Highest-Ranking Navy Official Sentenced To 46 Months In Prison For Accepting Bribes From Foreign Defense Contractor In Massive Bribery And Fraud Scheme

The U.S. Justice Department released the below information:

The highest-ranking official charged in a massive Navy bribery scandal was sentenced in federal court today to 46 months in prison for giving classified information to a foreign defense contractor in exchange for prostitutes, luxury travel and other gifts.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Director James B. Burch of the Department of Defense’s Defense Criminal Investigative Service (DCIS), Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) and Director Anita Bales of Defense Contract Audit Agency (DCAA) made the announcement.

U.S. Navy Capt. Daniel Dusek was sentenced by U.S. District Judge Janis L. Sammartino of the Southern District of California, who also ordered Dusek to pay a $70,000 fine and $30,000 in restitution to the Navy.  He was ordered to report to the U.S. Bureau of Prisons on June 15, 2016.

Dusek, 49, pleaded guilty in January 2015 to a single count of conspiracy to commit bribery.  Dusek admitted that he used his influence as Deputy Director of Operations for the Seventh Fleet, headquartered in Yokosuka, Japan, and later as executive officer of the USS Essex and the commanding officer of the USS Bonhomme Richard, to benefit Leonard Glenn Francis and his company, Glenn Defense Marine Asia (GDMA).  For decades, GDMA provided port services to U.S. Navy ships and in return, Francis plied Dusek with meals, alcohol, entertainment, gifts, dozens of nights and incidentals at luxury hotels and the services of prostitutes, Dusek admitted.

Underscoring his importance to the conspiracy, in an email to one of his employees, Francis wrote: “(Dusek) is a golden asset to drive the big decks (aircraft carriers) into our fat revenue GDMA ports.”

“As a Navy officer, Captain Dusek took an oath to bear true faith and allegiance to the United States,” said Assistant Attorney General Caldwell.  “Instead, he chose self-interest, greed and prurience.  And when he learned of the investigation, Captain Dusek deleted his email accounts in an attempt to shield his crimes from law enforcement.  The Department of Justice is committed to holding public officials responsible when they betray the public trust.”

“Captain Dusek’s betrayal is the most distressing because the Navy placed so much trust, power and authority in his hands,” said U.S. Attorney Duffy.   “This is a fitting sentence for a man who was so valuable that his conspirators labeled him their ‘Golden Asset.’”

“This outcome again sends the message that corruption will be vigorously investigated and prosecuted,” said Director Burch.  “This is an unfortunate example of dishonorable naval officers who recklessly risked the safety of our troops by trading classified information for cash, extravagant gifts and prostitutes.  Cases such as these are not motivated by need or other difficult personal circumstances; they are the product of simple greed.  This investigation should serve as a warning that those who compromise the integrity of the United States will face their day of reckoning.  DCIS and our law enforcement partners will pursue these crimes relentlessly.”

“Captain Dusek put greed and personal pleasure above the safety of his shipmates and, in doing so, violated his sworn oath as a naval officer,” said Director Traver.  “His sentence today attests to the seriousness of his crimes.  NCIS, along with our partners at the Department of Justice, the Defense Criminal Investigative Service and the Defense Contract Audit Agency have been steadfast in our commitment to fully investigate the actions of all those involved in the GDMA case, and will continue with the same determination as the investigation continues.”

“DCAA is honored to be a partner with DCIS, NCIS and the Department of Justice in this investigation,” said Director Bales.  “Our investigative support auditors did an outstanding job analyzing the evidence.  I’m proud of their work and its impact on bringing justice to those who corruptly defraud the government.”

According to Dusek’s plea agreement, he hand-delivered Navy ship schedules to the GDMA office in Japan or emailed them directly to Francis or a GDMA employee on dozens of occasions, each time taking steps to avoid detection by law enforcement or U.S. Navy personnel.

Dusek was lavishly rewarded for his efforts to help GDMA.  For example, according to the plea agreement, GDMA paid for a hotel for Dusek and his family at the Marriott Waikiki in Hawaii on July 19, 2010, and on Aug. 5, 2010, GDMA paid for a hotel room for Dusek at the Shangri-La in Makati, Philippines, and provided him with the services of a prostitute.

