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Admiral, 8 others charged with corruption in new ‘Fat Leonard’ bribery case

SAN DIEGO -- A rear admiral and eight other high-ranking military officers were indicted on corruption-related counts in what authorities say was the "fleecing and betrayal of the United States Navy in epic proportions," the U.S. Attorney's Office in San Diego announced Tuesday.

Rear Adm. Bruce Loveless

Rear Adm. Bruce Loveless, of Coronado, was charged with conspiracy to commit bribery, bribery and conspiracy to commit honest services wire fraud.

"The government is going after those in the Navy who may have been corrupted to go steer ships to ports of call versus some other cheaper ports of call," said Gretchen Von Helms, a defense attorney not involved in the case.

Loveless was formerly an assistant chief of staff for intelligence in the U.S. Seventh Fleet, which commands naval operations in the Western Pacific and Southeast Asia.

According to an unsealed federal grand jury indictment, the officers worked together to help Singapore-based defense contractor Leonard Glenn Francis and his company, Glenn Defense Marine Asia, pull off a fraud that ultimately cost the Navy -- and U.S. taxpayers -- tens of millions of dollars.

The broader case has received attention over the last several years as the "Fat Leonard" case -- referring to Francis -- in which Navy officers were provided bribes in exchange for confidential information that helped GDMA receive lucrative contracts.

Prosecutors said the accused were provided prostitutes, extravagant dinners and luxury travel. In exchange, they helped GDMA receive and keep contracts, steered ships to facilities operated by the firm and sabotaged competitors, according to the indictment.

GDMA also overcharged the Navy for port services, according to the U.S. Attorney's Office.

"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," said Acting U.S. Attorney in San Diego Alana Robinson.

"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," Robinson said.

Besides Loveless, those charged Tuesday were:

-- Capt. David Newland, former chief of staff to the Seventh Fleet commander;

-- Col. Enrico DeGuzman, who coordinated Marine missions with the Seventh Fleet;

-- Capt. James Dolan, an assistant chief of staff in charge of the fleet's logistics;

-- Capt. Donald Hornbeck, the fleet's deputy chief of staff for operations;

-- Capt. David Lausman, executive officer of the aircraft carrier U.S.S. Abraham Lincoln; and commanding officer of command ship U.S.S. Blue Ridge and aircraft carrier U.S.S. George Washington;

-- Lt. Cmdr. Stephen Shedd, the fleet's South Asia policy and planning officer who identified which ports Navy ships would visit;

-- Cmdr. Mario Herrera, who was responsible for scheduling the port visits for ships and submarines in the Seventh Fleet's area; and

-- Chief Warrant Officer Robert Gorsuch, who was responsible for providing administrative support to the Seventh Fleet commander and other senior staff officers.

Shedd and Herrera are active-duty, while the others have recently retired, according to prosecutors.

They were all charged with conspiracy to commit bribery and conspiracy to commit honest services wire fraud. Most of the others were also charged with bribery, while Lausman was also charged with obstruction and making false statements.

The U.S. Attorney's Office said 11 other Navy officials were previously charged in the case, which has run over three year. Ten pleaded guilty, including another admiral, Robert Gilbeau, who is awaiting sentencing.

Five GDMA executives were also charged previously, and three -- including Francis -- have admitted guilt. Francis is among those who have not yet been sentenced.

"The allegations contained in today's indictment expose flagrant corruption among several senior officers previously assigned to the U.S. Navy's Seventh Fleet," said Dermot O'Reilly, director of the Defense Criminal Investigative Service. "The charges and subsequent arrests are yet another deplorable example of those who place their own greed above their responsibility to serve this nation with honor."

Admiral Loveless and the others are due back in court April 14th.