/ Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.7 Page 1 of 78 4 • v.. - FILEt l 11 MAR JO AN 10' 12 2 3 4 -f)CmVv BY 5 pi 6 8 s wt.- s /ih in H 'EROFft UNITED STATES DISTRICT COURT $ 9 SO U TH ER N D ISTR IC T O F CA! FO R N IA s January 2016 G rand Jury 10 11 U N ITED STATES O F AM ER IC A, IN D I 12 13 14 15 16 17 18 ^ 19 20 21 22 C ase N o. T M E N T Ti t l e 18 U .S.C ., Sec. 371 C onspiracy); Ti t l e 18, U .S.C ., Sec. 201(b)' (2) (A) and (C ) Bri bery; Ti t l e 18, U .S.C ., Sec. 1001(a)(2) False Statem ents; Ti t l e 18, U .S.C ., Sec. 1519 - O bstructi on of Justi ce; Ti t l e 18, U .S.C ., Secs. 1349, 1346, and 1343 C onspiracy To C om m it H onest Servi ces W ire Fraud; Ti t l e 18, U .S.C ., Sec. 981(a)(1)(c), and Ti t l e 28, U .S.C ., Sec. 2461(c) C ri mi nal Forfei ture v. D AVID N EW LAN D (1), aka "N ew l y," EN R IC O D EG U ZM AN (2), aka "R i ck," D O N ALD H O RN BEC K (3), aka "Bubbl es," JAM ES D O LAN (4), aka "JD ," BR U C E LO VELESS (5), D AVID LAU SM AN (6), aka "Too Tal l , " STEPH EN SH ED D (7), M AR IO H ER R ER A (8), aka "C hoke," aka "C hoke O IC ," R O BER T G O R SU CH (9), 23 1 7 CRO 6 2 3 JLS D efendants. 24 25 The grand j ury charges that at al l rel evant ti m es: 26 IN TR O D U C TO R Y ALLEG ATIO N S 27 A. The U .S. N avy' s Seventh Fl eet 28 -0 M W P: PAH O : nl v: San D i ego:3/9/l 7 •S Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.8 Page 2 of 78 1. 1 The U .S. N avy w as a branch of the U .S. D epartm ent of D efense, 2 w hose m i ssi on w as to m ai ntai n, t rai n, and equi p com bat-ready naval forces 3 capable of w i nning w ars, deterri ng aggressi on, and m ai ntai ni ng freedom 4 of the seas. 5 f l eet , wi th 6 Sai l ors and M arines. 7 ships and subordi nate com m ands, w hich operate i n the W estern Paci fi c 8 O cean throughout Southeast Asi a, P aci fi c Isl ands, A ustral i a, R ussia, and 9 the Indi an O cean t erri t ori es, as w el l shi ps and personnel from other U .S. 60-70 shi ps, 200-300 ai rcraf t and N avy 11 ("AO R "). 12 Seventh Fl eet and housed at-sea 13 of f i ci al s. The Seventh Fl eet' s m otto w as: 2. approxi m atel y 40,000 The Seventh Fl eet w as responsi bl e f or U .S. N avy 10 14 Fl eets The U .S. N avy' s Seventh Fl eet w as i t s l argest num bered that enter the Seventh Fl eet' s area of responsi bi l i t y The U .S.S. Blue R idge w as the com m and and control shi p of the f aci l i t i es f or Seventh Fl eet seni or R eady Pow er f or Peace. The Seventh Fl eet w as under the com m and of a Vice Adm i ral , w ho 15 oversaw a st af f of other seni or U .S. N avy of f i cers charged w i th runni ng 16 the Seventh Fl eet' s operati ons. 17 D epartm ents, each desi gnated N 1 through N 8. 18 served aboard the U .S.S. Blue R idge. 19 3. Thi s operati onal st af f w as arrayed i nto The Seventh Fl eet ' s st af f The Seventh Fl eet w as further di vi ded i nto speci al i zed task 20 forces, i ncl udi ng Task Force 70 21 com m anded al lt ransi t i ng surface forces i n the Seventh Fl eet AO R , and 22 Task Force 73 23 and other support vessel s. 24 4. (C TF 70) , w hich, am ong other thi ngs, (C TF 73), com prised of the Seventh Fl eet' s suppl y ships The U .S. N avy N aval Supply System s C om m and ("N AVSU P") w as a 25 com m and w i thi n the U .S. N avy, w hich w as responsi bl e f or the gl obal supply 26 and del i very of goods and servi ces to U .S. N avy personnel and w arfi ghti ng 27 assets. 