Soon after, Francis asked Dusek to exercise his influence on GDMA’s behalf by steering the aircraft carrier USS Abraham Lincoln and its associated strike group to Port Klang, Malaysia (PKCC) – a port terminal owned by Francis.  Dusek replied in a series of emails to GDMA in late August 2010 that he would make it happen.  “Good discussion with N00 (Admiral) today and convince him that PKCC is the better choice,” Dusek wrote to Francis on Aug. 21, 2010.  Three days later, Dusek reported to Francis that he had “everyone in agreement that the next CSG (Carrier Strike Group) through the AOR (area of responsibility) will stop at PKCC.  Dates will be 08-12 Oct.”  The port visit cost the United States approximately $1.6 million. 

On Sept. 17, 2013, when Dusek learned that Francis and Navy personnel had been arrested, he deleted the contents of his email accounts in an effort to avoid detection by law enforcement.

To date, 10 individuals have been charged in connection with this scheme; of those, nine have pleaded guilty, including Dusek, Lieutenant Commander Todd Malaki, Commander Michael Vannak Khem Misiewicz, NCIS Special Agent John Beliveau, Commander Jose Luis Sanchez and U.S. Navy Petty Officer First Class Dan Layug.  Former Department of Defense civilian employee Paul Simpkins awaits trial.  On Jan. 21, 2016, Layug 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; and on March 18, 2016, Alex Wisidagama, a former GDMA employee, was sentenced to 63 months and $34.8 million in restitution to the Navy; the others await sentencing.

The ongoing investigation is being conducted by NCIS, DCIS and DCAA.  The case is being prosecuted by Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mark W. Pletcher of the Southern District of California. 

Those with information relating to fraud, corruption or waste in government contracting 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. 

Former Executive Of Defense Contractor Sentenced To 63 Months In Prison For $30 Million Fraud Scheme

The U.S. Justice Department released the below information:

A former executive of a Singapore-based defense contracting firm was sentenced to 63 months in prison today for his participation in a fraud scheme that over-billed the U.S. Navy by more than $34 million for ship husbanding services. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Special Agent in Charge Chris D. Hendrickson of the Defense Criminal Investigative Service’s (DCIS) Western Field Office and Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) made the announcement.

Alex Wisidagama, 42, of Singapore, the former global manager for government contracts of Glenn Defense Marine Asia (GDMA), was sentenced today by U.S. District Judge Janis L. Sammartino of the Southern District of California.  In addition to imposing the prison term, Judge Sammartino ordered Wisidagama to pay $34.8 million in restitution to the Navy.  In March 2014, Wisidagama pleaded guilty to one count of conspiracy to submit false claims for payment.  He is the third defendant to be sentenced in a massive fraud and corruption scheme involving GDMA, which provided port services to U.S. Navy ships in the Asia-Pacific region.

According to admissions made as part of his plea agreement, Wisidagama and his cousin, GDMA CEO Leonard Glenn Francis, 51, of Malaysia, perpetrated a scheme to defraud the U.S. Navy on ship husbanding contracts by, among other things, over-billing for the sale of goods, fuel and port tariffs.  Records show that GDMA’s contracts with the U.S. Navy allowed it to sell certain categories of supplies for which GDMA was the lowest bidder.  To make it appear that GDMA’s prices were competitive, Wisidagama and others created false price quotations purporting to be from third-party vendors and submitted them to the U.S. Navy, he admitted.  Because the contracts forbade GDMA from making up the price of fuel that it supplied to U.S. Navy ships, Wisidagama admitted that he and his conspirators created false invoices purporting to show that GDMA paid more to purchase fuel than was actually the case, which allowed GDMA to build undisclosed markups into the prices at which it supplied fuel to the U.S. Navy.  According to the plea, GDMA inflated the cost of port tariff expenses that it passed on to GDMA, despite the fact that the contracts did not allow GDMA to mark up these items. 

Wisidagama admitted that in October 2011, GDMA charged the U.S. Navy $2,739,351.49 to service the USS Mustin during a port visit to Thailand, $1,593,766.75 of the charges were fraudulent.  Wisidagama admitted that the scheme caused more $34 million in total losses to the U.S. Navy. 

To date, 10 individuals have been charged in connection with this scheme; of those, nine have pleaded guilty, including Malaki, Commander Michael Vannak Khem Misiewicz, Captain Daniel Dusek, NCIS Special Agent John Beliveau, Commander Jose Luis Sanchez and U.S. Navy Petty Officer First Class Dan Layug.  Former Department of Defense (DoD) civilian employee Paul Simpkins awaits trial.  On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; and 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; the others await sentencing.

