The U.S. Navy is being rocked by a bribery scandal that federal investigators say has reached high into the officer corps and exposed a massive overbilling scheme run by an Asian defense contractor that provided prostitutes and other kickbacks.
Among those arrested on corruption charges are a senior agent for the Naval Criminal Investigative Service and a Navy commander who escaped Cambodia’s “killing fields” as a child only to make a triumphant return to the country decades later as the skipper of a U.S. destroyer. The investigation has also ensnared a Navy captain who was relieved of his ship’s command this month in Japan.
The chief executive of the Singapore-based defense contractor, Glenn Defense Marine Asia, and another company official were arrested last month at a San Diego harborside hotel after federal investigators lured them to the United States by arranging a sham meeting with Navy officials, according to court records and people involved in the case.
The unfolding investigation is shaping up as the biggest fraud case in years for the Navy. Federal prosecutors allege that Glenn Defense Marine, which has serviced and supplied Navy ships and submarines at ports around the Pacific for a quarter-century, routinely overbilled for everything from tugboats to fuel to sewage disposal.
Investigators are still assessing the scope of the alleged fraud, but federal court records filed in San Diego cite a handful of episodes that alone exceeded $10 million. Since 2011, Glenn Defense Marine has been awarded Navy contracts worth more than $200 million. The company also services ships from several navies in Asia.
The U.S. military has never been immune from contracting scandals, but it is extremely rare for senior uniformed commanders to face corruption charges.
“Allegations of bribery and kickbacks involving naval officers, contracting personnel and NCIS agents are unheard of,” said retired Adm. Gary Roughead, a former chief of naval operations who is a distinguished visiting fellow at the Hoover Institution at Stanford University.
Roughead recalled meeting the chief executive of Glenn Defense Marine, Leonard Glenn Francis, nearly a decade ago while serving as commander of the U.S. Pacific Fleet. He said he was unfamiliar with details of the investigation, but he called the allegations “extremely serious, disconcerting and surprising.”
According to court papers filed by federal prosecutors in San Diego, Francis and others in his company targeted Navy personnel serving in Asia and plied them with prostitutes, cash, luxury hotel rooms, plane tickets and, on one occasion last year, tickets to a Lady Gaga concert in Thailand.
In exchange, Francis sought inside information on ship deployments and pressed at least one high-ranking commander to steer aircraft carriers and other vessels to ports where his firm could easily overcharge the Navy for pierside services, the court documents allege.
Francis’s defense attorney, Edward Patrick Swan Jr., declined to comment on the allegations but said he expects the government will file additional charges.
“I think this is just the opening,” he said.
Federal prosecutors in San Diego declined to answer specific questions. But Laura E. Duffy, the U.S. attorney for the Southern District of California, said the investigation was continuing.
“The allegations described in this complaint describe a bribery case with all the sexy elements of a TV drama,” Duffy said in an e-mailed statement. “But the significance of the case is that it involves huge sums of money, a wide range of players, a long period of time and a number of countries.”
‘Big Bro’ and ‘Little Bro’
In May 2010, according to court papers filed by federal investigators, Francis and an unnamed manager from his firm “began targeting” Cmdr. Michael Misiewicz, a graduate of the Naval Academy in Annapolis, “as someone who might be susceptible to providing favor . . . in return for things of value.”
Misiewicz was born Vannak Khem in Cambodia, but he was adopted as a 6-year-old by a U.S. Embassy worker. He moved to Illinois in 1973, just before Cambodia plunged into a bloody communist revolution.
In December 2010, as commander of the USS Mustin, Misiewicz returned to Cambodia for the first time in 37 years as the destroyer made a port visit in Sihanoukville. Although Misiewicz had lost his father and a sister in the killing fields — an estimated 1.7 million people died at the hands of the Khmer Rouge — other long-lost relatives boarded the ship for a tearful reunion.
About the same time, Misiewicz was forging a close relationship with Glenn Defense Marine, court papers allege. Shortly after the Cambodia visit, the commander took an influential job as deputy operations manager for the Navy’s 7th Fleet, overseeing all naval activities in the western Pacific and Indian oceans.
In March 2011, according to court documents, Francis hired four prostitutes to entertain Misiewicz and another unnamed Navy commander during a three-day visit to Singapore.