28 N avy Fl eet and The U .S. N avy Fl eet Logi sti cs C enters ("FLC "), form erl y the U .S. I ndust ri al Supply C enter 2 ("FISC "), w ere subordi nate Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.9 Page 3 of 78 S •W 1 com m ands of N AVSU P l ocated i n vari ous dom estic and forei gn l ocati ons. 2 FLC s provi ded 3 operati ng i n the FLC 's AO R . 4 aw arding, and overseeing contracts f or goods and servi ces, i ncl udi ng shi p 5 husbanding, requi red by the U .S. N avy i n each FLC 's AO R . 6 supported naval i nst al l at i ons and vessel s operati ng i n Japan, H ong Kong, 7 South Korea, and R ussia. 8 FLC 9 i nst al l at i ons and vessel s operati ng i n Singapore, M al aysi a, Indonesia, 10 the Phi l i ppi nes, Thai l and, C am bodia, Vietnam , A ustral i a, and elsew here. l ogi st i cs support f or naval i nst al l at i ons and vessel s The FLC s w ere responsi bl e f or sol i ci t i ng, FLC Yokosuka FLC Yokosuka al so oversaw the operati ons of an D etachm ent i n Singapore ("FLC Si ngapore"), w hich supported naval 11 B. The D efendants 12 5. D efendant D AVID N EW LAN D , aka "N ew l y," w as a C aptai n i n the U .S. Jul y 2005 to Jul y 2007, served aboard the U .S.S. Blue 13 N avy, w ho, from 14 R idge as the C hi ef of S taff ("C O S") to the C om m ander of the Seventh 15 Fl eet. 16 Seventh Fl eet st af f , and hi s responsi bi l i t i es i ncl uded the adm i ni strati on 17 and oversi ght of al l aspects of the Seventh Fl eet, i ncl udi ng de facto 18 control w hen the Seventh Fl eet C om m ander w as out of the regi on. 19 6. As C hi ef of S taff, N EW LAN D D efendant EN R IC O w as the seni or of f i cer am ong the D EG U ZM AN , aka "R i ck," w as a C ol onel i n the 20 U ni ted States M arine C orps, w ho, from Jul y 2004 to Jul y 2007, served on 21 the Seventh Fl eet S taff as the Fl eet M arine O ffi cer. 22 D EG U ZM AN 23 States M arine C orps w i thi n the Seventh Fl eet AO R . 24 January 1, 2011, D EG U ZM AN served as the Assi stant C hi ef of S taff ("AC O S") 25 of O perati ons f or U .S. M arine C orps Forces, P aci f i c, based at C am p H .M . 26 Sm ith, H aw aii . 27 D EG U ZM AN served as the ci vi l i an D eputy C hi ef of S taff of O perations for 28 U .S. M arine C orps Forces, P aci f i c. In t hi s rol e, w as responsi bl e for coordi nati ng the m i ssi ons of the U nited Im m ediatel y subsequent to 3 hi s From acti ve Jul y 2 0 07 to duty servi ce, Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.10 Page 4 of 78 0 7. 1 D efendant D O N ALD H O R N BEC K, aka "Bubbl es," w as a C aptai n i n the 2 U .S. N avy, w ho, from August 2005 to January 2007, served as the Assi stant 3 C hi ef of S taff f or O perations at C TF70, aboard the U .S.S. K i t t y H aw k. 4 From February 2007 unt i l January 2009, H O R N BEC K served as the N 3, D eputy 5 C hi ef of S taff f or O perations f or the Seventh Fl eet, As the N 3, H O RN BEC K 6 w as responsi bl e f or di recti ng the operati ons of al l com batant shi ps i n 7 the Seventh Fl eet AO R . 8. 