Admiral, seven officers charged in 'Fat Leonard' sex bribes scandal

Rear Admiral Bruce Loveless. Photo / US Navy

The US Justice Department unsealed a fresh indictment today charging eight Navy officials - including an admiral - with corruption and other crimes in the "Fat Leonard" bribery case, escalating an epic scandal that has dogged the Navy for four years.

Among those charged were Rear Admiral Bruce Loveless, a senior Navy intelligence officer who recently retired from a key job at the Pentagon, as well as four retired Navy captains and a retired Marine colonel. The charges cover a period of eight years, from 2006 through 2014.

The Navy personnel are accused of taking bribes in the form of lavish gifts, prostitutes and luxury hotel stays courtesy of Leonard Glenn "Fat Leonard" Francis, a Singapore-based defence contractor who has pleaded guilty to defrauding the Navy of tens of millions of dollars.

The indictment lists page after page of bribes allegedly provided to the defendants including US$25,000 watches, US$2000 boxes of Cohiba cigars, US$2000 bottles of cognac and US$600-per-night hotel rooms.

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 US$50,000, which Francis covered in full.According to the charging documents, Francis also frequently sponsored wild sex parties for many officers assigned to the USS Blue Ridge, the flagship of the Navy's 7th Fleet, and other warships.

On another port visit by the Blue Ridge to Manila in February 2007, Francis allegedly hosted a sex party for officers 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," according to the indictment.

In exchange, according to federal prosecutors, the officials provided Francis with classified or inside information that enabled his firm, Glenn Defence Marine Asia, to gouge the Navy out of tens of millions of dollars.

Federal agents fanned out across six states today in a coordinated operation to arrest the defendants, authorities said.

Loveless, the retired admiral, was arrested at his home in Coronado, California. The Navy had announced in November 2013 that he was under scrutiny by the Justice Department and suspended his access to classified material. He was allowed to retire last year.

Navy officials have said that about 30 admirals are under investigation, although only a handful have been named publicly.

Robert Gilbeau, a one-star admiral, was convicted last June after he pleaded guilty to making false statements to investigators about his contacts with Francis. He has since retired. He is scheduled to be sentenced next month in federal court.

Separately, the Navy has censured or disciplined three admirals for ethics violations after they accepted lavish meals and other gifts from Francis.

Others taken into custody today included David Newland, 60, a retired captain from San Antonio; James Dolan, 58, a retired captain from Gettysburg, Pennsylvania.; David Lausman, a retired captain from The Villages, Florida and Donald Hornbeck, a retired captain who lives in Britain.

Agents also arrested Enrico de Guzman, a retired Marine colonel from Honolulu; Lieutenant Commander Stephen Shedd, an active-duty officer from Colorado Springs; and Robert Gorsuch, 48, of Virginia Beach, a retired chief warrant officer.