Navy admiral, 8 others indicted in ongoing 'Fat Leonard' corruption dragnet

The charges say naval officials took bribes that included expensive watches, cigars, liquor, prostitutes and wild sex parties.
By Doug G. Ware   |   Updated March 15, 2017 at 6:47 AM

March 14 (UPI) -- The U.S. Department of Justice on Tuesday leveled new corruption charges against several current or former Navy officers in its far-reaching "Fat Leonard" investigation.

The department unsealed an indictment Tuesday that charges several people -- including retired Rear Adm. Bruce Loveless, who was also the Navy's director of intelligence operations -- in connection to activities prosecutors say occurred between 2006 and 2014 that resulted in the loss of tens of millions of taxpayer dollars. Loveless was arrested Tuesday at his San Diego area home.

Those listed in the indictment Tuesday join 19 other people who have also been implicated in the case. Thirteen -- 10 naval officers and three contractors -- have already pleaded guilty to related charges.

Joining Loveless in the charging document are retired captains David Lausman, Donald Hornbeck and David Newland; active-duty Capt. James Dolan; retired USMC Col. Enrico de Guzman; active-duty Cmdr. Stephen F. Shedd; and retired warrant officer Robert Gorsuch. An unnamed member of the Royal Australian Navy is also identified as a conspirator. The San Diego Union Tribune reported a ninth charged individual, Cmdr. Mario Herrera.

The varying charges include conspiracy, obstructing justice and bribery. Prosecutors say some of the men lied about their relationship with Francis and tried to cover up their activity by destroying incriminating evidence.

Tuesday's slate of charges represents a fever pitch in the four-year-old scandal -- at the center of which is former Singapore-based defense contractor Leonard Glenn Francis, who prosecutors say was given sensitive military information in exchange for wide-ranging bribes that included prostitution, expensive gifts, wild parties and other lavish benefits.

Known as "Fat Leonard," Francis used the information he was given to overbill the U.S. Navy by at least $20 million for port services in behalf of his firm, Glenn Marine Defense Asia. He pleaded guilty to fraud charges in 2015 and is awaiting sentencing. Francis' cousin, an accomplice at the firm, also pleaded guilty and is serving a five-year prison sentence.

In December, former Navy official and contractor Paul Simpkins was sentenced to six years in prison after admitting he accepted monetary and sexual bribes. He was also ordered to pay $500,000 in restitution and fines.

Some of the bribes allegedly occurred when personnel were docked in Asia. After details of the scandal emerged, the Navy in 2013 revoked access to classified information for several officers, including Loveless, who was subsequently reassigned before retiring. Another former rear admiral, Robert Gilbeau, pleaded guilty last year and is awaiting his sentence.

According to the charging document, the defendants in the case referred to themselves as "the Cool Kids," "the Band of Brothers," "the Brotherhood" and "The Lion King's Harem." Francis was referred to by some as "the Lion Man."

Among the bribes prosecutors specify are $25,000 watches, $2,000 boxes of cigars, $2,000 bottles of liquor and stays in posh hotels that sold for up to $600-per-night. The document says one meal Francis paid for in Hong Kong in 2006 cost $20,435.

Francis is also accused of throwing sex parties, sometimes for days, on naval warships -- including the USS Blue Ridge, the flagship of the Navy's 7th Fleet. Prosecutors say during one visit to the Philippines in 2008 a group of Navy personnel drank the Shangri-La Hotel's entire supply of Dom Perignon, an expensive brand of champagne, and ran up a bill over $50,000 that was paid by Francis.

A year earlier, the indictment says, a similar party was thrown at the same Manila hotel in its MacArthur Suite -- a high-priced room that honors former five-star U.S. Pacific commander Douglas MacArthur. During that party, according to the charges, "historical memorabilia related to Gen. Douglas MacArthur were used by the participants in sexual acts."

Authorities continue to investigate the case, which has placed more than 200 people under scrutiny. The Navy has also so far disciplined four admirals for breaking military law or ethics guidelines.

"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," acting U.S. attorney for the Southern District of California Alana Robinson said in a statement Tuesday. "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."

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