8 9 D efendant JAM ES D O LAN , aka "JD ," w as a C aptai n i n the U .S. N avy w ho, from Jul y 2007 through Jul y 2009, served as the N 4, Assi stant C hi ef 10 of S taff f or Logi sti cs f or the Seventh Fl eet. 11 responsi bl e f or m eeting the l ogi st i cal needs of every shi p wi t hi n the 12 Seventh Fl eet' s AO R . 9. 13 In t hi s rol e, D O LAN w as D efendant BR U C E LO VELESS w as a C aptai n i n the U .S. N avy, w ho, 14 from 15 S taff f or Intel l i gence f or the Seventh Fl eet. 16 responsi bl e f or assessing and counteracti ng forei gn i ntel l i gence threats 17 wi thi n the Seventh Fl eet' s AO R . 18 2007, LO VELESS 19 LO VELESS's l ast know n address w as i n San D iego, C A, w i t hi n the Southern 20 Di st ri ct of C al i forni a. 21 22 23 Jul y 2007 through Jul y 2008, served as the N 2, Assi stant C hi ef of 10. w as the N 2 From As the N 2, LO VELESS w as i n or about A pri l 2005 to Jul y f or C TF70, aboard the U .S.S. K i t t y H aw k. D efendants H O R N BEC K, D O LAN , and LO VELESS w ere referred to by m em bers of the conspi racy col l ect i vel y as the "0-6 Ensi gns." 11. D efendant D AVID LAU SM AN , aka "Too Tal l , " w as a C aptain i n the 24 U .S. N avy, w ho, from Jul y 2004 through M ay 2006, w as the Executi ve O ffi cer 25 of the U .S.S. Abraham 26 deploym ents to the Seventh Fl eet' s AO R . 27 2007, LAU SM AN served as the Assi stant C hi ef of S taff f or O perati ons for 28 the C om m ander of N aval Forces Japan. Li ncol n, an ai rcraf t carri er that m ade m ul ti pl e 4 From From M ay 2006 through January approxi m atel y M arch 2007 to Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.11 Page 5 of 78 *V 1 Jul y 2008, LAU SM AN served as C om m anding O ffi cer of the U .S.S. Blue R idge. 2 A fter recei vi ng addi ti onal trai ni ng on the operati on of nucl ear ai rcraf t 3 carri ers, from A pri l 2009 through Septem ber 2012, LAU SM AN served as the 4 C om m anding O ffi cer of the U .S.S. G eorge W ashington, an ai rcraf t carri er 5 that w as forw ard deployed to the W estern P aci fi c. 6 through M ay 2013, LAU SM AN w orked assessing strategi c com m unications for 7 the U ni ted States P aci fi c C om m and i n H aw aii . 9 Septem ber 2012 D efendant STEPH EN SH EDD w as a Li eutenant C om m ander i n the U .S. 12 . 8 From N avy, w ho, from N ovem ber 2006 to O ctober 2008, served as the Seventh 10 Fl eet' s South Asi a Pol i cy and Pl anni ng O ffi cer, i n w hich posi ti on he w as 11 responsi bl e 12 consi stent w i th U .S. N avy engagem ent pri ori t i es. From 13 M ay 2010, SH EDD served as a Personnel D i st ri but i on O ffi cer f or the U .S. 14 N avy, stati oned i n Mi l l i ngton, TN , and thereafter, upon being prom oted 15 to 16 Executi ve O ffi cer and l at er the C om m anding O ffi cer of the U .S.S. M i l i us. C om m ander, from M arch 2 011 that U .S. N avy shi ps w ould vi si t N ovem ber 2008 to unt i l M ay 2 014, SH ED D served as the D efendant M AR IO H ER R ER A, aka "C hoke," aka "C hoke O IC ," w as a 13 . 