Felony convictions vacated for 4 former Navy officers in sprawling ‘Fat Leonard’ bribery scandal

SAN DIEGO — The felony convictions of four former Navy officers in one of the worst bribery cases in the maritime branch’s history were vacated Wednesday following allegations of prosecutorial misconduct, the latest setback to the government’s yearslong efforts in going after dozens of military officials tied to a defense contractor nicknamed Fat Leonard.

U.S. District Judge Janis Sammartino called the misconduct “outrageous” and agreed to allow the four men to plead guilty to a misdemeanor and pay a $100 fine each. Last year after the trial, Sammartino had ruled the lead federal prosecutor committed “flagrant misconduct” by withholding information from defense lawyers but said at the time that it was not enough to dismiss the case.

The surprising turn came at a sentencing hearing in federal court in San Diego.

Assistant U.S. Attorney Peter Ko, who was brought on after the trial last year, admitted to “serious issues” and asked the judge to vacate the officers’ felony convictions.

He said his office does not agree with all of the allegations but said errors were made.

“There were pretty obviously serious issues that affect our ability to go forward” defending the convictions or seeking a new trial, Ko told the judge, according to the San Diego Union-Tribune.

Andrew Haden, acting U.S. Attorney for the Southern California District, reiterated that in a statement after the hearing.

“As stated in court, we do not agree with all the allegations or characterizations in the motions or in court,” Haden said. “We recognize and regret, however, that errors were made, and we have an obligation to ensure fairness and justice. The resolutions of these defendants’ cases reflect that.”

Haden added that it “is also significant that the four officers who stood before the court today admitted for the first time, under oath, that they broke the law and are guilty of crimes related to their official duties.”

The officers — former Capts. David Newland, James Dolan and David Lausman and former Cmdr. Mario Herrera — were previously convicted by a federal jury on various counts of accepting bribes from foreign defense contractor Leonard Francis, and his company, Glenn Defense Marine Asia, or GDMA.

On Wednesday three of them pleaded guilty to one count each of disclosing information to Francis, and Lausman pleaded guilty to a charge of destruction of government property, for smashing a hard drive with a hammer.

Defense attorney Todd Burns, who represented Dolan, said his client was relieved to have this behind him. He and defense attorneys for the three other men had filed hundreds of pages outlining how the monthslong trial was rife with misconduct from prosecutors hiding evidence, ignoring false testimony and concealing facts that questioned the credibility of key witnesses.

“The government has a massive amount of power to coerce things, and that power is still evident in this context,” Burns said.

He said his client agreed to plead guilty to a misdemeanor after a decade of fighting the allegations against him, “bleeding legal fees” and enduring stress on his family.

“These four guys were facing what was going to be sentences by the original prosecutors that were going to be absolutely devastating financially and custody-wise,” he said. “Then they were offered a deal to plead to a misdemeanor and a $100 fine to walk away and end this brutal chapter.”

The men spent more than a year asking for a retrial. Theirs was the only case to go to trial out of the more than two dozen defendants charged. The jury deadlocked and reached no verdict on charges against a fifth defendant, retired Rear Adm. Bruce Loveless, and prosecutors later dropped those charges.

Nearly two dozen Navy officials, defense contractors and others have been convicted and sentenced on various fraud and corruption charges.

Several others are awaiting sentencing next month. It’s not clear if this could jeopardize those cases.

Francis admitted to buying off dozens of top-ranking officers with booze, sex, lavish parties and other gifts. Prosecutors say he bilked the Navy out of more than $35 million.

Three weeks before the Malaysian defense contractor faced sentencing last year, Francis made a stunning escape, snipping off his ankle monitor and fleeing the San Diego residence where he had been under house arrest.

The escape was also seen by some as a misstep by the prosecution for allowing him to not be held behind bars. He was later captured in Venezuela, where he remains.

The four former officers had served in the Navy’s 7th Fleet in the Eastern Pacific, where Francis’ company supplied ships for decades.

Francis was arrested in a San Diego hotel in September 2013 as part of a federal sting. Investigators say he and his company, Glenn Defense Marine Asia, bribed officers so he could overcharge for supplying ships or charge for fake services at ports he controlled in Southeast Asia.

The case, which delved into salacious details about service members cheating on their wives and seeking out prostitutes, was an embarrassment to the Pentagon. The U.S. attorney’s office handled the prosecution, offering independence from the military justice system.