NCIS, DCIS and the Defense Contract Audit Agency are conducting the ongoing investigation.  Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Mark W. Pletcher of the Southern District of California are prosecuting the case.

Those with information relating to fraud, corruption or waste in government contracting 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.

U.S. Navy Officer Sentenced To 40 Months In Prison For Selling Classified Ship Schedules As Part Of Navy Bribery Probe

The U.S. Justice Department released the below link:

A U.S. Navy Lieutenant Commander was sentenced today to 40 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 U.S. Navy ship and submarine schedules and other internal Navy information.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura Duffy of the Southern District of California, Deputy Inspector General for Investigations James B. Burch of the Defense Criminal Investigative Service (DCIS) and Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) made the announcement.

In April 2015, Todd Dale Malaki, 44, pleaded guilty to one count of conspiracy to commit bribery and admitted that in 2006, while he was working as a supply officer for the U.S. Navy’s Seventh Fleet, he began a corrupt relationship with Leonard Glenn Francis, the former president and CEO of GDMA, a company that provided port services to U.S. Navy ships and submarines throughout the Pacific.  In addition to his prison sentence, U.S. District Judge Janis L. Sammartino of the Southern District of California ordered Malaki to pay a $15,000 fine and $15,000 in restitution to the Navy.

As part of the scheme, Malaki provided Francis with classified U.S. Navy ship schedules and proprietary invoicing information about GDMA’s competitors in exchange for luxury hotel stays in Singapore, Hong Kong and the island of Tonga, as well as envelopes of cash, entertainment expenses and the services of a prostitute.  Malaki admitted that the total value of the benefits he received from Francis was approximately $15,000. 

To date, 10 individuals have been charged in connection with this scheme; of those, nine have pleaded guilty, including Malaki, Commander Michael Vannak Khem Misiewicz, Captain Daniel Dusek, NCIS Special Agent John Beliveau, Commander Jose Luis Sanchez and U.S. Navy Petty Officer First Class Dan Layug.  Former Department of Defense (DoD) civilian employee Paul Simpkins awaits trial.  On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; the others await sentencing. 

The NCIS, the DCIS and the Defense Contract Audit Agency are conducting the ongoing investigation.  Assistant Chief Brian Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Robert S. Huie of the Southern District of California are prosecuting the case.

Those with information relating to fraud, corruption or waste in government contracting 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.

The Admiral In Charge Of Navy intelligence Has Not Been Allowed To See Military Secrets For Years

Craig Whitlock at the Washington Post offers a piece the Navy admiral who is in charge of naval intelligence, but can't access classified information due to his possible involvement with a bribery scandal and investigation .

For more than two years, the Navy’s intelligence chief has been stuck with a major handicap: He’s not allowed to know any secrets.

Vice Adm. Ted “Twig” Branch has been barred from reading, seeing or hearing classified information since November 2013, when the Navy learned from the Justice Department that his name had surfaced in a giant corruption investigation involving a foreign defense contractor and scores of Navy personnel.

Worried that Branch was on the verge of being indicted, Navy leaders suspended his access to classified materials. They did the same to one of his deputies, Rear Adm. Bruce F. Loveless, the Navy’s director of intelligence operations.

More than 800 days later, neither Branch nor Loveless has been charged. But neither has been cleared, either. Their access to classified information remains blocked.

Although the Navy transferred Loveless to a slightly less sensitive post, it kept Branch in charge of its intelligence division. That has resulted in an awkward arrangement, akin to sending a warship into battle with its skipper stuck onshore.

Some critics have questioned how smart it is for the Navy to retain an intelligence chief with such limitations, for so long, especially at a time when the Pentagon is confronted by crises in the Middle East, the South China Sea, the Korean Peninsula and other hot spots.

“I have never heard of anything as asinine, bizarre or stupid in all my years,” Norman Polmar, a naval analyst and historian, said in an interview.

