Navy | The Contracting Education Academy

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

March 9, 2017 By AMK

Navy officially adopts GSA reverse auctions acquisition platform

The Department of the Navy, looking for more efficiency in its acquisition process, has adopted the General Service Administration’s Reverse Auctions eTool to increase savings on commonly purchased office products, equipment and services.

Signing a memorandum of understanding on Jan. 18, 2017, the two parties have extended a longstanding partnership for reverse auction procurements, where sellers compete to win business from agencies with prices decreasing as the competitive auction progresses.

The eTool can be used to facilitate the request for and submission of quotes, offers or proposals for products, services and solutions through GSA Multiple Award Schedules and Blanket Purchase Agreements and Open Market (non-schedule) acquisitions.

Keep reading this article at: http://www.federaltimes.com/articles/navy-officially-adopts-gsa-reverse-auctions-acquisition-platform

February 28, 2017 By AMK

Navy’s 355-ship fleet goal would cost $25 billion per year

A new analysis from the Congressional Budget Office (CBO) finds the Navy would have to spend $25 billion a year for 30 years to reach its stated goal of a 355-ship fleet, $6 billion a year more than if it stayed on its current track for a 308-ship fleet.

The report, released this month, assessed the costs of the service’s 2017 30-year shipbuilding plan, finding the Navy would need to spend $566 billion to build a fleet of 308 ships, up from the current 274. But the service can expect to spend much more to reach the new goal of 355 ships, announced in December, the report found.

While the full cost implications of the 355-ship fleet will be addressed in a future CBO report, the study laid out broad estimates for the ambitious shipbuilding goal.

The Navy could reach a fleet of 353 ships by 2046 by increasing ship production, CBO staff found. Building 321 ships over 30 years would cost the service $25 billion a year, compared with $19 billion a year if the Navy stayed on its current path.

Keep reading this article at: https://www.dodbuzz.com/2017/02/25/navys-355-ship-fleet-25-billion-per-year/

January 16, 2017 By AMK

Navy officer sentenced in ongoing ‘Fat Leonard’ contract fraud and bribery investigation

A U.S. Navy Lieutenant Commander was sentenced on Jan. 12, 2017 to 30 months in prison for accepting cash, hotel expenses and the services of a prostitute from foreign defense contractor Glenn Defense Marine Asia (GDMA) in exchange for classified Navy information.

This action is the latest in a 3-year string of guilty pleas, indictments and convictions related to alleged fraudulent activities of GDMA and its chief executive, Leonard Glenn “Fat Leonard” Francis.

GDMA won contracts from the Navy worth more than $200 million since 2009. The contracts were for port services to U.S. Navy ships and submarines throughout the Pacific.

The Jan. 12 sentencing stems from Gentry Debord’s October 2016 guilty plea to one count of conspiracy to commit bribery. He admitted that in 2007 he began a corrupt relationship with Francis. In addition to his 30-month prison sentence, U.S. District Judge Janis L. Sammartino ordered Debord to pay a $15,000 fine and $37,000 in restitution to the Navy.

As part of the scheme, between 2007 and 2013, Debord accepted cash, luxury hotels and the services of prostitutes from Francis in exchange for proprietary Navy information that benefitted GDMA. During this period, Debord served as a supply officer aboard the U.S.S. Essex and later as a logistics officer for the Pacific Fleet.

Debora further admitted that he:

provided Francis and others with internal, proprietary U.S. Navy information;
directed Francis and GDMA to inflate invoices to reflect services not rendered;
advocated for the U.S. Navy to procure items from GDMA under its husbanding contracts; and
used his position and influence in the U.S. Navy to advocate for and advance GDMA’s interests.

To date, a total of 16 individuals have been charged in connection with the scheme. Of those, 10 have pleaded guilty, including Debora, Admiral Robert Gilead, Captain Michael Brooks, Commander Bobby Pitts, Captain Daniel Dusk, Commander Michael Mickiewicz, Lt. Commander Todd Malaki, Commander Jose Luis Sanchez and U.S. Petty Officer First Class Daniel Layup.

