Sting reveals corruption in U.S. navy,
How a defence contractor ripped off the U.S. navy on an industrial scale
For months, a small team of U.S. navy investigators and federal prosecutors secretly planned a high-stakes international manhunt.
The target of the sting was not a terrorist, nor a foreign spy, nor a drug kingpin. But rather a 350-pound defence contractor nicknamed Fat Leonard, who had befriended a generation of navy leaders with cigars and liquor whenever they made port calls in Asia.
Leonard Glenn Francis was legendary on the high seas for his charm and his appetite for excess. For years, the Singapore-based businessman had showered navy officers with gifts, epicurean dinners, prostitutes and, if necessary, cash bribes.
His moles had burrowed deep into the navy hierarchy to leak him a stream of military secrets, thwarting previous efforts to bring him to justice.
In the end, federal agents decided they would lure him to California, dangling a meeting with admirals who hinted they had lucrative contracts to offer.
He took the bait and they caught him Sept. 16, 2013, in his hotel suite overlooking San Diego’s harbour. It was the opening strike in a sweep covering three states and seven countries, as hundreds of law enforcement agents arrested other suspects and seized incriminating files from Francis’s business empire.
A 51-year-old Malaysian citizen, Francis has since pleaded guilty to fraud and bribery charges. His firm, Glenn Defense Marine Asia, is financially ruined.
But his arrest exposed something else that is still emerging three years later: a staggering degree of corruption within the U.S. navy.
Three more officers — a lieutenantcommander and two retired officers — were arrested Friday on charges of leaking naval intelligence to Francis in exchange for sex, vacations and other favours . The new cases bring the number of people charged in the scandal to 14, and prosecutors have said that as many as 200 are under investigation.
The investigation has revealed how Francis seduced the navy’s storied 7th Fleet, long a proving ground for the navy’s senior command.
In perhaps the worst nationalsecurity breach of its kind to hit the navy since the end of the Cold War, Francis doled out sex and money to a shocking number of people in uniform who fed him classified material on warship and submarine movements, confidential contracting information and even files about active law enforcement investigations into his company.
Over at least a decade, according to documents filed by prosecutors, Glenn Defense ripped off the navy with little fear of getting caught.
Francis and his firm have admitted to defrauding the navy of $35 million (U.S.), though investigators believe the real amount could be much greater.
When he pleaded guilty, Francis admitted to bribing “scores” of navy officials with cash, sex and gifts worth millions of dollars. All told, about 30 admirals are under criminal investigation or ethical scrutiny for their connections to Francis, according to two senior navy officials with direct knowledge of the matter.
This account of how Francis corrupted the navy is based on interviews with more than two dozen current and former navy officials, as well as hundreds of pages of court filings, contracting records and military documents obtained under freedom of information requests.
“The Soviets couldn’t have penetrated us better than Leonard Francis,” said a retired navy officer who worked closely with Francis and spoke on the condition of anonymity to avoid reprisal. “At one time, he had infiltrated the entire leadership line. The KGB could not have done what he did.”
‘Endemic corruption’
At its height, Glenn Defense and its subsidiaries boasted a fleet of more than 50 vessels, servicing U.S. navy ships in ports from Vladivostok, Russia, to Papua New Guinea.
Whenever a navy vessel arrived in port, the odds were high that Francis, who spoke in navy lingo and wore neckties emblazoned with the U.S. flag, would be waiting at the pier to ingratiate himself with senior officers.
Select sailors would be invited to an extravagant banquet, featuring cognac and whiskey, Cohiba cigars from Cuba, and platters of Spanish suckling pig and Kobe beef. Francis would sometimes fly in a band of pole dancers, which he called his Elite Thai SEAL Team, for X-rated shows, court records show.
Francis would deploy his flagship, a refurbished British warship he renamed the Glenn Braveheart, to follow the USS Blue Ridge, the 7th Fleet’s flagship. In port, he would often turn the Braveheart into a party boat, with prostitutes to entertain U.S. officers, according to court records and interviews.
To advertise his access to the highest levels of command, he published an array of grip-and-grin photographs featuring him alongside the navy’s top admirals in their dresswhite uniforms.
One brochure, published in 2008, shows Francis, smiling, in a collage of photos with then-Vice Adm. Jonathan Greenert, who would become chief of naval operations, the top job in the navy; Adm. Gary Roughead, another chief of naval operations; Adm. Robert Willard, who would become a four-star admiral and commander of all U.S. military forces in the Pacific; Adm. Sam Locklear, who later became commander of U.S. forces in the Pacific. All have since retired. All declined to comment.
