Fat Leonard, Navy Spies, and Contract Crimes

Overview

Since 1982 I taught classes in the Detection and Prevention of Economic Crimes. I retired from Federal Service with the Department of Defense with more than 34 years. My career included 25 years in operational contracting and 9 plus years as a Professor of Contract Management. I thought I was aware of all types of schemes and ploys to commit contract crime. After retirement I devised a formula for contract crime and copyrighted a course designated as ACBIO.

The acronym is a result of combining the Absence of Checks and Balances, Intent, and Opportunity, equals Contract Crime. When Leonard Francis signed a Plea Agreement and Addendum in January 2015, with the US District Court in San Diego, California, I was mildly surprised, but not amazed. Robert Huie, Assistant U. S. Attorney stated, “Mr. Francis’ conduct has passed from being merely exceptional to being the stuff of history and legend.” March 10, 2017 nine active duty and retired Navy officers were indicted on a variety of charges. Among the violations of law were bribery, conspiracy, obstruction of justice, and conspiracy to commit hones services fraud. All the officers had been affiliated with the 7^th Fleet flagship, the U.S.S. Blue Ridge, homeported in Yokosuka, Japan. The cascade of crimes largely commenced beginning in 2006 and continued until 2013. Leonard Francis and I had crossed paths for more than 6 years.

From January 1995 until September 2001 I was the Technical Director for Procurement and Contracting at the Naval Regional Contracting Center in Singapore. During that time frame Leonard Francis was the owner of Glenn Marine Enterprises, PTE and based in Penang, Malaysia. He was a Navy contractor for ships visiting Malaysia and Indonesia. Based on some incidents with the company, I would only trust Leonard Francis as far as I could throw him. Leonard is six-foot three and weighed more than 400 lbs. until he underwent a surgical procedure. Prior to my rotation from Singapore I met with Leonard who proudly announced he was moving his headquarters to Singapore and the company name would be Glenn Defense Marine Asia, PTE. He had established an office and purchased from the Singapore Navy self- powered barges to carry equipment and supplies to various ports. He would pursue contracts in the countries where the 7^th Fleet visited. The term of art describing total logistics support for vessels is Husbanding Agent. Eventually, GDMA would receive Navy contracts worth $200,000,000. With the Plea Agreement Leonard would pay the Navy restitution in the amount of $35,000,000.

The variety of reasons for contract crime usually included collusion, product substitution, bribes, kickbacks, and Government contracting personnel with a flawed moral compass. The Leonard Francs scandal, though, would present to me an entirely new the basis for contract crime. Though the formula holds true, the absence of checks and balances with GDMA was a breach of National Security. The Navy officers indicted also committed acts of espionage and compromised Secret, Confidential and For Official Use Only information to enrich Leonard Francis. Francis used cash, travel, hotels, gratuities and sex to alter ship schedules and use locations where massive overcharges would be experienced by the Navy.

The indictments of the 9 Navy officers would also create a large universe of personnel to be investigated, which included more than 400 military and civilian personnel and 60 admirals. In the book I describe vulnerabilities in the system which can lead to overcharges. Contracting is a mechanical and transparent process which has areas that can be exploited. I also researched two theses from students at the Naval Postgraduate School in Monterey, California. Some observations are on target and, in my opinion, some unrealistic or resource non-viable. I made recommendations, suggestions and actions which may reduce or eliminate contract crimes.

The Navy is not the only service to suffer a large contracting scandal. I also included United States Air Force and Army examples of contract crimes from small dollar to millions of dollars in magnitude.