rooms, $2,000 bottles of cognac and boxes of cigars, to $25,000 watches.
It is alleged that the gifts came from Leonard Glenn Francis, known as 'Fat Leonard,' a Singapore-based defense contractor who in January 2015 pleaded guilty to defrauding the navy of tens of millions of dollars.
The indictment also alleges that Francis frequently sponsored sex parties for many officers assigned to the ‘USS Blue Ridge’ and other warships.
The indictment mentions two port visits by the ‘Blue Ridge’ to Manila, the Philippines. During one, in February 2007, 'Fat Leonard' "paid for a lavish party and the services of prostitutes," during which "historical memorabilia related to General Douglas MacArthur were used by the participants in sexual acts."
Another port visit to Manila in May 2008, saw Francis host "a raging multi-day party, with a rotating carousel of prostitutes" at the Shangri-La Hotel. The navy officers allegedly drank all the Dom Pérignon champagne the hotel had, and the room and alcohol charges stacked up to $50,000 – all of which was apparently covered in full by Francis.
‘Betrayal in epic proportions’
Federal prosecutors say that in exchange, the officials provided Francis with classified or inside information that allowed his firm, Glenn Defense Marine Asia (GDMA), to extort nearly $35 million from the navy. The leaked data includes ship movements and confidential contract information.
In some cases, commanders steered ships to ports where GDMA could charge fake tariffs and fees, according to prosecutors cited by AP.
Navy officers are accused of using fake names and foreign email service providers to cover their tracks.
The scheme – described by the DOJ as "colossal fraud" – allegedly involved Francis' company overcharging for stocking navy ships in the Pacific with food, water, fuel, and other supplies.
The acting US attorney for the Southern District of California, Alana W. Robinson, called the new charges "a fleecing and betrayal of the United States Navy in epic proportions."
She added that the defendants "worked together as a team to trade secrets for sex, serving the interests of a greedy foreign defense contractor and not those of their own country.”
Meanwhile, Admiral John Richardson, the US Navy's top officer, vowed to repair the damage caused by the bribery scandal.
“This behavior is inconsistent with our standards and the expectations the nation has for us as military professionals,” he said, as quoted by AP. “It damages the trust that the nation places in us, and is an embarrassment to the navy.”
The new indictment brings the number of those charged in the 'Fat Leonard' case to 25. Twenty of those are current or former US Navy officials, while five are GDMA executives. Thirteen have pleaded guilty thus far.
Loveless is the second admiral to be charged. It is extremely rare for an admiral to face criminal proceedings.
Navy officials have said that about 30 admirals are currently under investigation, though only a handful have been named publicly.
The scandal is one of the worst corruption cases in US Navy history. It has dogged the military since Francis was arrested in 2013, after an international sting operation lured him from Singapore to San Diego.
Francis, a Malaysian national, is awaiting sentencing.
The defendants in the case reportedly called themselves various names as they worked to recruit others for the scheme, including 'The Cool Kids,' 'The Band of Brothers,' 'The Brotherhood,' 'The Wolfpack,' 'The Familia,' and 'The Lion King’s Harem.'
Despite increased signs of fraud, the navy continued to hire Francis' company to resupply its ships and submarines throughout Asia. Glenn Defense won deals valued at $200 million in 2011, to service US vessels at ports from Russia's Far East to Australia. The contracts were in effect up until after Francis' arrest in 2013.