The trip was postponed because of a tsunami. But Glenn Defense Marine officials soon became more familiar with Misiewicz and e-mailed one another about how the commander “liked Japanese women.” They later provided tickets and female escorts for Misiewicz and four co-workers to attend the Lady Gaga concert in Thailand and paid for shore leave in Singapore and other cities, according to court records.
“Take care gents, thank you for the best leave (w/o kids that is) ever!” Misiewicz, a married father of four, wrote in an e-mail to Francis and another company official after a visit to Cambodia in June 2011, according to court documents.
In his e-mails, Misiewicz fondly called Francis “Big Bro” — the executive is 6-3, weighs 350 pounds and is known in Navy circles as “Fat Leonard,” the court papers say. Francis in turn called Misiewicz “Little Bro,” reflecting how the commander stood nearly a foot shorter and almost 200 pounds lighter.
In exchange for prostitutes, travel and other favors, federal authorities allege, Misiewicz provided Francis with classified information about ship movements and steered vessels to specific Asian ports.
Misiewicz was arrested Sept. 16 by Defense Criminal Investigative Service agents at the Colorado Springs airport. The commander has been assigned to the U.S. Northern Command in Colorado since leaving the 7th Fleet last year. He was released on $100,000 bond and confined to home detention pending trial. His attorney, Wendy Gerboth of San Diego, did not return a phone call or e-mail seeking comment.
Court papers make references to other, unnamed Navy officers who accepted favors from Francis, an indication that the investigation remains in its early stages.
Navy officials have identified Capt. Daniel Dusek, former commander of the USS Bonhomme Richard, as another target of the investigation. He has not been charged, but the Navy relieved him of command Oct. 2, citing the investigation.
Dusek, who remains under suspension, declined to comment through a Navy spokesman.
NCIS leaks alleged
The Naval Criminal Investigative Service has opened multiple investigations into Glenn Defense Marine since 2010. Until last month, none had resulted in charges.
Court documents allege that Francis was receiving regular tip-offs from inside the agency about the state of investigations. The information, prosecutors say, was being supplied by John B. Beliveau II, a onetime NCIS agent of the year, who was arrested at Joint Base Anacostia-
Bolling in Southeast Washington on the same day that Misiewicz was taken into custody.
Beliveau is the supervisory agent in charge of the NCIS office in Quantico. Prosecutors have charged him with conspiracy to commit bribery, saying he fed Francis confidential information about pending criminal investigations into Glenn Defense Marine from March 2011 until shortly before both were arrested.
In return, according to charging documents, Francis supplied Beliveau with prostitutes and free travel, including a three-week trip to five Asian countries.
Court records show that Beliveau met Francis when he was stationed in Asia with the NCIS and allege that the pair began exchanging regular e-mails in 2008.
In e-mails included in the charging documents, Beliveau playfully pressed for returns from the Navy contractor. “You give whores more money than me ;)” he wrote to Francis in April 2012. “Don’t get too busy that you forget your friends. . . . Let me know . . . I can be your best friend or worst enemy.”
“You are a sore Bitch and I have not forgotten you Bro,” Francis replied, according to court papers. “How do I send you a gift?”
Beliveau was not assigned to the NCIS team scrutinizing Glenn Defense Marine, but court papers allege that he downloaded scores of reports from the case file by accessing the agency’s internal databases.
Investigators say Beliveau took many of the copied files home and exchanged more than 1,000 text messages with Francis over 15 months. Beliveau’s attorney, Gretchen Von Holmes of San Diego, did not return phone calls or e-mails seeking comment.
Trap laid for Francis
On Sept. 16, as federal agents arrested Beliveau in Washington and Misiewicz in Colorado Springs, they also laid a trap for Francis in California.
Navy officials summoned him from Singapore to California, saying they wanted a face-to-face meeting to discuss business. Francis brought two business associates with him to San Diego, where he was arrested in his hotel room at the Marriott Marquis, according to court records, his attorney and another person familiar with the case.
Arrested in San Diego at the same time was Glenn Defense Marine’s general manager for global government contracts, Alex J. Wisidagama. He was charged with fraud and remains in federal custody. His attorney, Knut Johnson, did not return a phone call seeking comment.
Last month, the Navy terminated three major contracts with Glenn Defense Marine worth nearly $200 million total.
At the company’s headquarters in Singapore, phone calls in recent days have gone unanswered. Reached via e-mail, Valeriane Toon, vice president for global communications, declined to comment.
Julie Tate contributed to this report.