A retired U.S. Navy Rear Admiral and eight other high-ranking Navy officers were arrested on Tuesday on charges of accepting luxury travel, elaborate dinners and services of prostitutes from foreign defense contractor “Fat Leonard” Francis, the former CEO of Glenn Defense Marine Asia (GDMA), in exchange for classified and internal U.S. Navy information. GDMA used the information to overbill the US Navy for services by more than $30 million.
The highest ranking of those charged was retired Rear Adm. Bruce Loveless, who was arrested at his home in Coronado, Calif. Loveless was the former Navy director of intelligence operations and had retired from the service in October.
The corruption was brazen. GDMA paid for hotel rooms, shopping trips and high priced dinners for naval officers and their families. The indictment describes one dinner paid for GDMA, at a high end restaurant in Singapore.
At dinner, defendants and other 4 enjoyed foi gras terrine, duck leg confit, ox-tail soup, and roasted Chilean sea bass, paired with expensive wine and champagne, followed by 6 digestifs and cigars, namely, Hennessy Private Reserve (approximately $600 per bottle) and Paradis Extra (approximately $2000 per bottle}, an 8 Cohiba Cigars ($2000 per box}.
$25,000 watches and $600-per-night hotel rooms were also paid for by GDMA.
Prostitutes were also part of the package. The Washington Post reports: During a port visit by the Blue Ridge to Manila in May 2008, for example, five of the Navy officers attended a “raging multi-day party, with a rotating carousel of prostitutes,” at the Shangri-La Hotel, according to the indictment. The group allegedly drank the hotel’s entire supply of Dom Pérignon champagne and rang up expenses exceeding $50,000, which Francis covered in full.
The indictment also described how “Francis hosted and paid for a lavish party and the services of prostitutes in the MacArthur Suite of the Manila Hotel…During the party, historical memorabilia related to General Douglas MacArthur were used by the participants in sexual acts.”
Nine defendants arrested on Tuesday, were charged variously with “bribery, conspiracy to commit bribery, honest services fraud, obstruction of justice and making false statements to federal investigators when confronted about their actions. Four of the defendants are retired captains: (1) David Newland, 60, of San Antonio, Texas, (2) James Dolan, 58, of Gettysburg, Pennsylvania, (3) David Lausman, 62, of The Villages, Florida, and (4) Donald Hornbeck, 56, a resident of the United Kingdom. The other defendants arrested today included: (5) Colonel Enrico Deguzman, 48, of Honolulu, Hawaii, (6) retired Chief Warrant Officer Robert Gorsuch, 48, of Virginia Beach, Virginia (7) retired Rear Admiral Bruce Lovelace, 48, of San Diego, California, (8) active duty Lieutenant Commander Stephen Shedd, 48, of Colorado Springs, Colorado and (9) active duty Commander Mario Herrera, 48, of Helotes, Texas.”
Including those arrested on Tuesday, a total of 20 current or former U.S. Navy officials have been charged with corruption and fraud related to GMDA. Five GMDA executives have also been charged. To date, 13, including one other Rear Admiral, have pleaded guilty while several other cases are pending. The Navy has said that 200 people are still under investigation, including thirty current or retired admirals.