Malaysian Defense Contractor Leonard Francis Pleads Guilty To Corruption Conspiracy Involving “Scores” Of Navy Officials; A Navy Captain – The Highest Ranking So Far - Admits He Was One Of Them
SAN DIEGO - Leonard Glenn Francis, owner and chief executive of Glenn Defense Marine Asia, pleaded guilty to bribery and fraud charges in federal court today, admitting that he presided over a massive, 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 – from cash, prostitutes and luxury travel to Cuban cigars, Kobe beef and Spanish suckling pigs.
Also today, U.S. Navy Capt. Daniel Dusek, 47, was charged via information and pleaded guilty to a single count of conspiracy to commit bribery before U.S. Magistrate Judge William V. Gallo. Dusek, the highest-ranking of five current or 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 executive officer of the USS Essex and the commanding officer of the USS Bonhomme Richard, to benefit Francis and GDMA, which for decades provided port services to U.S. Navy ships. Dusek admitted that in return, Francis plied him with meals, alcohol, entertainment, gifts, dozens of nights and incidentals at luxury hotels and the services of prostitutes.
Francis, a 50-year-old Malaysian national, and his corporate entity GDMA, both pleaded guilty to conspiracy to commit bribery, bribery and conspiracy to defraud the United States before U.S. Magistrate Judge Jan M. Adler. According to the plea agreement, Francis faces up to 25 years in prison.
Francis also admitted to defrauding the U.S. Navy of tens of millions of dollars by routinely overbilling for everything from fuel to tugboats to sewage disposal. The government and Francis have agreed that Francis and GDMA should forfeit $35 million of the ill-gotten proceeds and pay full restitution to the U.S. Navy, an amount to be determined by U.S. District Judge Janis L. Sammartino upon sentencing.
In his plea agreement, Francis conceded that over the course of the conspiracy, he and GDMA gave public officials millions of dollars in things of value, including over $500,000 in cash; hundreds of thousands of dollars in the services of prostitutes and associated expenses; hundreds of thousands of dollars in travel expenses, including airfare, often first or business class, luxurious hotel stays, incidentals and spa treatments; hundreds of thousands of dollars in lavish meals, top-shelf alcohol and wine and entertainment; and hundreds of thousands of dollars in luxury gifts, including designer handbags and leather goods, watches, fountain pens, fine wine, champagne, Scotch, designer furniture, consumer electronics, ornamental swords and hand-made ship models.
Francis identified seven Navy officials who accepted his bribes – including Dusek; Commanders Jose Luis Sanchez and Michael Vannak Khem Misiewicz; Naval Criminal Investigative Service Special Agent John Beliveau; Petty Officer First Class Dan Layug; and two unnamed, yet-to-be-charged individuals - a contract specialist and a lieutenant commander. All of the charged Navy officials have pleaded guilty except Misiewicz, whose case is pending. Misiewicz has pleaded not guilty.
“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 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.”
“Today’s guilty pleas of Leonard Francis, his company, and a Navy officer are vitally important steps in our active, ongoing investigation,” said Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division. “We will continue our efforts to root out those implicated in this long-running corruption scheme, both inside the Navy and out. The interests of justice and national security demand nothing less.”
“The greed of all those involved in this massive fraud and bribery case has cost American taxpayers tens of millions of dollars,” said Naval Criminal Investigative Service Director Andrew 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 Deputy Inspector General for Investigations James B. Burch of the Department of Defense, Defense Criminal Investigative Service. “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 Anita Bales, Director of Defense Contract Audit Agency.
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 so helpful to GDMA that an employee identified him as “an official GDMA card holder.” And he was rewarded for his efforts. In one example cited in the plea agreement, GDMA paid for a hotel for Dusek and his family at the Marriott Waikiki in Hawaii on July 19, 2010. A few weeks later, on August 5, 2010, GDMA paid for a hotel room for Dusek at the Shangri-La in Makati, Philippines and while there, GDMA 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 – 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 (Francis’ terminal) is the better choice,” Dusek wrote to Francis on August 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 USS Abraham Lincoln Carrier Strike Group did, in fact, make that visit to Francis’ port on October 8-12, 2010.
In an email to one of his employees, Francis wrote on October 3, 2010: “(Dusek) is a golden asset to drive the big decks (aircraft carriers) into our fat revenue GDMA ports.”
On September 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.
In the Francis plea agreement, Francis admitted that he required his Navy contacts to use their influence to benefit GDMA by steering contracts to GDMA; by scheduling and directing Navy ships to various ports favored by GDMA; and by advocating for and advancing GDMA’s interests with the Navy with respect to ship husbanding issues.
Francis also said Misciewicz provided classified and proprietary Navy information on dozens of occasions and in return, he gave cash and paid travel expenses for Misciewicz. The plea agreement lists eight examples.
Francis acknowledged that he recruited NCIS Special Agent Beliveau, who was the first to plead guilty in this case, to conduct regular searches of the NCIS database which housed information about ongoing NCIS investigations; to download NCIS reports involving investigations into the activities of GDMA and Francis and provide copies of these reports to Francis; and to give Francis advice and counsel on how to respond to, stall and thwart these investigations.
As part of his plea, Francis admitted that Beliveau gave him the identities of subjects of these investigations; the information provided by witnesses and documents, including identifying information about cooperating witnesses and their testimony; the aspects of GDMA’s billings that were of concern to the investigations; the fact that the investigations had obtained email accounts, and the identity of those accounts; the particulars about bank records and financial information sought by the investigations; the reports to prosecutors; and outlines of planned future investigative activities.
Besides Francis, two other GDMA executives - Alex Wisidagama and Edmond Aruffo – have pleaded guilty, acknowledging their roles in defrauding the United States. That brings the total of guilty pleas to seven of eight defendants.
Francis and Dusek are scheduled to be sentenced on April 3, 2015 at 9 a.m by Judge Sammartino.
The ongoing investigation is being conducted by NCIS, DCIS and the Defense Contract Audit Agency. The case is being prosecuted by Assistant U.S. Attorneys Mark W. Pletcher and Robert S. Huie of the Southern District of California and Director of Procurement Fraud Catherine Votaw and Trial Attorney Brian R. Young of the Criminal Division’s Fraud Section.
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.
|DEFENDANT||Case Number: 13-CR-3781, 3782 and 4287|
|Leonard Glenn Francis||Age: 50||Singapore|
|Glenn Defense Marine Asia Pte. Ltd.||Singapore|
Conspiracy to Commit Bribery, in violation of 18 U.S.C. § 371. Maximum penalty five years in prison, $250,000 fine or twice the gross pecuniary gain or loss from the offense, whichever is greater;
Bribery, in violation of 18 U.S.C. § 201. Maximum 15 years in prison, $250,000 fine or twice the gross pecuniary gain or loss from the offense, whichever is greater. Mandatory restitution.Conspiracy to Defraud the United States, in violation of in violation of 18 U.S.C. sec. 371. Maximum penalty five years in prison $250,000 fine or twice the gross pecuniary gain or loss from the offense, whichever is greater. Mandatory restitution.
|DEFENDANT||Case Number: 15-CR-131-JLS|
|Daniel Dusek||Age: 47||San Diego, CA|
Conspiracy to Commit Bribery, in violation of 18 U.S.C. § 371. Maximum penalty five years in prison, $250,000 fine or twice the gross pecuniary gain or loss from the offense, whichever is greater.
Defense Criminal Investigative Service
*An indictment or complaint itself is not evidence that the defendants committed the crimes charged. The defendants are presumed innocent until the Government meets its burden in court of proving guilt beyond a reasonable doubt.