On Jan. 21, 2016, Layup was sentenced to 27 months in prison and a $15,000 fine.
On Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine.
On March 25, 2016, Dusk was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine.
On April 29, 2016, Mickiewicz was sentenced to 78 months in prison and to pay a fine of $100,000 and to pay $95,000 in restitution to the Navy.
Beliveau was sentenced on Oct. 14, 2016, to 12 years in prison and to pay $20 million in restitution.
Simpkins was sentenced on Dec. 2, 2016, to 72 months in prison.
Brooks, Gilbeau and Sanchez await sentencing.
Pitts was charged in May 2016 and his case is pending.

The Defense Criminal Investigative Service, the Navy Criminal Investigative Service, and the Defense Contract Audit Agency are continuing the investigation of this matter.

Source: https://www.justice.gov/opa/pr/navy-officer-sentenced-30-months-expanding-bribery-and-fraud-investigation

January 4, 2017 By AMK

DoD contractor agrees to $4.5 million settlement for alleged False Claim Act violations

Advanced C4 Solutions, Inc. has agreed to pay $4.535 million to the United States to settle allegations that it submitted inflated invoices to the government for work performed at Joint Base Andrews.

Advanced C4 Solutions, Inc. is a Florida-based company that was operating as an 8(a) small business certified by the Small Business Administration (SBA). On June 10, 2010, Advanced C4 was awarded a contract to supply project management and labor services for an Air Force technology project. The contract was awarded by the U.S. Navy’s Space and Warfare Systems Command (SPAWAR), which was administering the contract in support of the United States Air Force.

Among other things, the contract required the Advanced C4 to design, construct, and implement certain local area network and wide area network systems that would be utilized by Air Force personnel and other components of the U.S. Armed Forces on Joint Base Andrews in Maryland. The contract required the company to accurately provide invoices to the United States for work performed under the contract, including work by subcontractors. Labor costs were required to be billed according to the job classifications set forth in the contract and the number of labor hours worked by personnel at each job classification. The contract also provided that the Advanced C4 could only utilize pre-approved subcontractors. Pursuant to this provision, the company entered into subcontractor agreements with several entities, one of which was Superior Communication Solutions, Inc. (SCSI).

spawar Advanced C4 Solutions and its subcontractors began work under the SPAWAR contract in June 2010. Andrew Bennett was the Advanced C4’s project manager who was tasked with overseeing the work performed by the company and its subcontractors under the contract. In this capacity, Bennett was responsible for verifying the accuracy of all invoices submitted by subcontractors to the company and, in turn, all the invoices submitted by the company to SPAWAR.

The settlement agreed to on Dec. 28, 2016 resolves allegations that Bennett, while an employee of Advanced C4, knew that SCSI created false invoices that charged for labor hours that were not actually worked, and charged the United States at job classification rates for personnel that did not have the requisite credentials to be billed at those rates, and yet submitted those SCSI invoices to the government for payment anyway. SPAWAR subsequently paid these invoices not knowing they were false.

In related cases, Bennett, of Tampa Florida, James T. Shank, of Perry, Georgia, and a third individual were indicted on federal criminal charges related to their actions in this matter. Bennett and Shank pled guilty to conspiracy to commit wire fraud for their conduct related to the SPAWAR contract. The third defendant is scheduled for trial beginning on January 30, 2017.

Source: https://www.justice.gov/usao-md/pr/defense-contractor-agrees-4535-million-settlement-alleged-false-claim-act-violations

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A new analysis from the Congressional Budget Office (CBO) finds the Navy would have to spend $25 billion a year for 30 years to reach its stated goal of a 355-ship fleet, $6 billion a year more than if it stayed on its current track for a 308-ship fleet.

A U.S. Navy Lieutenant Commander was sentenced on Jan. 12, 2017 to 30 months in prison for accepting cash, hotel expenses and the services of a prostitute from foreign defense contractor Glenn Defense Marine Asia (GDMA) in exchange for classified Navy information.

Advanced C4 Solutions, Inc. has agreed to pay $4.535 million to the United States to settle allegations that it submitted inflated invoices to the government for work performed at Joint Base Andrews.

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