Five years after arrest, Navy bribery mastermind Leonard Francis testifies at deposition
By GREG MORAN | The San Diego Union-Tribune | Published: September 16, 2018
(Tribune News Service) — Five years ago, investigators with the U.S. Navy knocked on the door of a San Diego hotel suite with a sweeping view of the city’s harbor, waiting for the 6-foot, 5-inch Malaysian businessman inside to answer — and in the process launch what has become the worst corruption scandal for the Navy in decades.
Since the arrest of businessman Leonard Glenn “Fat Leonard” Francis that day, federal prosecutors in San Diego have methodically filed charges or secured indictments against 32 defendants, including 27 Navy officials, for their roles accepting bribes from Francis, owner of the ship servicing firm Glenn Defense Marine Asia. Hundreds more Navy personnel who had interactions with Francis or his company have had their cases reviewed internally by the Navy, with several facing court martial.
And while the tally of the accused has continued to rise, nothing has been heard from Francis — until a three-day period in San Diego in July, when he answered questions behind closed doors.
Francis, who pleaded guilty in January 2015 and agreed to cooperate with investigators probing his bribery network, testified for the first time — in a deposition taken for a court martial case for Cmdr. David Morales, an active duty fighter pilot charged with conspiracy and bribery.
A transcript of the deposition was provided to The San Diego Union-Tribune by Morales’ attorney after the court martial ended Sept. 1, when the deposition became a public record.
Francis testified at length and in detail about his interactions with Morales, who fought the court martial charges filed against him. But the defense lawyer who questioned him asked for a mistrial at the court martial because he said Francis committed perjury.
The military judge hearing the case did not agree, but he acquitted Morales of the most serious charges against him, which relied in part on Francis’s version of events.
A lawyer defending a Navy officer now under indictment for accepting bribes from Francis, attended the court martial and said later that the deposition could put Francis’s credibility as a witness in play in future cases.
“It was clear to everyone in the courtroom the judge had serious questions about Leonard Francis’s credibility as a witness,” said Joseph Mancano, a lawyer representing retired Capt. David Newland, facing charges of conspiracy and bribery.
“I think the words the judge used were ‘possible embroidery’ of his testimony and how Leonard Francis had trouble answering questions directly.”
Francis also testified about his current status at the deposition. The 54-year-old Malaysian businessman is suffering from an renal cancer, and for months has been under the care and treatment of unidentified physicians in San Diego, according to the transcript and court records in San Diego federal court.
He’s no longer in the custody of the U.S. Marshals, nor in a federal lockup, but is on a medical furlough requested by attorneys and approved by the federal judge overseeing his case late last year.
Instead, Francis is living in a small, studio-like apartment above a garage at the home of one of his physicians. He is under guard 24 hours a day by private security guards, which his family is paying for. They are allowed to visit with him for up to three to four hours at a time, he said. He’s allowed to go to church once a week.
As part of a plea agreement Francis entered into in January 2015, he agreed to forfeit $35 million to the government — a measure of how much he profited from the bribery scheme.
Yet Francis has paid only $5 million of the amount, and did so — as the agreement required — in the first 90 days after he pleaded guilty. There’s no indication of when the rest will be paid.
That may not be unusual. For all his time in custody and the years since he pleaded guilty, Francis has yet to be sentenced for his crimes. Typically, cooperating witnesses like him in multiple-defendant cases are not sentenced until all the cases against other defendants are finished.
At that time, prosecutors can ask for a reduction in sentencing based on the cooperation of a witness. Francis is working for that.
At the deposition, Frank Spinner — the attorney for Morales — read from the five-page cooperation agreement Francis has with the government that spells out the possibility of a lesser sentence, then asked Francis if he was counting on that.
“I hope so, yes,” he answered.
Spinner also pressed about the money owed. He asked: “With respect to the forfeiture agreement of $35 million, was there a schedule set for you to pay the balance of that $35 million or is it your hope that that amount will somehow be reduced by cooperating?”
“I paid the $5 million as part of my plea agreement,” Francis responded, “and the rest of my restitution is, I’ll do my best at the end, sir.”
The US Attorney’s Office in San Diego, where the investigation is anchored, declined to comment for this story.
When the end comes in the Fat Leonard scandal is an open question. Just last month, federal prosecutors indicted three more people. Another nine defendants indicted in 2017 still have active cases that may go to trial. If any do, Francis will likely testify.
So far the 21 people who have admitted guilt did so by plea bargains and without a trial.
Spinner, the attorney for Morales, said he argued Francis lied during the deposition about a June 2013 trip he took with Morales to Bangkok. Francis said it was a pre-arranged “sex trip,” where he went to a fancy club and procured prostitutes for himself and Morales.
Navy prosecutors argued it was part of a string of gifts, meals and lavish hotel rooms he provided Morales, expecting in return Morales would give him inside information on Navy command deliberations, identify other personnel who would be open to bribes and favors, and provide confidential schedules on planned ship movements and what ports they were headed to.
That was the core of Francis’s decade-long bribery scheme: bribe Navy personnel with sex, booze, cash and gifts, then have them use their influence to get ships to dock in ports his company controlled. Once there, he gouged the Navy for providing services like fuel, waste removal, fresh water, land transportation and security.
Spinner argued other evidence, including some internal emails and texts from Francis and his employees, showed that Francis actually went to Bangkok to meet another officer, Capt. David Haas, who was indicted in August in federal court. Spinner didn’t deny Morales had accepted freebies from Francis — but disputed he gave classified information or agreed to do him favors in the future.
Morales was convicted of conduct unbecoming an officer and not reporting foreign contacts on his security form, but not of conspiracy and bribery charges. He was sentenced to 165 days in the brig, forefeited $30,000 in pay — far fewer penalties than he originally faced, Spinner said.
“He lied under oath,” Spinner said of Francis. “That goes to his credibility, which is always an issue. I’m sure there are some ways attorneys in other case could use that.”
But Devin Burstein, Francis’s lawyer in San Diego, disputed Spinner’s characterization. “I was there for the deposition,” Burstein said. “He was entirely credible. There was nothing lacking. Everything he said was consistent with the documentary evidence.”
Mancano, the lawyer for Newland, said the deposition testimony from Francis “raises serious questions” about his credibility, and the government reliance on him as a witness. Burstein discounted that critique, and noted that the case against Morales — as well as every other defendant — also relies heavily on text messages, financial records, emails and other information that back up Francis’ claims.
Burstein, as well as the U.S. Attorney’s Office, also declined to discuss Francis’s medical situation or his living arrangements. Court records show that his health and care have been discussed in a series of sealed court hearing since last fall. He was admitted to a hospital in December and his medical furlough has been extended at least twice.
In June the Navy subpoenaed Francis to come to Norfolk, Va. to testify at Morales’s court martial. But U.S. District Judge Janis Sammartino balked at the latest request and refused to sign the order, citing security concerns and wondering aloud about Francis’s health.
“It’s sort of outrageous if he’s not well, and I’m questioning that right now, if he’s not well to go across the country and back,” she said, according to a heavily redacted transcript of a May 16 court hearing.
But Burstein said his client was extremely sick. “He’s a man who can barely walk at this point,” he told the judge.
In the end, Navy officials decided to take his deposition in San Diego, eliminating the need for travel.
Apparently, Francis’s illness is beyond the capability of the Marshals Service to address. Because he has not been sentenced he is not in the custody of the Bureau of Prisons, which has medical facilities and can treat most prisoners.
Court records show other defense lawyers weren’t told of Francis’s arrangements until late May.
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