Another retired admiral, who spoke on the condition of anonymity because of the ongoing investigations, recalled how Francis once arrived at the pier bearing gifts: a $700 cigar lighter, two pewter platters worth about $500 apiece, a pack of 25 Cuban Cohiba cigars; and a business card for his bespoke tailor.
The admiral said he declined the presents. “There’s no question in my mind that he tried to influence me,” he said.
“It’s like fishing. He’s got the hook. If he got an inch, he’d go for a foot. If he’d get a foot, he’d go for a yard.”
Meanwhile, Glenn Defense became a leading sponsor of the navy League of the United States, a civilian nonprofit group that advocates on behalf of the navy.
At one military ball, Glenn Defense donated the top door prize: a pair of his and hers gold Rolex watches, valued at $30,000, according to two individuals who were present.
And Francis didn’t hesitate to exploit his connections, especially when lower-ranking officers challenged his exorbitant bills, according to several current and former navy officers and court documents.
David Schaus, a junior officer assigned to the navy’s Ship Support Office in Hong Kong, confronted Francis after receiving a huge invoice from Glenn Defense in 2004. Schaus said it charged the navy for pumping 100,000 gallons of sewage from a destroyer that spent four days in port — an impossible amount, because the ship’s tanks held just 12,000 gallons and were serviced only once a day.
But Schaus said he was told by other navy officials to back off, as was typical when he questioned Glenn Defense.
The company “was rotten from the first day I worked with them in 2004, and everyone knew they were rotten,” Schaus said. “Everyone knew what was going on, and it was just accepted as the way it was. If you tried to rock the boat, you got squashed.”
On Francis’s payroll Starting in 2006, Francis started planting moles in the U.S. navy’s logistical offices.
Francis paid Paul Simpkins, a navy contract supervisor in Singapore, $450,000 to rig the bidding for navy contracts and smooth over investigations into Glenn Defense, according to a federal indictment of Simpkins.
Simpkins left the Singapore office in 2007 to become a senior contracting executive for the Justice Department and later for the Defense Department. Prosecutors have accused him of maintaining a relationship with Francis while he worked in Washington.
During a return trip to Singapore for vacation, Simpkins asked Francis to arrange for some prostitutes, court records show. “Can u set up some clean, disease free wome(n) when I am there?” Simpkins emailed. A few days later, he added: “Whats the plan to meet up and maybe do some honeys?”
“Honeys and bunny’s,” Francis replied, confirming the date.
Simpkins has pleaded not guilty and is awaiting trial. His attorney did not respond to requests for comment.
But Francis’s most audacious achievement was his penetration of 7th Fleet headquarters in Japan. Four officers and an enlisted sailor who worked there have pleaded guilty to taking bribes.
In each case, court records show, Francis or his executives carefully groomed their targets, befriending them while searching for weak points: money or marital problems, alcohol, loneliness, lust, low self-esteem.
One mole, Capt. Daniel Dusek, who served as deputy director of operations for the 7th Fleet, said in court papers that a mentor introduced Francis to him in 2010 as “a great friend of the navy.”
Within months, Glenn Defense began supplying him with prostitutes, alcohol and stays at luxury hotels. In turn, Dusek handed over classified ship schedules and steered aircraft carriers to “fat revenue ports” controlled by Glenn Defense.
In a court memo, Dusek confessed but blamed an “endemic culture within the navy in Asia” and charged that Francis “was able to leverage his way to the top in plain view of generations of senior Naval Officers and Admirals.”
Dusek was sentenced in March to 46 months in prison. He declined to comment for this article.
Francis was choosy about his prostitutes, and kept meticulous notes about the physical desires of navy officials, such as who liked Thai girls or group sex.
In 2010, one of Francis’s executives took Cmdr. Michael Misiewicz, a married officer who was moving to 7th Fleet headquarters, out to dinner and then paid for the commander and his family to attend a production of The Lion King in Tokyo.
Within weeks, Francis’s surrogate had discovered that Misiewicz had a fondness for Japanese prostitutes, liked fancy hotels and needed to pay for international travel for his extended family. Obliged on all counts, Misiewicz soon funnelled classified material to the company.
In a court filing, prosecutors said Misiewicz became Francis’s “trained bulldog” in 7th Fleet headquarters and fed him highly sensitive military secrets, including information about ballistic missile defence operations in the Pacific.
In a letter to the judge in his case, Misiewicz blamed his behaviour on marital troubles and personal insecurities. Misiewicz was sentenced in April to 6 1⁄ years in prison.
