Fat Leonard scandal
[1][2] The Washington Post called the scandal "perhaps the worst national-security breach of its kind to hit the Navy since the end of the Cold War.
"[2] The company's chief executive, president, and chairman, Malaysian national Leonard Glenn Francis ("Fat Leonard"),[2] bribed a large number of uniformed officers of the United States Seventh Fleet with at least a half million dollars in cash, plus travel expenses, luxury items, parties and prostitutes, in return for classified material.
[2][3] Francis then "exploited the intelligence for illicit profit, brazenly ordering his moles to redirect aircraft carriers, ships and subs to ports he controlled in Southeast Asia so he could more easily bilk the Navy for fuel, tugboats, barges, food, water and sewage removal.
[4] The first activities of the conspiracy were confirmed to have existed in 2006 when Francis recruited numerous Navy personnel to engage in corruption, including directing contracts toward his firm, disfavoring competitors, and inhibiting legitimate fiscal and operational oversight.
[8] Separately, five Navy officers were charged with crimes under the Uniform Code of Military Justice (UCMJ) and were subject to court-martial proceedings.
Marshals Service, he was granted a medical furlough and at first allowed to stay in San Diego at a private residence owned by one of his physicians, under 24-hour surveillance for which his family paid.
[16][17] In 2006, Dave Schaus, a Naval officer, became suspicious of GDMA contracts, but Francis was alerted by an informant, Paul Simpkins, to the scrutiny.
Simpkins, a decorated veteran of the U.S. Air Force employed as a civilian contracting officer by the Navy in Singapore, managed to quash any inquiry and had Schaus' position eliminated.
After that, the Manila NCIS office got an anonymous letter and documents, alleging GDMA had overcharged for fees, armed guards and other services during a Subic Bay, Philippines port visit by the Fred Stockham container support ship.
[18] Manila's NCIS agents forwarded the paperwork to the Navy's Singapore contracting office, but it had been infiltrated by GDMA's moles, and they claimed the allegations were false, closing the case.
[citation needed] Documents obtained by The Washington Post via Freedom of Information Act Requests (FOIAs) revealed that after al-Qaeda committed the October 2000 suicide attack on the USS Cole and the September 11, 2001 attacks on the World Trade Center and the Pentagon, the Navy's Economic Crimes unit was reduced from a staff of 140 to only nine persons, most having been reassigned to focus on terrorism.
[18] The lack of enthusiasm for oversight might have been motivated in part by GDMA's demonstrable ability to deliver the sometimes complex level of services the Navy sought.
"[18] Ray Mabus, who was appointed Navy Secretary by President Barack Obama in 2009, admitted his branch was vulnerable to contracting fraud and should have performed better oversight: "I'm not going to defend at all opening and closing 27 cases.
[18] After a three-year investigation and having planted false information that their inquiries had been closed, putting Francis off his guard, federal agents lured him to the United States.
[22] He faced a maximum prison sentence of 25 years and agreed to forfeit $35 million in personal assets, an amount he admitted to overcharging the Navy.
[36][37] Corporate governance expert Mak Yuen Teen of the National University of Singapore noted that procurement in the defense industry is particularly vulnerable to bribery and corruption.
[32] In the case of former Naval Intelligence chief, Vice Admiral Ted N. Branch, both the Navy and the Department of Justice declined to prosecute after a three-year investigation.
[38] On June 29, 2022, after a 16-week trial, a jury found former Captains David Newland, James Dolan and David Lausman and former Commander Mario Herrera guilty of conspiracy to commit bribery, accepting bribes, and wire fraud in connection with their acceptance of bribes from Francis' company in exchange for information regarding the Navy's Seventh Fleet.
[39] Lausman was further convicted of obstruction of justice involving the destruction of a computer's hard drive containing materials from his time as commanding officer of the USS George Washington, an aircraft carrier.
[40] On July 13, 2022, U.S. District Judge Janis Sammartino ruled that the lead federal prosecutor in the bribery and fraud trial of the five ex-Navy officers committed "flagrant misconduct" by withholding certain potentially exculpatory materials from defense lawyers, specifically, a statement by a prostitute involved with.
Judge Sammartino had ordered 24-hour surveillance at Francis' expense but had expressed concerns in the past when a security guard had been absent from their post for hours.
[44] In November 2020, a bariatric surgeon who had been treating Francis for obesity wrote an unsolicited letter to the judge to inform her that the improvement in his condition gave him a clean bill of health.
[46] He was arrested at Simón Bolívar International Airport outside Caracas, Venezuela, pursuant to an Interpol "red notice" as he was about to board a plane to Russia.
[49] Per Department of Justice policy, it refused to comment on extradition requests until persons sought were returned to the U.S.[43] Sammartino had scheduled a status hearing date for December 14 in San Diego.
[50] In December 2023, despite tense relations with the United States, [46][47] Venezuela agreed to allow the extradition of Francis as part of a larger agreement that freed Alex Saab, an accused money launderer and associate of President Nicolas Maduro.
The Navy elected to take only a handful to court-martial, issuing at least 12 letters of censure from Mabus and his successor, Richard V. Spencer, with some 40 other administrative actions.
"[19] GDMA's influence paralleled the Pacific Fleet's intentions to locate vessels into ports unfamiliar with its standards for services, that had been complicated by the al Qaida attack on the USS Cole in Yemen that killed 17 sailors.
[19] In February 2018, Admiral Bill Moran, the Vice Chief of Naval Operations, announced the implementation of increased oversight and other measures and policies to deter a repeat of the widespread corruption in the "Fat Leonard" case.
California Representative Jackie Speier, the ranking member of the House Armed Services Subcommittee on Military Personnel, objected to the change in policy, characterizing it as a reduction in transparency and a barrier to the public's "right to know.
The Ministry of Justice has charged Sung-Yol “David” Kim, head of DK Marine Service, with counts of conspiracy and bribery, according to pleadings filed with the Eastern District of Michigan.
