investigation | The Contracting Education Academy

August 23, 2017 By AMK

Active-duty Navy commander pleads guilty to conspiring with foreign defense contractor to defraud Navy

The latest development in the years-long “Fat Leonard” Navy contract corruption scandal is a guilty plea by an active-duty U.S. Navy commander in connection with his efforts to obstruct a federal criminal investigation of the owner and chief executive officer of a multi-national defense contracting firm headquartered in Singapore.

The plea was entered last week by Bobby Pitts who served as the officer in charge of the Navy’s Fleet Industrial Supply Command (FISC) in Singapore.

This development is the most recent in a string of guilty pleas, indictments and convictions – spanning more than three years – related to alleged fraudulent activities of Glenn Defense Marine Asia (GDMA) and its chief executive, Leonard Glenn “Fat Leonard” Francis. So far, 27 individuals have been charged in connection with the corruption and fraud investigation into GDMA. Of those charged, at least 20 are current or former Navy officials and five are GDMA executives. Several additional cases are pending. Francis’ reputation for corruption and bribery in recent years has led him to be nicknamed “Fat Leonard.” (For background, see The Washington Post article, “The Man Who Seduced the 7th Fleet,” here.)

Bobby Pitts, 48, of Chesapeake, Virginia, pleaded guilty to one count of conspiracy to defraud the U.S. in connection with the NCIS’s investigation of Francis. Pitts is set to be sentenced on December 1, by U.S. Magistrate Judge Bernard Skomal of the Southern District of California, who accepted his plea on August 15, 2017.

According to admissions made as part of his plea agreement, Pitts, as part of his duties in Singapore during the period August 2009 to May 2011, learned that the Naval Criminal Investigative Service (NCIS) and several civilian employees of the Navy were investigating whether Francis was over-billing the Navy on ship husbanding contracts. Pitts had access to internal Navy documents pertaining to investigative steps that the Navy was considering and admitted that he shared this information with Francis, with the intent to impede and obstruct the Navy’s oversight of its contracts with GDMA. On Nov. 23, 2010, for example, Pitts forwarded to a representative of GDMA an internal Navy email discussing FISC’s intention to contact officials with the Royal Thai Navy to determine whether GDMA had been billing the U.S. Navy for services in fact rendered by the Thai government.

In pleading guilty, Pitts admitted, among other things, to working with Francis and other foreign-defense-contractor personnel to help them cover up GDMA’s overcharging practices with respect to providing protection to U.S. Navy forces deployed in the Western Pacific.

So far, 18 of 27 defendants charged in the U.S. Navy bribery and fraud scandal have pleaded guilty. All defendants are presumed innocent unless and until convicted beyond a reasonable doubt in a court of law.

The case is being prosecuted by the Fraud Section of the Justice Department’s Criminal Division and Assistant U.S. Attorneys from the Southern District of California.

Source: https://www.justice.gov/opa/pr/active-duty-us-navy-commander-pleads-guilty-conspiring-foreign-defense-contractor-defraud-us

For more information on this prosecution, see: http://contractingacademy.gatech.edu/?s=fat

August 14, 2017 By AMK

Singapore executives sentenced for fraud in international Navy corruption scandal

Two former executives of foreign defense contractor Glenn Defense Marine Asia (GDMA) were sentenced on August 12, 2107 for conspiring to submit bogus claims and invoices to the U.S. Navy in an effort to win contracts and overcharge the U.S. Navy by tens of millions of dollars as part of a years-long corruption and fraud scheme.

The case is the latest in a series of convictions spanning more than two years and involving Leonard Glenn Francis, the former CEO of GDMA, a defense contracting firm based in Singapore. Francis’ reputation for corruption and bribery in recent years has led him to be nicknamed “Fat Leonard.” (See The Washington Post article, “The Man Who Seduced the 7th Fleet,” here.)

In the latest conviction, Neil Peterson, 39, and Linda Raja, 44, both of Singapore, were sentenced to 70 and 46 months, respectively, by U.S. District Judge Janis L. Sammartino of the Southern District of California. Both worked as chief deputies for GDMA, which was owned by “Fat Leonard” Francis. Peterson served as the vice president for global operations for GDMA and Raja served as GDMA’s general manager for Singapore, Australia and the Pacific Isles.

Both defendants were arrested by authorities in Singapore at the request of the U.S. government and were extradited on Oct. 28, 2016. They each pleaded guilty in May 2017 to one count of conspiracy to defraud the United States with respect to claims.

According to admissions made as part of Peterson’s and Raja’s plea agreements, they and other members of GDMA’s management team created and submitted fraudulent bids that were either entirely fictitious, contained falsified prices supposedly from actual businesses, or fraudulently stated that the business shown on the letterhead could not provide the items or services requested. In this manner, Peterson, Raja and other members of GDMA’s core management team could ensure that GDMA’s quote would be selected by the U.S. Navy as the supposed low bidder. GDMA could thus control and inflate the prices charged to the U.S. Navy without any true, competitive bidding, as required, they admitted.

