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New indictment charges Navy admiral, eight others in Fat Leonard bribery case

Retired U.S. Navy Rear Admiral Bruce LovelessA grand jury indictment unsealed Tuesday charged a U.S. Navy admiral and eight other active or retired officers with taking bribes from a Singapore-based defense contractor.

Retired U.S. Navy Rear Admiral Bruce Loveless and the other defendants allegedly accepted luxury travel, elaborate dinners, and the services of prostitutes from Glenn Defense Marine Asia (GDMA) and its CEO Leonard Glenn Francis. 

In exchange, according to the indictment, the defendants gave Francis and his company classified and internal U.S. Navy information.

With the new indictment (pdf), 25 individuals have now been charged in the Navy’s worst corruption scandal in modern times.

Of those charged, 20 are current or former U.S. Navy officials and five are GDMA executives.

So far, 13 have pleaded guilty and other cases are pending.

Francis, 51 — also known as Fat Leonard — is a Malaysian national. He pleaded guilty to bribing Navy officials with travel, meals, cash, electronics, parties, and prostitutes. He’s waiting to be sentenced.

His company provided port services to U.S. Navy ships in Asia. As part of his plea agreement, Francis admitted over-billing the Navy tens of millions of dollars on contracts to stock and clean ships.

The nine newly indicted defendants were arrested Tuesday on various charges including bribery, conspiracy to commit bribery, honest services fraud, obstruction of justice, and making false statements to federal investigators.

They were arrested in California, Texas, Pennsylvania, Florida, Colorado, and Virginia.

All of the new defendants are likely to be appear in federal court in San Diego.

Admiral Loveless was taken into custody at his home in Coronado, California.

He formerly served in top-level intelligence posts for the Seventh Fleet and based at the Pentagon. He reportedly lost his security clearance last year during the Fat Leonard investigation.

Four of the new defendants are retired captains. They are:

  • David Newland, 60, of San Antonio, Texas
  • James Dolan, 58, of Gettysburg, Pennsylvania
  • David Lausman, 62, of The Villages, Florida, and
  • Donald Hornbeck, 56, a resident of the United Kingdom.

The other defendants arrested Tuesday are:

  • Marine Colonel Enrico Deguzman, 48, of Honolulu, Hawaii
  • retired Chief Warrant Officer Robert Gorsuch, 48, of Virginia Beach, Virginia
  • active duty Lieutenant Commander Stephen Shedd, 48, of Colorado Springs, Colorado, and
  • active duty Commander Mario Herrera, 48, of Helotes, Texas.

According to the indictment, the defendants helped steer contracts to Francis and GDMA and sabotaged competing defense contractors.

The indictment said Francis arranged sex parties aboard ships and in hotels for officers running the Navy’s Seventh Fleet in ports across Asia, including Thailand and the Philippines.

Among the alleged gifts Fat Leonard handed out over an eight-year period were watches worth $25,000, $2,000 boxes of Cohiba cigars, $2,000 bottles of cognac, and $600-per-night hotel rooms.

According to the indictment, the defendants allegedly “worked in concert to recruit new members for the conspiracy.” They allegedly kept the bribery-for-secrets plot hidden by using fake names and foreign email service providers.

The defendants allegedly “violated many of their sworn official naval duties, including duties related to the handling of classified information and duties related to the identification and reporting of foreign intelligence threats.”

The DOJ’s Kenneth Blanco said  the U.S. Navy’s Seventh Fleet has responsibilities over an area “that spanned from Russia to Southeast Asia and the Indian Ocean.”

“[T]hese defendants are alleged to have sold their honor and responsibility in exchange for personal enrichment,” Blanco said.

The Seventh Fleet is the biggest in the U.S. Navy. It includes 60 to 70 ships, up to 300 aircraft, and about 40,000 sailors and marines.

Loveless is the second admiral charged in the case.

Last June, the DOJ charged Rear Admiral Robert Gilbeau, 55, of Burke, Virginia, with trying to hide his relationship with Fat Leonard.

Gilbeau pleaded guilty to one count of making a false statement. He hasn’t been sentenced yet.

A list of defendants previously named in the case, including those sentenced, is here.


Richard L. Cassin is the publisher and editor of the FCPA Blog.

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