The trap is sprung
In 2010, Glenn Defense’s fraudulent tactics finally began to draw serious attention from the navy. The U.S. Naval Criminal Investigative Service opened two separate criminal investigations into the company for its billing practices in Thailand and Japan.
But Francis had another ace in the hole: a turncoat law enforcement agent.
John Beliveau II, a NCIS agent based in Singapore and later at Quantico, Va., had known Francis for at least two years. In exchange for prostitutes, cash and other favours, he tapped into an NCIS database as the cases unfolded and fed Francis information that let him cover his tracks and intimidate witnesses.
“I have inside Intel from NCIS and read all the reports,” Francis boasted in a 2011 email to another one of his moles. “I will show you a copy of a Classified Command File on me from NCIS ha.”
Francis’s intelligence machine worked so well that navy personnel in Singapore suspected their offices had been bugged; some even thought they were under surveillance by private detectives.
Despite the ongoing NCIS investigations, in June 2011the navy awarded Glenn Defense three major contracts, worth up to $200 million, to service ships in Southeast Asia, East Asia, Australia and the Pacific Isles.
Even when his luck turned bad, Francis always seemed to navigate back out of trouble.
In October 2012, Philippine authorities caught one of his ships, the Glenn Guardian, illegally dumping about 200,000 litres of waste water near Subic Bay. The waste water had been collected from the USS Emory S. Land, a submarine tender, during a port visit.
An investigation by the Philippine Senate found that Glenn Defense had been dumping millions of litres of waste water from U.S. navy ships for years without proper permits.
Company executives argued that as a U.S. defence contractor, the firm was protected from liability under terms of a U.S.-Philippines defence treaty. Despite a public outcry, the company was ultimately not penalized or fined.
But in the end, Francis’s overconfidence led to his downfall.
Navy officials eventually realized that Francis had infiltrated NCIS. Cybersecurity teams discovered that Beliveau had been downloading hundreds of files about Francis from the law enforcement database, even though the NCIS agent wasn’t assigned to the case.
In July 2013, they planted false information in the database, stating that all investigations against Glenn Defense had been closed and no charges would be filed.
Two months later, thinking he was in the clear, Francis flew to San Diego to attend a navy ceremony.
After giving a PowerPoint briefing to two admirals about ways he said Glenn Defense could save the navy money, he returned to his hotel and was arrested.
Beliveau was arrested the same day in Washington. He has pleaded guilty to bribery charges and is awaiting sentencing.
Beliveau’s attorney, Jessica Carmichael of Alexandria, Va., said he “fell under Francis’s spell” and “will forever regret his conduct.”
Francis is awaiting sentencing and faces a maximum of 20 years in prison. When he pleaded guilty last year, court papers show he promised to co-operate in a bid for leniency.
Although the Justice Department has repeatedly suggested that more arrests are forthcoming, it has been more than 15 months since any new defendants have been charged.
Authorities have identified only a few of the 30 admirals under investigation.
Ethan Posner, an attorney for Francis, declined to comment. The navy declined interview requests and referred questions to the Justice Department.
Laura Duffy, the U.S. attorney whose office is leading the investigation, declined to answer questions.
“The investigation continues apace, uncovering substantial wrongdoing,” she said in a brief statement.
The open-ended nature of the investigation, with so many officers under scrutiny, has hampered the navy’s ability to fill command jobs and move forward with promotions.
It has also led to grumbling that many officers have been forced to work under a cloud of suspicion for years, without facing charges, unable to clear their names.
“I’m not the guy to sweep this under the rug. In my view, there was a problem,” said Peter H. Daly, a retired vice-admiral who serves as chief executive of the U.S. Naval Institute, a non-profit military association in Annapolis, Md. “But to let this thing drag out is wrong. It’s just bad, bad, bad. It shouldn’t be this way. It’s not fair.”
Investigators said they have amassed 18 terabytes of data from more than 100 email and Facebook accounts, as well as dozens of computer hard drives, tablets and smartphones. Nine federal agents were assigned just to organize and upload the materials.
The evidence remains under a protective order to prevent it from being made public. But, occasionally, new details emerge that illustrate the scope of Francis’s penetration of the navy.
Last month, for instance, lawyers for Misiewicz filed a court document stating that Francis had gone so far as to bribe navy public-affairs specialists “to advise and train him on the navy’s strategic talking points.”
The document gave no other details. But a person close to the investigation said the public-affairs officers worked for the Hawaii-based U.S. Pacific Fleet and that Francis bribed them with a combination of cash, dinners and prostitutes.