Plea deals mount in ‘Fat Leonard’ Navy bribery case as trial nears

SAN DIEGO —  The nine Navy officers allegedly called themselves the “Band of Brothers,” joined together in their loyalty to the military contractor known as “Fat Leonard” and the ribald lifestyle he offered in Southeast Asia ports.

But with trial in the extensive bribery scandal drawing near, the brotherhood is breaking up.

Three of the nine have pleaded guilty in the case, the latest being former Cmdr. Stephen Shedd on Wednesday. A fourth, former Capt. Donald Hornbeck, is expected to do so next week.

That leaves five remaining defendants to face a jury, possibly as early as next month, in what could be the only criminal trial in the sprawling federal prosecution. Dozens of other people, most Navy officials, have also pleaded guilty over the last several years.

On Wednesday, Shedd, 48, of Temecula, pleaded guilty to two bribery charges in San Diego federal court, admitting to a familiar narrative of corrupt acts that prosecutors have said posed a national security threat and helped defraud the Navy out of millions of dollars.

An undated photo of Leonard Glenn Francis, aka Fat Leonard.

(Washington Post)

Leonard Glenn Francis, aka “Fat Leonard,” the Singapore-based contractor who provided a range of services to visiting ships across Southeast Asia, wanted the Navy in ports he controlled. Francis would overcharge the Navy by at least $35 million over the years for those services, including security, water and trash removal, according to the plea agreement that Francis entered into in 2015.

Shedd was one of the many naval officials that Francis targeted in the Navy’s Seventh Fleet. From 2006 to 2008, Shedd — then a lieutenant commander — served as the fleet’s South Asia policy and planning officer, making him responsible for identifying ports that Navy ships would visit.

Shedd, in his plea agreement, admitted to everything alleged in the indictment. That includes sending Francis the classified planned movements of several ships, including the amphibious assault ship Tarawa and guided missile cruiser Port Royal in 2007, as well as a change to the schedule of the guided missile destroyer Fitzgerald in 2008 that was made to accommodate Francis.

Shedd also admitted to providing Francis with proprietary invoice information on Francis’ competitors throughout Southeast Asia so he could pitch winning solicitations to secure his own company’s contracts.

In return, Francis showered Shedd and his co-defendants with lavish boys’ nights out, including fine dining, hotel stays and parties. The bribes were valued collectively at more than $250,000, according to the plea agreement.

Shedd was among the attendees of a $50,000 “raging multi-day party, with a rotating carousel of prostitutes, during which the conspirators drank all of the Dom Perignon available at the Shangri-La” in Manila, Philippines, in 2008, according to the indictment.

Francis also paid for a $30,000 vacation for Shedd’s family to Malaysia, and during a separate dinner Francis gave Shedd his-and-her watches valued at $25,000, according to the indictment.

In late 2008, Shedd asked Francis to help him out with personal debt that was about to put him in “big trouble” and gave Francis his wire account, the indictment states. Francis responded by saying he needed ship-visit plans, and Shedd promised that someone would get the information for Francis. It is not clear if Francis paid the debt.

California

‘Fat Leonard’ — central figure in U.S. Navy corruption case — breaks silence on surprise podcast

Leonard Glenn Francis pleaded guilty in 2015 to bribing Navy officials. Months before he is set to testify, he spoke at length on a podcast about his life.

Nov. 22, 2021

Francis relied on Shedd to help keep the conspiracy going by vetting other Navy officials who may be corruptible — a necessary exercise as Francis’ confidants left for other assignments and new people rotated in, the indictment states.

In one instance, Francis wrote to Shedd that an unidentified officer had been “very cautious around me last night.”

Shedd responded: “That officer is definitely poisoned. Now you can see why I haven’t attempted to bring him in.”

Shedd himself left Southeast Asia in late 2008, serving as a personnel distribution officer stationed in Tennessee and later as the executive officer and commanding officer of the Arleigh Burke-class guided-missile destroyer Milius, based in Japan.

Emails show Shedd and Francis continued to communicate, although infrequently.

It is unknown if Shedd or any of the others who have so far pleaded guilty in the group plan to testify at trial. The start date has been pushed back to Feb. 28, and the court is still dealing with new potential wrinkles posed by a recent podcast by Francis, who is expected to testify for the prosecution.

The five who are continuing to fight the charges are David Newland, James Dolan, Bruce Loveless and David Lausman — all former captains — and Cmdr. Mario Herrera.

Former Marine Col. Enrico DeGuzman and former Navy Chief Warrant Officer Robert Gorsuch pleaded guilty last year. Hornbeck was set to plead guilty a week ago, but the hearing was postponed due to COVID-19.