Nine more Navy officers, including an admiral who was head of intelligence operations before retiring in October, were indicted Tuesday on conspiracy, bribery, obstruction of justice and other charges in the ongoing “Fat Leonard” bribery scandal.
An indictment unsealed in federal court in San Diego accused the group of receiving a stream of gifts from Leonard Glenn Francis beginning in 2006.
In return Francis, who owned the ship servicing company Glenn Defense Marine Asia and was known as “Fat Leonard” because of his size, got access to classified information such as ship schedules as well as the services of the officers who used their position to steer Navy business to his company.
Among the indicted is Adm. Bruce Loveless, who was the Navy’s director of intelligence operations. Loveless retired in October but had been under investigation for his role in the scandal for several years.
He was arrested Tuesday morning at his home in Coronado and was scheduled to appear in court in the afternoon.
Also named in the indictment was Navy Capt. David Newland, former chief of staff to the commander of the Seventh Fleet, the service’s largest fleet and the center of the bribery scheme.
Others indicted from the Navy were Capt. Donald Hornbeck, Capt. James Dolan, Capt. David Lausman, Lt. Cmdr. Stephen Shedd, Cmdr. Mario Herrera and Chief Warrant Officer Robert Gorsuch. Also named in the indictment was Marine Col. Enrico Deguzman.
The indictment also names several other people with Navy ties who have been charged in related “Fat Leonard” cases.
They are Edmond Aruffo, a former Navy officer who went to work for Francis and was a key liaison for him in recruiting people into the bribery ring; Cmdr. Jose Sanchez, who has pleaded guilty to his role and is awaiting sentencing; Capt. Daniel Dusek, who pleaded guilty and was sentenced last year to four years in prison; and retired Capt. Michael Brooks, who pleaded guilty and is awaiting sentencing.
The indictment also references a member of the Royal Australian Navy identified only as “AG” as a member of the conspiracy.
Francis has pleaded guilty to orchestrating the scheme that overbilled the Navy by at least $20 million. For more than a decade, the Singapore-based contractor bribed Navy officials in the giant Seventh Fleet to use their influence to steer ships to ports that his company controlled. Once they were there, he systematically overbilled the service for fuel, water, transport and many other services.
The indictment unsealed Tuesday contains what is now a familiar litany of misdeeds — lavish meals, the services of prostitutes and gifts all paid for by Francis. One meal in February 2006 that Francis paid for in Hong Kong cost $20,435.
Another incident a year later involved Francis paying for a stay — and prostitutes — at the Macarthur Suite of the Manila Hotel in the Philippines. “During the party, historical memorabilia related to General Douglas MacArthur were used by the participants in sexual acts,” the indictment said.
The defendants also referred to themselves as “the Cool Kids,” “the Band of Brothers,” “the Brotherhood” and “The Lion King’s Harem,” the indictment said. Francis, who was well know for his girth and outsized personality, was called “the Lion Man” by Sanchez and others.
The indictment said that some of the defendants lied about their relationship with Francis, deleted email accounts that carried incriminating messages about the bribery scheme, and destroyed a hard drive from the George Washington aircraft carrier in an effort to impede the probe and cover up their actions.
A retired US navy admiral and eight other current and former military officers were bribed with sex, trips and other lavish perks, according to an indictment unsealed on Tuesday in a burgeoning scandal involving a Malaysian defence contractor nicknamed Fat Leonard.
Retired admiral Bruce Loveless, 53, and the others have been accused of accepting the services of sex workers and other bribes from Leonard Francis in exchange for classified information that helped his company, Glenn Defence Marine Asia.
The indictment says Francis once rented the MacArthur Suite at the Manila Hotel, where memorabilia of General Douglas MacArthur was used for sex acts with prostitutes.
Francis also is accused of paying for meals that cost as much as $12,000 and included foie gras, ox tail soup, expensive wine and cigars worth $2,000 a box.
Prosecutors say the defendants called themselves the Lion’s King Harem, Brotherhood, Wolfpack and other names as they worked to recruit others for the scheme. They were accused of using fake names and foreign email service providers to cover their tracks.
Prosecutors say Francis, whose nickname comes from his wide girth, cheated the navy out of nearly $35m – largely by overcharging for his company’s services stocking navy ships in the Pacific with food, water, fuel and other supplies.
Navy officers provided classified information to Francis that helped him beat the competition and in some instances commanders steered ships to ports in the Pacific where his company could charge fake tariffs and fees, prosecutors said.
It was the latest indictment in the three-year-old case that produced charges against more than 20 former or current navy officials and marks one of the worst navy corruption scandals in history. Loveless is the second admiral charged in the case. It is extremely rare for an admiral to face criminal proceedings.
Admiral John Richardson, the navy’s top officer, vowed to repair damage caused by the scandal.
“This behaviour is inconsistent with our standards and the expectations the nation has for us as military professionals,” he said. “It damages the trust that the nation places in us, and is an embarrassment to the navy.”
Loveless made no substantive comments during a brief hearing hours after his arrest at his Coronado home near San Diego. He did not yet have an attorney. Magistrate Judge Mitchell Dembin entered a not guilty plea on his behalf and ordered him released without bail.
In the military Loveless was responsible for collecting foreign intelligence for the navy’s Seventh Fleet, Patrick Hovakimian, an assistant US attorney, told the judge.
“Far from doing that, over the course of many years this defendant participated in wild sex parties,” Hovakimian said. “He has shown callous disregard for his duties.”
The judge also entered a not guilty plea on behalf of Enrico DeGuzman, a former marine colonel, and allowed him to remain free. His attorney didn’t immediately respond to a request for comment.
Five defendants were arrested on Tuesday in Texas, Pennsylvania, Florida, Colorado and Virginia. None had attorneys listed in court documents.
“This is a fleecing and betrayal of the United States Navy in epic proportions, and it was allegedly carried out by the Navy’s highest-ranking officers,” said acting US attorney Alana W Robinson.
She added that “the alleged conduct amounts to a staggering degree of corruption by the most prominent leaders of the Seventh Fleet — the largest fleet in the US navy — actively worked together as a team to trade secrets for sex, serving the interests of a greedy foreign defence contractor, and not those of their own country”.
Francis has pleaded guilty to fraud and is awaiting sentencing.
Twenty of the defendants are current or former US navy officials and five are executives of the Singapore-based company of Francis.
To date 13 have pleaded guilty, including another admiral who was sentenced in June and is believed to be the first active-duty naval flag officer charged in federal court. Other cases are pending.