Two Executives Sentenced in "Fat Leonard" Scandal

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By MarEx 2017-08-12 21:37:31

Two former executives of foreign defense contractor Glenn Defense Marine Asia (GDMA) have been sentenced for conspiring to submit bogus claims and invoices to the U.S. Navy. The losses to the U.S. Navy exceeded $34,800,000 as a result of their scheme.

Neil Peterson, 39, and Linda Raja, 44, both of Singapore, were sentenced to 70 and 46 months, respectively, by U.S. District Judge Janis L. Sammartino of the Southern District of California.  Both worked as chief deputies for GDMA, which was owned by Leonard Glenn Francis. 

GMDA supplied fuel, food and other services to Navy ships in Asian ports, and prosecutors said the company and its CEO, nicknamed “Fat Leonard,” bribed Navy officials with cash, prostitutes and gifts to obtain classified information that helped the firm over charge the Navy.

Peterson served as the vice president for global operations for GDMA and Raja served as GDMA’s general manager for Singapore, Australia and the Pacific Isles. Both defendants were arrested by authorities in Singapore at the request of the U.S. government and were extradited on October 28, 2016. They each pleaded guilty in May 2017 to one count of conspiracy to defraud the United States with respect to claims.

According to admissions made as part of Peterson’s and Raja’s plea agreements, they and other members of GDMA’s management team created and submitted fraudulent bids that were either entirely fictitious, contained falsified prices supposedly from actual businesses or fraudulently stated that the business shown on the letterhead could not provide the items or services requested. In this manner, Peterson, Raja and other members of GDMA’s core management team could ensure that GDMA’s quote would be selected by the U.S. Navy as the supposed low bidder. GDMA could thus control and inflate the prices charged to the U.S. Navy without any true, competitive bidding, as required, they admitted.

Peterson and Raja admitted that they and other members of the GDMA management team knowingly created and approved fictitious port authorities with fraudulently inflated port tariff rates and approved the presentation of such fraudulent documents to the U.S. Navy. GDMA thus charged inflated prices to the U.S. Navy rather than what GDMA actually paid to the bona fide port authorities.

For example, Peterson and Raja admitted that for the visit of the USS Bonhomme Richard to Kota Kinabalu, Malaysia, in or about October 2012, under the direction of Peterson and other members of GDMA's core management team, false documents and inflated invoices were presented to the U.S. Navy. The full amount billed to the U.S. Navy for this visit was $1,232,858, of which approximately $877,413 was fraudulently inflated, Peterson and Raja admitted.

So far, 17 of 27 defendants charged in the U.S. Navy bribery and fraud scandal have pleaded guilty.