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WASHINGTON – As the flagship for the Navy’s 7th Fleet, the USS Blue Ridgeplays a critical role in national security by overseeing all U.S. maritimeoperations in Asia and the western Pacific. The venerable warship is theNavy’s second-oldest active-duty vessel and has survived the Vietnam War,the Cold War and tensions with China and North Korea.
But there is one foreign threat against which the Blue Ridge proved utterlydefenseless for many years: a 6-foot-3, 350-pound tugboat owner known as”Fat Leonard.”
In a case that ranks as the worst corruption scandal in Navy history, theJustice Department has charged 15 officers and one enlisted sailor whoserved on the Blue Ridge with taking bribes from or lying about their tiesto Leonard Glenn Francis, a Singapore-based tycoon who held lucrativecontracts to service Navy ships and submarines in Asian ports.
For the better part of a decade, as part of a massive scam to defraud theNavy, Francis systematically infiltrated the Blue Ridge to a degree that isonly now coming into focus, more than four years after the defensecontractor’s arrest, according to the documents from federal court and theNavy, as well as interviews with Navy officials and associates of Francis.
Prosecutors say nine sailors from the 7th Fleet flagship leaked classifiedinformation about ship movements and other secrets to Francis, a Malaysiancitizen, making the Blue Ridge perhaps the most widely compromised U.S.military headquarters of the modern era.
The Navy is investigating dozens of others who served on the ship, which isbased in Japan, for possible violations of military law or ethics rules,according to documents and interviews.
Between 2006 and 2013, Francis doled out illicit gifts, hosted epicureanfeasts and sponsored sex parties for Blue Ridge personnel on at least 45occasions, according to federal court records and Navy documents obtainedby The Washington Post under the Freedom of Information Act.
Officers from the Blue Ridge consumed or pocketed about $1 million ingourmet meals, liquor, cash, vacations, airline tickets, tailored suits,Cuban cigars, luxury watches, cases of beef, designer handbags, antiquefurniture and concert tickets – and reveled in the attention of an armadaof prostitutes, records show.
Although Francis offered bribes and freebies to hundreds of Navy personnelassigned to other U.S. warships, bases and embassies in Asia starting inthe early 1990s, the Blue Ridge was his primary target.
Staff officers on the Blue Ridge had the clout to intervene on behalf ofFrancis’s company, Glenn Defense Marine Asia, because they managedoperations, logistics and intelligence for the entire 7th Fleet. Ofparamount importance to Francis was the officers’ access to the classifieditineraries of all U.S. ships and submarines transiting the region.
A master recruiter, Francis methodically assembled a network of informantsto feed him the secret itineraries, court documents show. Wieldingremarkable influence for a foreigner, he then prodded his moles on the BlueRidge to reroute aircraft carriers and other vessels to ports controlled byhis firm so he could more easily overcharge the Navy for fuel, othersupplies and services.
Francis, 53, has pleaded guilty to bribery and defrauding the military of$35 million, although some officials think the monetary losses sustained bythe Navy are far greater. He has been in jail in San Diego since his arrestin 2013 and is cooperating with authorities as he awaits sentencing. One ofhis attorneys, Ethan Posner, declined to comment.
The case has snowballed into an epic embarrassment for the Navy, which hasstruggled to explain how so many officers on the Blue Ridge succumbed soeasily to the prostitutes, extravagant meals and expensive gifts thatFrancis dangled as temptations.
It also has raised questions about the extent to which admirals in the 7thFleet and the rest of the Navy knew of what was happening under theircommand but did not intervene.
More than 60 admirals have come under investigation by the JusticeDepartment and the Navy for their interactions with Francis and hiscompany. Two admirals have been charged in federal court and six othershave been censured or disciplined by the Navy. Authorities have publiclyidentified only a handful of the others so far.
Cmdr. Mike Kafka, a Navy spokesman, said the service takes the ongoingcriminal investigation “very seriously” and that it is working closely withthe Justice Department to hold Navy personnel accountable.
“The criminal activity of Leonard Francis has changed how we conduct our .. . contracting services worldwide,” Kafka said in an email. “It is evidentthat Leonard Francis specifically targeted personnel from the USS BlueRidge, the flag ship for the Seventh Fleet, due to that staff’s ability toimpact other ship schedules and port visit locations.”
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The Navy advertises the 634-foot-long Blue Ridge, named after a range inthe Appalachian Mountains, as the most capable command ship ever built.
It was commissioned in 1970. Among the Navy’s active-duty vessels, only thewooden-hulled USS Constitution, which was launched in 1797 and is preservedas a museum, is older.
The Blue Ridge boasts little firepower. But as the floating headquartersfor the 7th Fleet, it is packed with advanced communications gear so thatit can track and command the fleet’s formidable assets: about 60 warshipsand submarines, manned by a combined 20,000 sailors, performing missions inthe Pacific and Indian oceans.
The 7th Fleet is led by a three-star admiral supported by a command staffof about 200 personnel assigned to the Blue Ridge. The ship itself isskippered by a captain with a separate crew. It spends about half the yeardocked at its home port in Yokosuka, Japan, and the rest making the roundsin Asia.
