Navy Admiral, 8 Others Charged in Widening Bribery Scandal

SAN DIEGO (CN) – A retired U.S. Navy admiral was indicted Tuesday along with eight naval officers in a massive contract-bribe scandal involving lavish food and travel, sex parties, military secrets and millions of taxpayer dollars.

U.S. Navy Rear Admiral Bruce Loveless and eight high-ranking Navy officers were charged in a 78-page federal grand jury indictment unsealed Tuesday that includes allegations of accepting luxury dinner and travel and sex parties with prostitutes in exchange for sharing classified information with foreign defense contractor Leonard Francis, according to Acting U.S. Attorney Alana Robinson for the Southern District of California.

Including Tuesday’s indictments, 25 people have been charged in connection with the fraud and corruption investigation into Singapore-based Glenn Defense Marine Asia, for which Francis served as its former CEO.

The Navy officers were arrested in California, Texas, Florida, Colorado and Virginia. The United States intends to bring them to San Diego to face charges.

Twenty of those who have been charged are current or former U.S. Navy officials, and five are Glenn Defense Marine Asia executives. Thirteen have already pleaded guilty while the other cases are pending.

“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,” Robinson said.

“The alleged conduct amounts to a staggering degree of corruption by the most prominent leaders of the Seventh Fleet – the largest fleet in the U.S. Navy – actively 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.”

The Navy officials face various charges including bribery, conspiracy to commit bribery, honest services fraud and obstruction of justice and making false statements to federal officers. Only two of the defendants are active duty, while the others are recently retired.

Francis is accused of spending thousands of dollars bribing the Navy officials, including paying for extravagant meals of foie gras terrine, duck leg confit and oxtail soup. He also bought the defendants $2,000 boxes of cigars and rare cognac and organized “wild sex parties in fancy hotels,” according to Robinson.

Some examples of the lavish meals Francis treated the Navy officers to in exchange for defense spending contracts included a $11,898 dinner in Sydney, Australia, in June 2007, where Francis was handed two floppy disks containing classified port visit information for many U.S. Navy ships; and a dinner in March 2007 in Tokyo, Japan, where Francis treated the defendants to lobster thermidor and other courses paired with fine champagne, and also gifted the Navy officers custom-made neckties.

In exchange for the lavish gifts, the Navy officials worked to help Francis and his company win and keep defense contracts to provide port services to U.S. Navy ships, and to redirect ships to ports controlled by Francis in Southeast Asia so he could charge the Navy for supplies and services for food, fuel, water, tugboats and sewage removal. The defendants are also accused of sabotaging competing defense contracts and recruiting new members to the conspiracy.

The defendants used fake names and foreign email server providers to keep the bribery scam under wraps. They referred to themselves using various names such as “the Cool Kids,” “the Band of Brothers,” “the Brotherhood,” “the Wolfpack,” “the Familia,” and “the Lion King’s Harem,” Robinson said.

The U.S. Navy’s Seventh Fleet is the largest fleet, comprised of 60-70 ships, 200-300 aircraft and 40,000 sailors and Marines. The Seventh Fleet operates in the West Pacific Ocean throughout Southeast Asia, the Pacific Islands, Australia and Russia as well as Indian Ocean territories.

The Navy defendants face up to decades in prison and hundreds of thousands of dollars in fines if convicted.

The other defendants indicted Tuesday include Capts. David Newland, James Dolan, Donald Hornbeck and David Lausman; Marine Corps Col. Enrico DeGuzman; Cmdr. Mario Herrera; Lt. Cmdr. Stephen Shedd and Chief Warrant Officer Robert Gorsuch.

Francis still awaits sentencing.