Peterson and Raja admitted that they and other members of the GDMA management team knowingly created and approved fictitious port authorities with fraudulently inflated port tariff rates, and approved the presentation of such fraudulent documents to the U.S. Navy. GDMA thus charged inflated prices to the U.S. Navy, rather than what GDMA actually paid to the bona fide port authorities.

For example, Peterson and Raja admitted that for the visit of the U.S.S. Bonhomme Richard to Kota Kinabalu, Malaysia, in or about October 2012, under the direction of Peterson and other members of GDMA’s core management team, false documents and inflated invoices were presented to the U.S. Navy. The full amount billed to the U.S. Navy for this visit was $1,232,858, of which approximately $877,413 was fraudulently inflated, Peterson and Raja admitted.

Peterson and Raja admitted that losses to the U.S. Navy exceeded $34,800,000 as a result of this scheme.

So far, 17 of 27 defendants charged in the U.S. Navy bribery and fraud scandal have pleaded guilty. All defendants are presumed innocent unless and until convicted beyond a reasonable doubt in a court of law.

The DCIS, NCIS and the Defense Contract Audit Agency are continuing to investigate.

See previous articles on this topic here: http://contractingacademy.gatech.edu/tag/fat-leonard/

June 22, 2017 By AMK

Contracts, firings, and favoritism: Explaining the latest DC government scandal

Another week, another apparent scandal involving D.C. government officials. This one gets a bit wonky, involving a city agency that isn’t often in the headlines, contract bids, and hundreds of pages of testimony before a D.C. Council committee.

D.C.’s Department of General Services oversees construction projects—and the lucrative bids for them. Director Christopher Weaver abruptly and mysteriously resigned last August. Within two weeks, it came out that Weaver stepped down rather than fire two employees, as directed by City Administrator Rashad Young, who had recalibrated how DGS evaluated bids. A heavyweight local construction company that donated to Mayor Muriel Bowser’s campaign lost out on two contracts, and it appeared the administration wasn’t happy about it.

One of the employees filed a lawsuit, suing the city and Young for $10 million, saying he was “terminated in retaliation for failing to cooperate with [the Mayor’s office’s] efforts to award the contract” to a political donor and then “publicly defam[ed] and embarass[ed].”

Ward 3 Councilmember Mary Cheh, who oversees the D.C. Council committee with oversight of DGS, decided to look into the situation. “I wanted to see if there was anything improper, but I was also interested to report if there’s nothing improper,” Cheh tells DCist about her decision to open an investigation. “It’s not a good thing for the government for allegations to swirl around, that there’s a notion that improprieties are occurring.”

Keep reading this article at: http://dcist.com/2017/06/whats_this_about_a_dgs_investigatio.php

June 20, 2017 By AMK

Ex-naval attaché sentenced to 41 months in ‘Fat Leonard’ bribery case

A former U.S. naval attache to the U.S. embassy in the Philippines has been sentenced to 41 months in prison for illicitly secured diplomatic clearances for a Malaysian defense contractor in exchange for luxury watches and the services of prostitutes.

Retired Navy Capt. Michael Brooks was sentenced Friday in federal court in San Diego after pleading guilty to bribery charges last year in the Navy’s worst corruption scandal, which helped line the pockets of a Singapore-based businessman, Leonard Francis, nicknamed “Fat Leonard.”

U.S. District Judge Janis L. Sammartino ordered Brooks, 59, of Fairfax Station, Virginia, to pay a $40,000 fine and $31,000 in restitution to the U.S. Navy.

Keep reading this article at: https://www.navytimes.com/articles/ex-naval-attache-sentenced-to-41-months-in-bribery-case

See Justice Dept. news release here: https://www.justice.gov/opa/pr/former-us-naval-attach-and-military-advisor-us-ambassador-philippines-sentenced-taking-bribes

March 15, 2017 By AMK

More ‘Fat Leonard’ fallout: Admiral and 8 other officers indicted in fraud and bribery scheme

Retired U.S. Navy Rear Admiral Bruce Loveless and eight other high-ranking Navy officers have been charged in a federal indictment with accepting luxury travel, elaborate dinners and services of prostitutes from foreign defense contractor Leonard Francis, the former Chief Executive Officer (CEO) of Glenn Defense Marine Asia (GDMA), in exchange for classified and internal U.S. Navy information.

The Justice Department’s Criminal Division, the Defense Criminal Investigative Service (DCIS), and the Naval Criminal Investigative Service (NCIS) made the announcement yesterday (Mar. 14, 2017). This action is the latest in a string of guilty pleas, indictments and convictions – spanning more than three years – related to alleged fraudulent activities of GDMA and its chief executive, Leonard Glenn “Fat Leonard” Francis.

To date, a total of 25 named individuals have been charged in connection with the corruption and fraud investigation into GDMA, a defense-contracting firm based in Singapore. Of those charged, 20 are current or former U.S. Navy officials and five are GDMA executives. So far, 13 have pleaded guilty while several other cases are pending.

