25 individuals now charged or guilty in GDMA scandal

WASHINGTON — Retired US Navy Rear Adm. Bruce Loveless, four retired Navy captains, a Marine colonel and three other individuals were arrested and charged Tuesday in the latest indictments related to the Glenn Defense Marine Asia (GDMA) bribery scandal. The investigation is also known as the "Fat Leonard" case, after a nickname for GDMA's former chief executive officer, Leonard Francis.

The latest federal indictment charges the individuals with accepting luxury travel, elaborate dinners and the services of prostitutes from Singapore-based GDMA, according to the US Department of Justice, all in exchange for classified and internal US Navy information.

Glenn Defense Marine Asia was one of the biggest husbanding firms in the western Pacific, handling a large variety of services for ships visiting ports throughout the region.

With Tuesday's arrests, a total of 25 individuals have been charged in connection with the corruption and fraud investigation into GDMA, the Justice Department said in a press release. Of those charged, Justice said, 20 are current or former U.S. Navy officials and five are GDMA executives. Thirteen of those charged already have pleaded guilty.

The defendants were arrested early Tuesday morning in California, Texas, Pennsylvania, Florida, Colorado and Virginia, Justice said in the press release, adding that federal officials will seek to move all defendants to San Diego, where the GDMA case is being tried in federal court.

According to the press release, the nine defendants were arrested on various charges including bribery, conspiracy to commit bribery, honest services fraud, obstruction of justice and making false statements to federal investigators when confronted about their actions.

Loveless, 48, of San Diego, was arrested at his home in Colorado.   

Four of the defendants, Justice said, are retired captains: David Newland, 60, of San Antonio, Texas; James Dolan, 58, of Gettysburg, Pennsylvania; David Lausman, 62, of The Villages, Florida; and Donald Hornbeck, 56, a resident of the United Kingdom.

The other defendants arrested Tuesday included Marine Col. Enrico Deguzman, 48, of Honolulu, Hawaii; retired Chief Warrant Officer Robert Gorsuch, 48, of Virginia Beach, Virginia; active-duty Lt. Cmdr. Stephen Shedd, 48, of Colorado Springs, Colorado; and active-duty Commander Mario Herrera, 48, of Helotes, Texas.

According to the indictment, Justice said in the press release, the Navy officers allegedly participated in a bribery scheme with Leonard Francis, in which the officers accepted travel and entertainment expenses, the services of prostitutes and lavish gifts in exchange for helping to steep lucrative contracts to Francis and GDMA and to sabotage competing defense contractors. The defendants allegedly violated many of their sworn official naval duties, including duties related to the handling of classified information and duties related to the identification and reporting of foreign intelligence threats.

According to the indictment, the defendants allegedly worked in concert to recruit new members for the conspiracy, and to keep the conspiracy secret by using fake names and foreign email service providers. According to the indictment, the Justice press release said, the bribery scheme allegedly cost the Navy "tens of millions of dollars."

Acting U.S. Attorney Alana Robinson of the Southern District of California, quoted in the press release, declared the scandal represented "a fleecing and betrayal of the United States Navy in epic proportions, and it was allegedly carried out by the Navy's highest-ranking officers. The alleged conduct amounts to a staggering degree of corruption by the most prominent leaders of the Seventh Fleet -- the largest fleet in the U.S. Navy -- actively worked together as a team to trade secrets for sex, serving the interests of a greedy foreign defense contractor, and not those of their own country."

Dermot O'Reilly, director of the Defense Criminal Investigative Service (DCIS), said in the press release that, "the allegations contained in today's indictment expose flagrant corruption among several senior officers previously assigned to the U.S. Navy's Seventh Fleet. The charges and subsequent arrests are yet another unfortunate example of those who place their own greed above their responsibility to serve this nation with honor. This investigation should serve as a warning sign to those who attempt to compromise the integrity of the Department of Defense that DCIS and our law enforcement partners will continue to pursue these matters relentlessly."

Asked for comment, a spokesman at the Navy's office of the chief of information deferred to the Department of Justice.

Loveless becomes the second flag officer charged in the GDMA scandal. Rear Adm. Robert Gilbeau, a supply officer, has pleaded guilty and is awaiting sentencing.

According to the federal indictment, Loveless was charged for actions when, as a captain in 2007 and 2008, he was serving as assistant chief of staff for intelligence for the Seventh Fleet. Before that, starting in 2005 he served as an intelligence officer aboard the Japan-based carrier Kitty Hawk.

In the federal grand jury indictment, Loveless accepted bribes, expensive hotel rooms, and the services of prostitutes, mostly from 2006 to 2008. He is charged with making false statements to investigators and obstructing justice in November 2013.

Loveless underwent a publicly embarrassing, nearly 900-day period serving first as the Navy's director of intelligence operations – but with his security clearance revoked pending the results of the Justice investigation. He, along with his boss, director of intelligence Vice Adm. Ted "Twig" Branch, were not allowed to attend classified briefings or even enter their officers, which were considered classified areas.

To date, Branch has not been publicly charged in the investigation.

Loveless was transferred in late 2014 to become the Navy's corporate director for information dominance, dealing mostly with non-classified issues. He retired in October 2016.

The federal investigation continues under a partnership of three primary agencies, the Defense Criminal Investigative Service (DCIS), the Naval Criminal Investigative Service (NCIS) and the Defense Contract Audit Agency. In San Diego, Assistant Chief Brian Young of the Criminal Division's Fraud Section and Assistant U.S. Attorneys Mark Pletcher and Patrick Hovakimian of the Southern District of California are prosecuting the case.

The Navy is conducting its own investigations of individuals cleared of criminal wrongdoing, and a number of active duty officers remain under investigation. 

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