17 f or i dent i f yi ng ports 18 C om m ander i n the U .S. N avy, w ho, from M arch 2007 to N ovem ber 2009, served 19 as the Fl eet O perati ons and Schedules O ffi cer f or the Seventh Fl eet, and 20 f or a peri od of tim e reported to H O R N BEC K. 21 responsi bl e f or schedul i ng the port vi si t s f or ships and subm arines i n 22 the 23 chachi09@ cooltoad.com 24 others, by the fol l ow i ng nicknam es: "M ari o," "C hachi ," "C hoke," "C hoke 25 O IC 26 Anderson. " 27 28 Seventh Fl eet ' s AO R . and H ER R ER A In t hi s rol e, H ER R ER A w as ut i l i zed the em ail address i n em ai ls w as referred to by Franci s, and ("O ffi cer In C harge")," "C hoker," "TA," "T.A. Anderson," and "Thom as 14 . D efendant R O BER T G O R SU C H w as a C hi ef W arrant O ffi cer i n the U .S. N avy, w ho, from January 2005 to M arch 2008, served as the Seventh 5 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.12 Page 6 of 78 1 Fl eet' s Flag Adm i ni strati on O ffi cer. In t hi s rol e, G O R SUC H provi ded 2 adm i ni strati ve support to the Seventh Fl eet C om m ander and other seni or 3 of f i cers on the Seventh Fl eet st af f . 4 C. The U .S. N avy C onspi rators 5 15. Edm ond Aruffo, charged elsew here, served f or over 20 years i n 6 the U .S. N avy, ret i ri ng i n Jul y 2 007 as a Li eutenant C om m ander. 7 January 2005 to Jul y 2007, Aruffo served aboard the U .S.S. Blue R idge, 8 vari ousl y 9 Assi stant to the Seventh Fl eet C hi ef of S taff, and the Seventh Fl eet' s as the Seventh Fl eet' s Protocol O ffi cer, the From Executive 10 Force Protecti on O ffi cer. 11 n w hich rol e he w as f or G D M A as the C ountry M anager f or G D M A Japan, i 12 responsi bl e f or m anaging the dai l y operati ons of the G D M A f aci l i t y i n 13 Yokosuka, Japan. 14 16. In or about A pri l 2009, Aruffo w ent to w ork Jose Sanchez, charged elsew here, w as a C om m ander i n the U .S. 15 N avy, w ho, from A pri l 2008 to A pri l 2010, served as the Seventh Fl eet' s 16 Assi stant N 4, D eputy Logi sti cs O ffi cer. 17 reported to D O LAN , w as responsi bl e f or assuri ng that al l Seventh Fl eet 18 shi ps recei ved the suppl i es and servi ces needed to m ai ntai n readi ness. 19 From Jul y 2010 to M ay 2012, Sanchez w as the D i rector of O perati ons for 20 FLC Yokosuka, w here he w as responsi bl e f or m eeti ng the l ogi st i cal needs 21 of shi ps i n the regi on. 22 the Executi ve O ffi cer f or FLC Yokosuka, w here he oversaw operati onal and 23 adm i ni strati ve m atters w i thi n FLC Yokosuka and FLC Singapore. 24 ut i l i zed 25 referred to by the fol l ow i ng nicknam es: "J, " "Li on King, Jr. , " and "Troy 26 Sm ith." 27 28 17. the In t hi s rol e, Sanchez, w ho From M ay 2012 to A pri l 2013, Sanchez served as em ai l address, navy94@ cooltoad. com and i n Sanchez em ail s w as D ani el D usek, charged elsew here, w as a C om m ander i n the U .S. N avy servi ng from on or about January 11, 2009 to on or about February 24, 6 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.13 Page 7 of 78 4 I 1 2011, as the D eputy D i rector of O perati ons f or the Seventh Fl eet, aboard 2 the U .S.S. Blue R idge. 3 M arch 15, 2012, D usek w as assigned as the Executi ve O ffi cer of the U .S.S. 4 Essex. 5 D usek served as the Executi ve O ffi cer of the U .S.S. Bonhom m e R i chard, at 6 w hich ti m e, D usek w as prom oted to C aptai n and the C om m anding O ffi cer, 7 w here he served unt i l O ctober 2, 2013, w hen he w as rel i eved of com m and. 18. 