Contractor Admits to Bribing Navy Officials With Prostitutes, Alcohol, Cuban Cigars

— -- A defense contractor who is the central figure in a wide-ranging Navy bribery scandal pleaded guilty on Thursday to providing cash, prostitutes, free hotel rooms and gifts worth millions of dollars to gain maintenance and supply contracts in Asian ports that overbilled the Navy by $20 million.

In a federal court in San Diego, Leonard Francis, known by his nickname “Fat Leonard," pleaded guilty to bribery and fraud charges related to a decade-long conspiracy to gain the contracts that he said involved “scores” of U.S. Navy officials. Francis was the CEO of Glenn Defense Marine Asia (GDMA) a Singapore-based company that provided fuel, supplies, tugboats and sewage disposal to U.S. Navy ships when they arrived in ports.

Leonard gave the Navy officials lavish gifts to gain classified information about the scheduled movement of U.S. Navy ships in Asia so he could block out competitors and then overbill the Navy for his company's services, prosecutors said.

Francis admitted that he gave millions of dollars in extravagant gifts and expenses to Navy officials including $500,000 in cash; hundreds of thousands of dollars in prostitution services; travel expenses, including first class airfare, luxurious hotel stays and spa treatments. He also provided officials with lavish meals, including Kobe beef, Spanish suckling pigs, Cuban cigars, designer handbags and even tickets to a Lady Gaga concert.

When sentenced in April Francis could face up to 25 years in prison. In admitting his guilt he and his company agreed to repay the Navy $35 million. He has been cooperating with investigators and additional Naval officials may be implicated.

So far the investigation has involved eight Navy officials, including a Naval Criminal Services Investigative Services (NCIS) agent who would tip Francis off to ongoing investigations into his conduct.

Also on Thursday, Navy Captain Daniel Dusek pleaded guilty to one count of conspiracy to commit bribery, and faces up to five years in prison.

Dusek is the highest-ranking of the five current and former Navy officials who have plead guilty in the case so far. In October, 2013 he was relieved of command of the amphibious assault ship USS Bonhomme Richard after being fingered in the investigation.

It was alleged that in an earlier role as an operations officer for the Seventh Fleet he provided Francis with advance information of Navy port visits. He also succeeded in having the command direct the carrier USS Abraham Lincoln to visit Port Klang, Malaysia, where Francis’s company owned the port terminal.

“The Navy holds its personnel to the highest standards and those that fall short are held accountable," said Rear Admiral Dawn Cutler, the Navy’s top spokesman.

As part of the investigation two admirals in charge of Naval intelligence have had their security clearances pulled while the Justice Department investigated allegations of their involvement in the case. Neither admiral has been charged.

“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 Laura E 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.”