For years, when it arrived in a port, the Blue Ridge would be welcomed by afamiliar sight on the pier: a beaming Leonard Francis, flanked by a blacksport-utility vehicle or limousine and an entourage of comely young women.
His company, Glenn Defense, held Navy contracts to provide everything thecrew might need while in port, including fuel, food, fresh water, tugboats,security guards and ground transportation. But Francis, also known withinNavy circles as “Leonard the Legend,” was renowned for the perks that heprovided off the books.
Besides paying for meals at Asia’s fanciest restaurants, he was famedwithin the Navy for the prostitutes and strippers he had on call fromChina, Indonesia, Malaysia, Mongolia, the Philippines, Russia, Thailand andVietnam.
Organizing the sex workers into what he dubbed “elite SEAL teams,” he wouldfly them from their countries to whatever port the Blue Ridge might bevisiting.
Blue Ridge officers were repeatedly instructed that none of this waspermissible. The Navy, like other federal agencies, has strict rulesagainst accepting anything of monetary value from people seeking to dobusiness with the government.
Gifts are prohibited unless they are worth $20 or less. There is also a $50annual limit on accepting gifts from a single source.
Yet officers on the Blue Ridge routinely conspired with Francis toundermine the regulations, according to federal prosecutors.
In February 2006, as the Blue Ridge prepared to visit Hong Kong, a militarylawyer sent an ethics alert to senior officers on the ship: Beware defensecontractors who might try to bribe you.
Instead of complying, Capt. David Newland, the 7th Fleet chief of staff,immediately leaked the message to Francis so that Francis could cover histracks, according to an indictment filed last year in federal court in SanDiego.
Prosecutors said Newland was one in a long line of Blue Ridge officers whohad been on the take from the contractor.
The next day, the Blue Ridge docked in Hong Kong for a 72-hour visit.Newland and other officers dined and drank at Francis’s expense at a swankyFrench restaurant, racking up a $20,000 tab; then they spent the night atthe Shangri-La Hotel, where Francis covered much of the cost, theindictment states.
Steve Barney, a retired Navy captain who wrote the 2006 ethics alert whenhe was serving as the 7th Fleet’s top lawyer, said he was shocked by theallegations of his former shipmates flagrantly disregarding the rules.
“There was a continuous drumbeat on ethics,” he said. “Anybody who was onthe staff, if they took the time to read it, would have been on noticeabout what the ethics rules were.”
Three weeks after Barney posted his ethics warning, the flagship arrived inSingapore for another port visit – and another party.
On March 9, 2006, at least seven officers from the Blue Ridge attended atwilight cocktail hour held by Francis on the helipad atop the 73-storySwiss~CHECK~tel the Stamford, one of the tallest hotels in Southeast Asia,according to court documents and photographs of the event obtained by ThePost.
Afterward, the group dined in a private room at Jaan, the hotel’sMichelin-starred restaurant, where they savored foie gras terrine, oxtailsoup and duck-leg confit followed by a degustation of baby lamb, accordingto a copy of the menu from that evening.
For dessert: dark Manjari chocolate gelee, with cacao nib foam, poachedrhubarb and passion fruit sorbet. The officers drank Hennessy Paradis Extracognac at $2,000 a bottle and smoked Cuban Cohiba cigars worth $2,000 abox, records show.
If there was any doubt about who was paying for it, the menu proclaimed inlarge type that the hosts for the evening were Mr. and Mrs. Leonard G.Francis.
Photographs show Francis being toasted by Newland, the 7th Fleet chief ofstaff. Also in attendance were Col. Enrico DeGuzman, the Marine Corpsliaison to the 7th Fleet, and Lt. Cmdr. Edmond Aruffo, another 7th Fleetstaff officer.
Newland and DeGuzman were indicted in March on bribery and conspiracycharges, along with seven other former officers from the Blue Ridge and the7th Fleet staff. All have pleaded not guilty.
Joseph Mancano, an attorney for Newland, called the allegations against him”simply unproven” and said that his client “looks forward to beingvindicated at trial.”
A lawyer for DeGuzman acknowledged that the Marine Corps officer hadaccepted favors from Francis but denied that he gave anything in return orknew that Glenn Defense was overbilling the Navy.
“While Colonel DeGuzman may have accepted a handful of dinners and hotelrooms paid for by the defense contractor Francis, [his] decisions andactions were never based even in part on these unsolicited gratuities, butrather were made based on the best interests of the safety and security ofthe Marines and sailors under his command,” said Birney Bervar, theattorney.
Aruffo, who was hired by Francis to work at Glenn Defense after retiringfrom the Navy, pleaded guilty in 2014 to conspiracy to defraud the UnitedStates. His sentence is pending. His attorney did not respond to requestsfor comment.
Others present for the March 2006 Singapore dinner included the BlueRidge’s commanding officer, Capt. Jeff Bartkoski, and the 7th Fleetchaplain, Capt. William Devine, who posed for a photo with a thick cigar inhis mouth.
Bartkoski, who retired from the Navy in 2014, declined to comment.