8 9 From From on or about M ay 12, 2 011 to on or about on or about A pri l 23, 2012 to on or about June 29, 2012, AG w as a m em ber of the R oyal Austral i an N avy, w ho from N ovem ber 2007 to January 2010 w as seconded to the U .S. N avy as the R oyal Austral i an 10 N avy Li ai son O ffi cer to the Seventh Fl eet. 11 served aboard the U .S.S. Blue R idge al ongsi de hi s U .S. N avy counterparts, 12 pl anni ng j oi nt operati ons and exerci ses betw een the U ni ted States and 13 A ust ral i a. 19. 14 As the Li ai son O ffi cer, AG M ichael Brooks, charged elsew here, w as a C aptai n i n the U .S. 15 N avy, w ho, from June 2006 to Jul y 2008, served as the U nited. States N aval 16 Attache ("N ATT") i n M ani l a, Phi l i ppi nes. In t hi s posi ti on, Brooks served 17 as the U .S. N avy representati ve of the Secretary of D efense, the C hairm an 18 of the Joi nt C hi efs of S taff , and the U ni ted Forces of the U ni ted States 19 i n M ani l a, as w el l as the U .S. N avy m i l i t ary advi sor to the U ni ted States 20 Am bassador. 20. 21 D efendants N EW LAN D , D EG U ZM AN , D O LAN , H O R N BEC K, LO VELESS, 22 rators Sanchez, D usek LAU SM AN , SH ED D , H ER R ER A, and G O R SUC H , and conspi 23 and Brooks w ere "publ i c of f i ci al s" w i t hi n the def i ni t i on of Ti t l e 18, 24 U ni ted States C ode, Secti on 201(a)(1). 25 D. Of f i ci al D uti es 26 21. D efendants, as of f i cers i n the U .S. N avy, had and w ere assigned 27 vari ous of f i ci al duti es, i ncl udi ng, but not l i mi t ed to those found i n 28 the U ni ted States N avy R egul ati ons; D epartm ent of D efense 7 Di recti ve Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.14 Page 8 of 78 A 1 ("D oD D ") 5500.07 (Standards of C onduct), D oD D 2 R egul ati ons), 3 (Standards of Ethi cal C onduct f or Em ployees of the Executi ve Branch), 4 and 5 C .F.R . Part 3601 5 Em ployees 6 (Pri nci pl es of Ethi cal C onduct). and supplem ents of the 5500.07-R ncl udi ng thereto, i 5 (Joi nt Ethi cs C .F.R . Part 2625 (Supplem ental Standards of Ethi cal C onduct f or D epartm ent of D efense); and Executi ve O rder 12674 Am ong m any others, the of f i ci al duti es of O ffi cers i n the U .S. 7 22 . 8 N avy i ncl ude 9 t hei r authori ty extends, enforci ng the law s, regul ati ons, and orders 10 rel at i ng to the D epartm ent of the N avy; (2) f ai t hf ul l y and t rut hf ul l y 11 di schargi ng the duti es of t hei r offi ces to the best of t hei r abi l i t y i n 12 conform ance 13 professi on of the oath of of f i ce (A rt i cl e 1130); (3) requi ri ng them selves 14 to show a good exam ple of vi rt ue, honor, patri oti sm , and subordi nati on; 15 to be vi gi l ant i n i nspecti ng the conduct of al l persons w ho are placed 16 under t hei r com m and; to guard agai nst and suppress al l di ssol ute and 17 im m oral practi ces, and to correct, accordi ng to the law s and regul ati ons 18 l persons w ho are gui l t y of them ; and take al l of the U .S. N avy, al 19 ati ons and custom s necessary and proper m easures / under the law s, regul 20 of the naval servi ces, to prom ote and safeguard the m orale, the physi cal 21 w el l -bei ng and the general w el fare of the of f i cers and enl i sted persons 22 under t hei r com m and or charge 23 possi bl e to superi or authori ty al l offenses under the U niform