DEFENSE CONTRACTOR, CEO PLEAD GUILTY FOR ROLES IN LARGE-SCALE NAVY CORRUPTION CONSPIRACY

FROM:  U.S. JUSTICE DEPARTMENT 
Thursday, January 15, 2015
Defense Contractor and its CEO Plead Guilty to Corruption Conspiracy Involving “Scores” of Navy Officials

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.

UKRAINIAN ARRESTED ON INTERNATIONAL CORRUPTION CONSPIRACY CHARGES

FROM:  U.S. JUSTICE DEPARTMENT 
Friday, March 14, 2014
Ukrainian Businessman Arrested in Austria on U.S. International Corruption Conspiracy Charges

Dmitry Firtash, 48, a Ukrainian businessman, was arrested Wednesday by Austrian authorities in Vienna on a provisional arrest request based on charges filed in the Northern District of Illinois, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division and U.S. Attorney Zachary T. Fardon of the Northern District of Illinois.

The charges result from an investigation, which the FBI has conducted for several years,    of an alleged international corruption conspiracy.   Firtash’s arrest is not related to recent events in Ukraine.

Firtash, who controls Group DF, an international conglomerate of companies, remains in Austrian custody unless he meets the bail condition of posting a €125 million bond, which was set today in a Vienna court.   The U.S. government will seek his extradition.

The charges are merely accusations, and the defendant is presumed innocent unless and until proven guilty.

The department has worked closely with and has received significant assistance from its law enforcement counterparts in Austria and greatly appreciates their assistance in this matter.  Significant assistance was also provided by the Criminal Division’s Office of International Affairs.   The Chicago Office of the FBI conducted the investigation.