Francis’ reputation for corruption and bribery in recent years has led him to be nicknamed “Fat Leonard.” (For background, see The Washington Post article, “The Man Who Seduced the 7th Fleet,” here.)

The allegations contained in the latest indictments expose flagrant corruption among several senior officers previously assigned to the U.S. Navy’s Seventh Fleet. Nine defendants were arrested yesterday on various charges including bribery, conspiracy to commit bribery, honest services fraud, obstruction of justice and making false statements to federal investigators when confronted about their actions.

Four of the defendants are retired captains: David Newland, 60, of San Antonio, Texas; James Dolan, 58, of Gettysburg, Pennsylvania; David Lausman, 62, of The Villages, Florida; and Donald Hornbeck, 56, a resident of the United Kingdom. The other defendants arrested yesterday include: Colonel Enrico Deguzman, 48, of Honolulu, Hawaii; retired Chief Warrant Officer Robert Gorsuch, 48, of Virginia Beach, Virginia; retired Rear Admiral Bruce Lovelace, 48, of San Diego, California; active duty Lieutenant Commander Stephen Shedd, 48, of Colorado Springs, Colorado; and active duty Commander Mario Herrera, 48, of Helotes, Texas.

According to the indictment, the Navy officers allegedly participated in a bribery scheme with “Fat” Leonard Francis, in which the officers accepted travel and entertainment expenses, the services of prostitutes and lavish gifts in exchange for helping to steep lucrative contracts to Francis and GDMA – and to sabotage competing defense contractors. The defendants allegedly violated many of their sworn official naval duties, including duties related to the handling of classified information and duties related to the identification and reporting of foreign intelligence threats. According to the indictment, the defendants allegedly worked in concert to recruit new members for the conspiracy, and to keep the conspiracy secret by using fake names and foreign email service providers. According to the indictment, the bribery scheme allegedly cost the Navy – and U.S. taxpayers – tens of millions of dollars.

In addition to the nine defendants charged today, the 11 Navy officials charged so far in the fraud and bribery investigation are: Admiral Robert Gilbeau, retired Captain Michael Brooks, Commander Jose Luis Sanchez, Captain Daniel Dusek, former Department of Defense civilian employee Paul Simpkins, Commander Michael Misiewicz, Lieutenant Commander Gentry Debord, Lieutenant Commander Todd Malaki, Petty Officer First Class Daniel Layug, Naval Criminal Investigative Service Supervisory Special Agent John Beliveau, and Commander Bobby Pitts.

Gilbeau, Brooks, Sanchez, Dusek, Simpkins, Misiewicz, Debord, Malaki, Layug and Beliveau have pleaded guilty.
Gilbeau, Brooks, and Sanchez await sentencing.
On March 25, 2016, Dusek was sentenced to 46 months in prison and ordered to pay a $70,000 fine and $30,000 in restitution to the Navy.
On Dec. 2, 2016, Simpkins was sentenced to 72 months in prison.
On April 29, 2016, Misiewicz was sentenced to 78 months in prison and ordered to pay a $100,000 fine and $95,000 in restitution to the Navy.
On Jan. 12, 2017, Debord was sentenced to 30 months in prison and ordered to pay a $15,000 fine and $37,000 in restitution to the Navy.
On Jan. 29, 2016, Malaki was sentenced to 40 months in prison and ordered to pay a $15,000 fine and $15,000 in restitution to the Navy.
On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine.
On Oct. 14, 2016, Beliveau was sentenced to 12 years in prison and ordered to pay $20 million in restitution to the Navy.
Pitts was charged in May 2016 and his case is pending.

Additionally, to date, five GDMA executives have been charged: Alex Wisidagama, Francis, Edmund Aruffo, Neil Peterson, and Linda Raja. Of these:

Three have pleaded guilty: Wisidagama, Francis and Aruffo.
On March 18, 2016, Wisidagama was sentenced to 63 months in prison and ordered to pay $34.8 million in restitution to the Navy.
Francis and Aruffo await sentencing.
Peterson and Raja were extradited to the United States from Singapore in September 2016 and their cases remain pending.

The charges and allegations contained in an indictment are merely accusations. The defendants are presumed innocent unless and until proven guilty.

DCIS, NCIS and the Defense Contract Audit Agency are investigating the case.

Anyone with information relating to fraud or corruption should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline or call (800) 424-9098.

Source: https://www.justice.gov/opa/pr/us-navy-admiral-and-eight-other-officers-indicted-trading-classified-information-massive

Another week, another apparent scandal involving D.C. government officials. This one gets a bit wonky, involving a city agency that isn’t often in the headlines, contract bids, and hundreds of pages of testimony before a D.C. Council committee.

A former U.S. naval attache to the U.S. embassy in the Philippines has been sentenced to 41 months in prison for illicitly secured diplomatic clearances for a Malaysian defense contractor in exchange for luxury watches and the services of prostitutes.

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