C ode of 24 Military Justice (Article 25 1137); 26 D efense and Secretary of the N avy regardi ng the Standards of C onduct and 27 G overnm ent Ethi cs (1) acquai nti ng them selves w i th, obeying and, so far as wi th exi sti ng ("UCMJ") orders and regul ati ons and t hei r solem n (A rt i cl e 1131); (4) reporti ng as soon as which come under their observation (5) com plying w i th al l di recti ves issued by the Secretary of (A rt i cl e 1110); and 28 8 (6) reporti ng i n w ri t i ng any Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.15 Page 9 of 78 't 1 fraudul ent, col l usi on, or im proper conduct by a U .S. N avy contractor 2 (A rt i cl e 1115). 3 To perform their duties, the defendants all held "Secret" or 23 . 4 "Top Secret" clearances as a prerequi si te to handl i ng vari ous types of 5 cl assi f i ed i nform ati on. 6 duti es of U .S. N avy O ffi cers i n the handl i ng of cl assi f i ed i nform ati on, 7 i ncl udi ng 8 i ndi vi dual s having access to cl assi f i ed i nform ati on m ust prom ptl y report 9 to t hei r securi ty of f i ce: any unauthori zed di scl osure to any person of D oD D Addi ti onal regul ati ons prescri be the of f i ci al 5200.02r, w hich requi res am ong other duti es that 10 cl assi f i ed i nform ati on or of other i nform ati on, di scl osure of w hich i s 11 prohi bi ted by Statute, Executi ve O rder, or R egul ati on 12 di sregard 13 (C 2.2.1.7); 14 om ission or com m ission that i ndi cate poor judgm ent, unrel i abi l i t y, or 15 untrustw orthi ness (C 2.2.1.9); any vul nerabi l i t y to coerci on, i nfl uence, 16 or pressure that m ay cause conduct contrary to the nati onal i nterest 17 (C 2.2.1.11); and any acts of sexual m isconduct or perversi on i ndi cati ve 18 of m oral turpi tude, poor judgm ent or l ack of regard f or the law s of 19 soci ety (C 2.2.1.17). C o-w orkers shoul der an equal of f i ci alduty to report 20 w hen "they becom e aw are of i nform ati on w i th pot ent i al l y seri ous securi ty 21 si gni fi cance regardi ng som eone w i th access to cl assi f i ed i nform ati on" i n 22 a sensi ti ve posi ti on (C 9.1.5). 23 of publ i c law , Statute, Executi ve (C 2.2.1.5); the O rder, or R egul ati on any cri mi nal or di shonest conduct (C 2.2.1.8); any acts of D oD D 5240.06 prescri bes the of f i ci al duti es of D epartm ent of 24 . 24 D efense personnel , 25 counteri ntel l i gence 26 personnel 27 i ndi cators, and 28 threats m ust agai nst i ncl udi ng aw areness report and DO D, as defendants herei n, reporti ng. certai n behavi ors the the enum erated In personnel , 9 part i cul ar, contacts, potenti al forei gn i t s rel ated DO D act i vi t i es, i ntel l i gence i nform ati on, to ent i t y m ateri el , Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.16 Page 10 of 78 > 1 f aci l i t i es, and act i vi t i es or agai nst U .S. nati onal securi ty. M andatory 2 reporti ng obl i gati ons i nure to the fol l ow i ng act i vi t i es, am ong others: 3 any im proper handl i ng or di scl osure of cl assi f i ed i nform ati on; attem pts 4 to 5 bl ackm ai l or extorti on; attem pts to enti ce D O D personnel i nto si tuati ons 6 that coul d pl ace them 7 D O D personnel under obl i gati on through speci al treatm ent, favors, gi f t s, 8 or m oney. 9 10 enti ce co-w orkers i nto cri mi nal si tuati ons that coul d l ead to i n a com prom ising posi ti on; and attem pts to place E. The G lenn D efense M arine Asi a ("G D M A") C onspi rators 25. G lenn D efense M arine Asi a ("G D M A") a w as corporati on 11 headquartered i n Singapore, w i th operati ng l ocati ons i n Japan, Thai l and, 12 M al aysi a, Korea, H ong Kong, Indonesi a, A ustral i a, Phi l i ppi nes, and the 13 U ni ted States. 