You can read the rest of the piece via the below link:

https://www.washingtonpost.com/news/checkpoint/wp/2016/01/27/the-admiral-in-charge-of-navy-intelligence-has-not-been-allowed-to-see-military-secrets-for-years/

U.S. Navy Officer Pleads Guilty To Selling Classified Ship Schedules As Part Of Expanding Navy Bribery Probe

The U.S. Justice Department released the below information:

A lieutenant commander in the U.S. Navy pleaded guilty to bribery charges in federal court today, admitting that he accepted cash, hotel expenses and the services of a prostitute in return for providing classified U.S. Navy ship schedules and other internal Navy information to an executive of a defense contracting firm.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Deputy Inspector General for Investigations James B. Burch of the Defense Criminal Investigative Service (DCIS), Director Andrew L. Traver of the Naval Criminal Investigative Service (NCIS) and Director Anita Bales of the Defense Contract Audit Agency (DCAA) made the announcement.

“Another Navy officer has now pleaded guilty and admitted to taking bribes to reveal classified military information to a major supplier,” said Assistant Attorney General Caldwell.  “It is both troubling and disappointing how many Navy officers we have exposed as willingly falling prey to GDMA’s corruption, and our investigation remains active and ongoing.  Those who serve in our nation’s military must uphold the public’s trust or pay the consequences for their crimes.”

“The receipt of envelopes of cash and lavish hotel stays by our public officials at whatever level erodes the public’s trust in our institutions and our government,” said U.S. Attorney Duffy.  “Today’s guilty plea reflects the next step in our ongoing effort to regain that public trust.”

Todd Dale Malaki, 44, of San Diego, pleaded guilty before U.S. Magistrate Judge Mitchell D. Dembin of the Southern District of California to one count of conspiracy to commit bribery.  A sentencing hearing is scheduled for July 6, 2015.

As part of his guilty plea, Malaki admitted that in 2006, while he was working as a supply officer for the U.S. Navy’s Seventh Fleet, he began a corrupt relationship with Leonard Glenn Francis, the former president and chief executive officer of Glenn Defense Marine Asia (GDMA), a company that provided services to the U.S. Navy.  As part of the scheme, Malaki provided Francis with classified U.S. Navy ship schedules and proprietary invoicing information about GDMA’s competitors.

In exchange, Malaki admitted that Francis provided him with luxury hotel stays in Singapore, Hong Kong and the island of Tonga, as well as envelopes of cash, entertainment expenses and the services of a prostitute.  Malaki admitted that the total value of the benefits he received was approximately $15,000.

Malaki is the eighth individual to plead guilty in this expanding probe into corruption and fraud in the U.S. Navy.  GDMA pleaded guilty in January.  Two other individuals, Paul Simpkins, formerly a Department of Defense (DOD) contracting officer, and Michael Misiewicz, a Captain-select in the U.S. Navy, have been charged and entered pleas of not guilty.

The ongoing investigation is being conducted by NCIS and DCIS, with substantial assistance from the DCAA.  The case is being prosecuted by Senior Trial Attorney Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Robert S. Huie of the Southern District of California.

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

Defense Contractor And Its CEO Plead Guilty To Corruption Conspiracy Involving “Scores” Of Navy Officials

The U.S. Justice Department released the below information:

The owner and chief executive of Glenn Defense Marine Asia (GDMA), a company providing services to the U.S. Navy, pleaded guilty to bribery and fraud charges in federal court today, admitting that he presided over a decade-long conspiracy involving “scores” of U.S. Navy officials, tens of millions of dollars in fraud and millions of dollars in bribes and gifts.  GDMA also pleaded guilty today, as did a Navy captain who pleaded guilty for accepting bribes in exchange for using his position to benefit GDMA.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Deputy Inspector General for Investigations James B. Burch of the Defense Criminal Investigative Service (DCIS), Director Andrew L. Traver of the Naval Criminal Investigative Service (NCIS) and Director Anita Bales of the Defense Contract Audit Agency (DCAA) made the announcement.

“Today’s guilty pleas of Leonard Francis, his company, and a senior Navy officer are vitally important steps in our active, ongoing investigation,” said Assistant Attorney General Caldwell.  “We will continue our efforts to root out those involved in this long-running corruption scheme, both inside and outside the Navy.  The interests of justice and national security demand nothing less.”

“It is astounding that Leonard Francis was able to purchase the integrity of Navy officials by offering them meaningless material possessions and the satisfaction of selfish indulgences,” said U.S. Attorney Duffy.  “In sacrificing their honor, these officers helped Francis defraud their country out of tens of millions of dollars.  Now they will be held to account.” 