In an interview, Devine, a Catholic priest who has since retired from themilitary, said he “vaguely” remembered the dinner. “I didn’t sense therewas any inappropriateness,” he added.
Devine said he recalled discussing the ethics alert with the 7th Fleet’stop lawyer at the time it was issued. But he was at a loss to explain whyhe decided to go to Francis’s soiree anyway.
“I guess in my naivete I never saw that as going against any rules,” saidDevine, who now serves as the pastor of a parish in Bridgewater, Mass. “Iguess I didn’t make that connection at the time. Shame on me.”
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Over time, Francis’s corruption of the Blue Ridge’s wardroom becameprogressively decadent, court records show.
During a port visit in February 2007, he threw a sex party involvingmultiple prostitutes, Newland and other officers at the five-star ManilaHotel, where Gen. Douglas MacArthur lived when he served as militaryadviser to the government of the Philippines in the late 1930s, accordingto the indictment. During the party, “historical memorabilia” related toMacArthur were used in sexual acts, the indictment states.
A year later, during a return visit to Manila, Francis spent more than$50,000 to stage “a raging multi-day party” for Blue Ridge officers in thePresidential Suite of the Makati Shangri-La Hotel, the court records show.
Prosecutors say Francis hired a “rotating carousel of prostitutes” for theparty. The group guzzled the hotel’s entire supply of Dom Pérignon andswapped sex partners in the suite, according to the indictment and a personfamiliar with the bacchanalia.
“I finally detoxed myself from Manila,” Cmdr. Stephen Shedd, a 7th Fleetplanning officer, emailed Francis a week later. “That was a crazy couple ofdays. It’s been a while since I’ve done 36 hours of straight drinking!!!”
Over the next six years, some Blue Ridge officers who swallowed Francis’sbait grew hungry for more than their steady diet of multicourse meals andromps with prostitutes.
Capt. Donald Hornbeck, the 7th Fleet’s deputy chief of staff foroperations, persuaded Francis to arrange a culinary internship for one ofhis relatives at the posh Chalet Suisse restaurant in Kuala Lumpur andcover $13,000 of her living expenses, according to the indictment. Hisattorney, Benjamin Cheeks, declined to comment.
Cmdr. Jose Luis Sanchez, a deputy logistics officer for the 7th Fleet,pleaded guilty to accepting between $30,000 and $120,000 worth of cash,paid sex, travel and other favors. Prosecutors say he pocketed at least$100,000 in cash.
Vincent Ward, an attorney for Sanchez, said the Navy officer could notcomment because he has not been sentenced. He said Sanchez “has taken fullresponsibility for his mistakes” and “looks forward to the day when thetruth about his role . . . is accurately portrayed to the public.”
Even the wife of one of the Blue Ridge’s former skippers had her hand out,court records show.
Carol Lausman, the spouse of Capt. David “Too Tall” Lausman, accepted an$8,400 Versace purse while on a 2011 visit to Hong Kong, according to anindictment against her husband. “Leonard gave me a lovely gift,” sheemailed a Glenn Defense staff member before complaining that the goldinsignia on the purse had cracked.
Glenn Defense sent her a new Versace purse as a replacement.
Carol Lausman has not been charged with a crime and did not respond torequests for comment. But court records show that Francis considered hersomeone he could exploit to corrupt the Blue Ridge’s commanding officer.
During an earlier visit by the flagship to Thailand, Francis told his staffin an email to pay for Carol Lausman to stay at a beach resort with herhusband and for other perks.
“Fast track and VIP service. Best room at Sheraton,” Francis instructed.”Arrange Market trip and tour for shopping in Bangkok. She wants to makesilk pants. Cheap price. We pay ha ha.”
David Lausman has pleaded not guilty to charges of bribery, conspiracy andobstruction of justice. His attorney did not respond to requests forcomment.
Other spouses allegedly received their share, too. In 2007, Francis gave apair of Ulysse Nardin watches, worth $25,000, to Shedd and his wife,according to the indictment.
A few months later, Shedd emailed Francis to ask whether he would mindpaying for the couple and two children to vacation in Singapore andMalaysia. “Spank me hard if I’m out of line,” Shedd added.
Francis covered their expenses, which totaled $30,000 for the week-longvacation, according to the indictment.
A few months later, Shedd allegedly came back for a bigger favor. He wasbroke. He emailed Francis a spreadsheet listing his personal debts andasked for emergency help in paying them off.
“I’ve got about 10 days before I’m in big trouble and I really, reallyappreciate your assistance,” Shedd wrote. “I’ll get you whateverinformation you need.”
Tired of Shedd’s requests for handouts, Francis responded with a demand ofhis own. He wanted classified details of upcoming ship visits to the SouthPacific. “The info is required by tomorrow,” he ordered in a brusque email.
The Navy officer obeyed right away, according to the indictment. Francishad his secret ship schedules within eight hours.
Five days later, however, Shedd still had not received the money he needed.Unsure whether he had been duped, he sent Francis a beggarly email: “I waswondering if you have reached a decision on my Shedd Bailout/Rescue Loanproposal.”
Whether Francis came through in the end, the indictment does not say.Shedd’s attorney did not respond to requests for comment. – Washington Post