14 vessel s, a servi ce i thad provi ded across the Seventh Fl eet ' s AO R under 15 vari ous contracts w i th the U .S. N avy f or over 25 years. 16 i nvol ves 17 procurem ent of item s and servi ces requi red by shi ps and subm arines w hen 18 those vessel s arri ve at port. 19 i ncl uded, am ong others, tugboats; fenders; port authori ty or custom s 20 fees; securi ty; food; f uel ; w ater; trash rem oval; col l ecti on, hol di ng, 21 and transfer of l i qui d w aste ("C H T"); and transportati on. the ’ coordi nati ng, 26. 22 G D M A's m ain busi ness i nvol ved the "husbanding" of m arine Leonard G lenn schedul i ng, and "Shi p husbanding" di rect and i ndi rect Exam ples of these item s and servi ces Franci s, charged elsew here, a ci t i zen of Franci s ut i l i zed 23 M al aysi a, w as the ow ner, Presi dent and C EO of G D M A. 24 the 25 Leonard@ glennm arinegroup. com 26 fol l ow i ng nicknam es: "Li on Ki ng," "LK," and "Boss." Franci s' s l ast know n 27 resi dence w as w i thi n the Southern D i st ri ct of C al i forni a. em ail addresses Leonard.G l enn. Francis@ gm ai l. com and i n 28 10 em ai ls w as referred and to by the Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.17 Page 11 of 78 •) ' i 27 . 1 2 the Vi ce Presi dent of G lobal O perati ons f or G D M A. 28 . 3 4 N ei l Peterson, charged elsew here, a ci t i zen of M alaysia, w as Al ex W isidagam a, charged elsew here, a ci t i zen of Singapore, w as the G eneral M anager f or G lobal G overnm ent C ontracts f or G D M A. 29 . 5 Beginni ng at l east as earl y as 2 004 and conti nui ng to i n or 6 about Septem ber 2013, Franci s, Peterson, W isidagam a, Aruffo, and others 7 parti ci pated i n a schem e to defraud the U .S. N avy by over-bi l l i ng on 8 G D M A's husbanding contracts. 9 losses of tens of m i l l i on' s of dol l ars. 30. 10 11 Franci s and W isidagam a, am ong others, w ere arrested on or about Septem ber 17, 2013, i n San D iego, C al i forni a. C O U N T 1 - C onspi racy (18 U .S.C . § 371) 12 31. 13 14 The schem e caused the U .S. N avy to sustai n Paragraphs 1 through 30 of t hi s Indi ctm ent are re-al l eged and i ncorporated by reference. 32 . 15 Begi nning the i n or about February 2 0 06 j uri sdi ct i on on the hi gh seas and 16 outsi de 17 through at l east February 2014, defendants D AVID N EW LAN D , aka "N ew l y," 18 EN R IC O D EG U ZM AN , aka "R i ck," D O N ALD H O R N BEC K, aka "Bubbl es," JAM ES D O LAN , 19 aka "JD ," BR U C E LO VELESS, D AVID LAU SM AN , aka "Too Tal l , " STEVEN SH ED D , 20 M AR IO H ER R ER A, aka of any part i cul ar di st ri ct , and conti nui ng "C hoke, C hoke aka O IC ," and R O BER T G O R SUC H 21 (col l ect i vel y "the defendants") di d know ingly and i nt ent i onal l y conspi re 22 and agree w i th each other and w i th others, i ncl udi ng Franci