Navy petty officer is sentenced to prison in ‘Fat Leonard’ bribery scandal

A Navy petty officer received more than two years in prison Thursday for his role in the “Fat Leonard” bribery scandal — the first of at least seven defendants to be sentenced in a case that has prompted sweeping changes in how military contracts are handled.

U.S. District Judge Janis Sammartino’s sentencing of Dan Layug, who prosecutors said was the least culpable of the defendants, sets the bar for when the higher-ranking Navy officials appear before her.

“You put the Navy at risk. You put your colleagues at risk. And you put our country at risk,” Sammartino told Layug.

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FOR THE RECORD:
Bribery case: In the Jan. 22 California section, the headline on an article about the sentencing in a military bribery case referred to the defendant as a Navy officer. He is a Navy petty officer, an enlisted position. —
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In his plea agreement, Layug admitted giving confidential information to Singapore-based Glenn Defense Marine Asia, a military contractor that provides goods and services to visiting Navy ships at ports throughout Southeast Asia.

In return, the supply and logistics petty officer received bribes of hotel stays, electronics and a monthly stipend of $1,000.

By doing so, prosecutors said, Layug joined a stable of informers whom “Fat” Leonard Francis had collected to expand his firm and bilk the Navy out of some $20 million.

It all started with a gift of an unlocked cellphone in 2010 from Layug’s contact, an associate at the defense contractor. Later presents included iPads, a PlayStation, a camera, a laptop and luxury trips to Malaysia and Indonesia.

When he hinted to his contact that he was thinking of taking a second job, he was offered the monthly stipend, prosecutors said.

During a port visit to Vietnam, the contact asked for the invoice of a competitor to help Glenn Defense Marine Asia craft a bid for an upcoming South Korea contract. Layug sneaked the file off the Blue Ridge command ship, shared it with the contractor and then smuggled it back on board, prosecutors said.

The relationship lasted a little less than three years.

“He knew exactly the worth and risk that breed of classified information posed, and for whatever reason he decided to turn his back ... in return for, frankly, trinkets, putting our nation, our Navy and our sailors at risk,” Assistant U.S. Atty. Mark Pletcher said.

Layug cooperated with authorities upon his arrest and on Thursday accepted full responsibility.

“I let my ego and my greed take over me and betrayed my country,” Layug told the judge. “Whatever sentence I get today, I’ll get back up.”

After his arrest, Layug was assigned to a temporary unit in San Diego working with military members struggling with personal issues. He is expected to be administratively processed out of the Navy from his rank of petty officer first class, and to surrender to prison on April 1. He will have to pay $15,000 in restitution and a $15,000 fine.

Navy Rear Adm. Jonathan Yuen, chief of the Navy Supply Corps and commander of the Navy Supply Systems Command, told the judge Thursday that a task force has overhauled the Navy’s contracts procedures, making it harder for anybody to take advantage of holes in the system.

Changes include not being too dependent on any one contractor and segregating the three phases of dealings with contractors — procurement, receipt of goods and services and payment.

He said 60 additional people have been hired and trained to provide better oversight.

“This has had a far-reaching impact in the way we perform our mission, the way others perceive us and the way we feel and think about ourselves,” Yuen told the judge.

Six others — including a Navy commander, a captain and a Naval Criminal Investigative Services special agent — have pleaded guilty in the scandal, as has Francis, who is to be sentenced in August. Two others have been charged and pleaded not guilty.

kristina.davis@sduniontribune.com

Davis writes for the San Diego Union-Tribune.