Petty officer first sentenced in 'Fat' Leonard case

By Kristina Davis | The San Diego Union-Tribune (TNS) | Published: January 23, 2016

SAN DIEGO (Tribune News Service)  A Navy petty officer was given two years and three months in prison Thursday for his role in the "Fat" Leonard bribery scandal, marking the first of at least seven defendants to be sentenced in the global case that has embarrassed the Navy and prompted sweeping changes in how military contracts are handled.

Dan Layug was considered the least culpable of the defendants, prosecutors said, but the sentence handed down by U.S. District Judge Janis Sammartino sets the bar for higher-ranking Navy officials who she is to sentence in coming months.

"You put the Navy at risk. You put your colleagues at risk. And you put our country at risk," Sammartino scolded Layug during the hearing in San Diego federal court.

In his plea agreement, Layug admitted handing over confidential information to Singapore-based Glenn Defense Marine Asia, a military contractor that provides goods and services to visiting Navy ships at ports throughout Southeast Asia. In return, the supply and logistics petty officer received bribes of fancy hotel stays for him and his friends, the newest gadgets and a monthly stipend of $1,000.

By doing so, Layug, who was described by his defense attorneys as a rising star in the Navy, joined a stable of informers that GDMA owner "Fat" Leonard Francis had collected over the years to expand his business and bilk the Navy out of some $20 million.

Like many of Layug's colleagues, who found themselves in a similar situation, Layug let his wide-eyed lust for small luxuries override any moral dilemmas about handing classified Navy information to a foreign outsider, prosecutors said.

For him, it all started with a gift of an unlocked cellphone from his contact, a GDMA associate, in 2010. The presents only snowballed from there, turning into his "bucket list" of must-haves -- iPads, a Playstation, a camera, a laptop, luxury trips to exotic ports like Malaysia and Indonesia.

"What are the chances of getting the new iPad 3?," he emailed the vice president of global operations at GDMA.

When he hinted to his contact that he was thinking of taking a second job, he was offered a $1,000 monthly stipend, prosecutors said.

During a port visit to Vietnam, the contact asked for the invoice of a competitor to help GDMA make a bid for an upcoming South Korea contract. Layug snuck the file off the Blue Ridge command ship, whisked it away to a GDMA office, then smuggled it back on board, prosecutors said.

The clandestine tactics also included middle-of-the-night cash-and-information exchanges and confidential ship schedules -- coded "golf schedules" -- printed out from a ship's computer then scanned into his personal email at home.

The corrupt relationship lasted a little under three years.

"He knew exactly the worth and risk that breed of classified information posed, and for whatever reason he decided to turn his back ... in return for, frankly, trinkets, putting our nation, our Navy and our sailors at risk," said Assistant U.S. Attorney Mark Pletcher.

Layug cooperated with authorities immediately upon his arrest and on Thursday accepted full responsibility.

His defense lawyers, Ezekiel Cortez and Joshi Valentine, pointed out that many of the bribes he received ended up going to extended family members in the Philippines, adding that he was partly driven by the need to prove his success back home.

He had left an impoverished childhood there as a teenager when given the opportunity to be adopted by his uncle, a career Navy man in the U.S.

"I let my ego and my greed take over me and betrayed my country," Layug told the judge. "Whatever sentence I get today, I'll get back up."

Since his arrest, Layug was assigned to a temporary unit in San Diego working with military members struggling with personal issues. He is expected to be administratively processed out of the Navy from his current rank of petty officer 1st class, likely at a lower rank, and to surrender to prison on April 1. Upon his release, he's eyeing culinary school. He will also have to pay $15,000 in restitution and a $15,000 fine.

The Navy, meanwhile, has taken a long, critical look at how such a massive bribery scandal was possible, all at the behest of one charming contractor.

Navy Rear Adm. Jonathan Yuen, chief of the Navy Supply Corp and commander of the Navy Supply Systems Command, told the judge Thursday that a task force has overhauled the Navy's contracts procedures, making it harder for anybody to take advantage of holes in the system. Changes include avoiding being too dependent on any one contractor and segregating the three phases of dealings with contractors -- procurement, receipt of goods and services, and payment.

He added that 60 additional people have been hired and trained to provide more robust oversight in this area.

As the rear admiral approached the podium to make his comments, Layug, still a Navy man, rose from his chair at the defendant's table out of respect.

Yuen called Layug's crime "a fundamental betrayal of everything we stand for."

"This has had a far-reaching impact in the way we perform our mission, the way others perceive us and the way we feel and think about ourselves," Yuen told the judge.

Six others -- including a Navy commander, a captain and a U.S. Naval Criminal Investigative Services special agent -- have pleaded guilty in the scandal, as well as Francis, who is apparently continuing to cooperate with authorities in the ongoing investigation. He isn't slated to be sentenced until August. Two others have been charged with similar corruption charges and have pleaded not guilty.

A former Navy contract specialist in Singapore is also being charged by officials there.

(c)2016 The San Diego Union-Tribune
Distributed by Tribune Content Agency, LLC.

In this photo dated March 17, 2010, Dan Layug, right, volunteers with a Republic of Korea navy sailor during a community service project at the Bluebird Home for the Aged in Korea.
Daniel Viramontes/U.S. Navy photo


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