A San Diego federal judge on Tuesday blasted the U.S. Attorney’s Office for its “significant misconduct” in the prosecution of the U.S. Navy’s “Fat Leonard” bribery and corruption scandal, saying the continued crumbling of the case is an “embarrassment to the government.”
U.S. District Judge Janis Sammartino said during a hearing in her San Diego courtroom that prosecutorial “misconduct started (the) unraveling of this case.” She called it an “extremely unfortunate” situation that was “all the government’s making.”
Sammartino made the comments during a hearing in which she agreed — reluctantly — to throw out a previous guilty plea by former Navy Cmdr. Stephen Shedd and dismissed all charges against him. She also dismissed felony pleas by three other former Navy officers and a retired Marine colonel and allowed the four men to each plead guilty to a single misdemeanor.
In a similar move last year as the result of the same government misconduct, the judge tossed out the jury convictions of four Navy officers who had been found guilty at trial and allowed them to plead guilty to misdemeanor counts.
Sammartino made it clear Tuesday that there was no new information to suggest the five defendants in her courtroom did not accept the bribes or commit the acts to which they previously pleaded guilty. But she said that the misconduct and its snowball effect made it so that dismissing Shedd’s charges and allowing the four misdemeanor plea deals was the best remaining option.
“While not a perfect resolution, it is accepted to minimize disparities in this case,” the judge said. If their previous felony pleas had been left to stand, the officers who pleaded guilty would have faced harsher penalties than those who went to trial.
Sammartino also said the government’s continued lack of communication to the public and the military community about what has gone wrong with the prosecution was “troublesome.”
U.S. Attorney Tara McGrath, who was present in the courtroom, declined to comment afterward.
Tuesday’s hearing provided the latest twist in what has become a spectacular unraveling of the legal case against the dozens of Navy officers who took bribes from Leonard Glenn Francis, aka “Fat Leonard,” the Malaysian contractor at the center of the corruption scheme.
The government has alleged that from at least 2006 to 2014, Francis showered those officers and others with bribes of fancy meals, prostitutes, high-end hotel rooms and other perks. In exchange, the officers did Francis’ bidding, providing ship schedules for the Seventh Fleet and steering ships to ports around Southeast Asia where Francis and his company, Glenn Defense Marine Asia, could gouge the Navy on services.
Since Francis was arrested in 2013 during a sting operation at a San Diego hotel, prosecutors have racked up dozens of guilty pleas in the case. Francis pleaded guilty early on, admitting that he defrauded the Navy out of at least $35 million, and subsequently cooperated with the prosecution for years.
But as the decade-old case dragged on, it began to show cracks. Defense attorneys raised questions about evidence that they believed prosecutors tried to hide — questions that led Sammartino to declare Assistant U.S. Attorney Mark Pletcher, the former lead prosecutor in the case, had committed “flagrant misconduct.” The defense attorneys also questioned the reliability of other documents in the case and the prosecution’s failure to disclose that a key investigator had made false statements in a similar investigation. Defense attorneys also raised red flags about the preferential treatment that Francis received while on house arrest before he absconded and fled the country in late 2022. He has since been returned to the U.S. as part of a prisoner swap.
Sammartino cited those issues in a numbered list Tuesday in explaining her decision to dismiss the felony guilty pleas by Shedd and the four others: former Navy Cmdr. Jose Luis Sanchez; retired Chief Warrant Officer Robert Gorsuch; former Navy Capt. Donald Hornbeck; and retired Marine Col. Enrico “Rick” DeGuzman.
Prosecutors had attempted to resolve the cases the same way during a hearing in December, but Sammartino rejected the plan at that time, saying attorneys on both sides had failed to provide a legal argument for such drastic measures. Prosecutors filed a briefing last month providing their legal reasoning.
Sammartino said Tuesday that the filing was “just barely” sufficient and provided the “bare minimum” information necessary for her to accept the proposed resolutions.
In that filing, First Assistant U.S. Attorney Peter Ko acknowledged that the issues with the case could affect even more defendants than the nine who have already had their guilty pleas or trial convictions dismissed. Ko wrote that that the government was “committed to ensuring all the defendants receive any redress that is owed them for the (prosecution) issues” and said prosecutors were reviewing other cases to determine if other defendants were deserving of relief because of the prosecutorial issues.
What that potential relief could look like is still unclear, but several attorneys whose clients had previously been sentenced in the case were on hand Tuesday to observe the proceedings.
The four defendants who pleaded guilty to misdemeanors Tuesday had previously agreed as part of their felony guilty pleas to pay varying amounts of restitution totaling more than $285,000. As part of their new deals, they were each ordered to pay a $100 fine but given no time in custody and no restitution requirement.
In previous plea agreements, they had admitted to accepting costly perks — fancy dinners, luxury hotel stays, prostitutes and gifts — in exchange for helping Francis. DeGuzman admitted to supplying Francis with proprietary information, helping him evaluate other potential recruits and bad-mouthing GDMA’s competitors. Gorsuch admitted to passing Francis classified information about the planned movements of two ships. Hornbeck admitted to using his influence to steer contracts to Francis. Sanchez admitted to providing Francis with confidential information such as ships schedules, supply needs and competing bids.
Shedd admitted to sending Francis classified information about planned ship movements and providing him with proprietary invoices from GDMA’s competitors so Francis could undermine their bids.
Prosecutors said Shedd warranted a full dismissal because he testified at trial. “We do not think it is fair or just for this defendant who acknowledged his guilt and testified publicly against peers of similar or greater culpability to be penalized more harshly or the same,” Ko wrote in a filing last year. “Considering how the (trial) cases ended, through no fault of Shedd’s, dismissal is the only realistic way to differentiate his effort to mitigate his wrongs.”
One of the big questions now is if Francis himself will be eligible for any sort of relief because of the government misconduct — though his situation is vastly different than that of the other defendants. Not only did Francis flee the country shortly before his scheduled sentencing, but he’s also a part of the suspicious chain of custody surrounding certain documents in the case. Francis also did not testify at trial, as had been expected, and recorded a secret podcast while on house arrest.
Francis has remained jailed since December when he was returned to the U.S. from Venezuela as part of a prisoner swap. Prosecutors have tried to push forward with his sentencing, but Sammartino has delayed scheduling the sentencing to give Francis time to find a new attorney. Several hearings to sort out his legal representation have not solved the issue, but Sammartino has ordered Francis to find a new attorney by the time of his next hearing on May 31.
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