“The greed of all those involved in this massive fraud and bribery case has cost American taxpayers tens of millions of dollars,” said NCIS Director Traver.  “NCIS and our law enforcement partners have pored through mountains of documents and emails, discovering and documenting the crimes so that those who participated can be held accountable.  Although today’s pleas are a significant milestone in the case, this investigation is far from over; there is much more work to be done.”

“The guilty pleas entered today send a clear message to those who, driven by greed, betray the faith and trust of the American taxpayers,” said DCIS Deputy Inspector General Burch.  “The DCIS, along with its law enforcement partners, will relentlessly pursue those who corrupt the procurement process for their own personal benefit.”

“I’m extremely gratified that the work of our investigative support team could make a significant contribution to the outcome in this egregious case of defrauding the government and, ultimately, the American taxpayer,” said DCAA Director Bales.

Leonard Glenn Francis, 50, of Singapore, the owner and CEO of GDMA, pleaded guilty to conspiracy to commit bribery, bribery and conspiracy to defraud the United States before U.S. Magistrate Judge Jan M. Adler of the Southern District of California.  GDMA likewise pleaded guilty today to conspiracy to commit bribery, bribery and conspiracy to defraud the United States.  A sentencing hearing for both Francis and GDMA is scheduled for April 3, 2015, before U.S. District Judge Janis L. Sammartino of the Southern District of California.  As part of their plea agreements, Francis and GDMA have agreed to forfeit $35 million and pay full restitution to the Navy, in an amount to be determined at sentencing.

As part of his guilty plea, Francis admitted to defrauding the Navy of tens of millions of dollars by routinely overbilling for various goods and services, including fuel, tugboat services and sewage disposal.

Francis also admitted that over the course of the conspiracy, he and GDMA gave Navy officials millions of dollars in gifts and expenses, including over $500,000 in cash; hundreds of thousands of dollars in prostitution services; travel expenses, including first class airfare, luxurious hotel stays and spa treatments; lavish meals, including Kobe beef, Spanish suckling pigs, top-shelf alcohol and wine; and luxury gifts, including Cuban cigars, designer handbags, watches, fountain pens, designer furniture, electronics, ornamental swords and hand-made ship models. 

In exchange, Francis solicited and received classified and confidential U.S. Navy information, including ship schedules.  Francis also sought and received preferential treatment for GDMA in the contracting process.  Francis further admitted that he bribed a federal criminal investigator in an attempt to learn more about the federal investigation of his company.

Also today, U.S. Navy Capt. Daniel Dusek, 47, of San Diego, California, pleaded guilty to one count of conspiracy to commit bribery before U.S. Magistrate Judge William V. Gallo of the Southern District of California.  A sentencing hearing before U.S. District Judge Janis L. Sammartino of the Southern District of California is scheduled for April 3, 2015. 

Dusek, the highest-ranking of five present and former Navy officials to plead guilty in the case so far, admitted that he used his influence as Deputy Director of Operations for the 7th Fleet, headquartered in Yokosuka, Japan, and later as commanding officer of the USS Bonhomme Richard and the executive officer of the USS Essex, to benefit Francis and GDMA. 

Dusek admitted that he hand-delivered Navy ship schedules to the GDMA office in Japan or emailed them directly to Francis or a GDMA employee on dozens of occasions, each time taking steps to avoid detection by law enforcement or Navy personnel.  Dusek further admitted that Francis plied him with lavish meals, alcohol, entertainment, gifts, dozens of nights and incidentals at luxury hotels, including the Marriott Waikiki and the Shangri-La in Makati, Philippines, and the services of prostitutes.

Dusek admitted that, after accepting these gifts, he worked to direct Naval ships to GDMA’s port terminals.  For example, on one occasion, he steered an aircraft carrier and its strike group to Port Klang, Malaysia, a port terminal owned by Francis.

In addition to Francis, GDMA and Dusek, five other individuals have pleaded guilty for their roles in the scheme to date: U.S. Navy Commander Jose Luis Sanchez, U.S. Naval Criminal Investigative Service Special Agent John Beliveau, U.S. Navy Petty Officer First Class Dan Layug and GDMA employees Alex Wisidagama and Edmond Aruffo.

The ongoing investigation is being conducted by NCIS, DCIS and DCAA.  The case is being prosecuted by Director of Procurement Fraud Catherine Votaw and Senior Trial Attorney Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Robert S. Huie of the Southern District of California.

Those with information relating to fraud, corruption or waste in government contracting 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.