s, Aruffo, 23 AG , Brooks, Sanchez, and D usek, to com m it an offense agai nst the U ni ted 24 States, nam ely bri bery; that i s, (1) the defendants and others know ingl y 25 agreed 26 perform ance of of f i ci al acts and bei ng induced to do and om it to do acts 27 i n vi ol at i on of t hei r of f i ci al duti es, and ai di ng and abetti ng other 28 defendants to be so i nfl uenced and induced, (a) Franci s and others w oulc n that, i return f or the defendants 11 bei ng i nfl uenced i n the Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.18 Page 12 of 78 * 1 di rect l y and i ndi rect l y, corruptl y gi ve, of f er, and prom ise thi ngs of 2 val ue to the defendants, col l ect i vel y and i ndi vi dual l y, i ncl udi ng m eals, 3 entertai nm ent, travel and hotel expenses, gi f t s, cash, and the servi ces 4 of prosti tutes, and 5 w ould di rect l y and i ndi rect l y, corruptl y dem and, seek, recei ve, accept, 6 and agree to recei ve and accept these thi ngs of val ue personal l y and for 7 other persons; and 8 furtherance of t hi s conspi racy, i n vi ol at i on of Ti t l e 18, U ni ted States 9 C ode, Secti on 201(b) (2) (A) and (C ) , and Ti t l e 18, U ni ted States C ode, 10 (b) the defendants, col l ect i vel y and i ndi vi dual l y, (2) the defendants and others took overt acts i n Secti on 2. O BJEC TS O F TH E C O N SPIR AC Y 11 33 . 12 I t w as an obj ect of the conspi racy f or the defendants to use 13 t hei r of f i ci al posi ti ons and i ndi vi dual and com bined i nfl uence i n the 14 U .S. N avy to perform of f i ci al acts; to exert pressure on other of f i ci al s 15 to 16 of f i ci al s, know ing and i ntendi ng that such advocacy and advi ce w ould form 17 the basi s f or t hei r of f i ci al acts; al l to advance G D M A's i nterests, as 18 questi ons, m atters, and controversi es regardi ng G D M A's shi p husbanding 19 business w ere brought to the defendants' attenti on. 20 and others w ould of f er and gi ve a stream of benefi ts to or on behal f of 21 the 22 entertai nm ent, travel and hotel expenses, gi f t s, cash, and the servi ces 23 of prosti tutes. 24 perform of f i ci al acts; and defendants, 34 . i ncl udi ng, to am ong advocate other before thi ngs and advise other In return, Franci s of val ue, m eals, I t w as a further obj ect of the conspi racy f or the defendants 25 to do and om it to do acts i n vi ol at i on of t hei ri ndi vi dual and col l ecti ve 26 of f i ci al duti es, and i n return, Franci s and others offered and gave a 27 stream of benefi ts to or on behal f of the defendants, i ncl udi ng m eals, 28 12 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.19 Page 13 of 78 1 entertai nm ent, travel and hotel expenses, gi f t s, cash, and the servi ces 2 of prosti tutes. M AN N ER S AN D M EAN S O F TH E C O N SPIR AC Y 3 35. 4 In furtherance of t hi s conspi racy, and to accom plish i t s 5 obj ects, vari ous conspi rators at vari ous tim es used the fol l ow i ng m anners 6 and m eans, am ong others: 7 Franci s offered and gave a stream a. of benefi ts to and on 8 behal f of the defendants, i ncl udi ng m eals, entertai nm ent, travel and 9 hotel expenses, gi f t s, cash, and the servi ces of prosti tutes. b. 10 from D efendants sought, recei ved, and accepted these thi ngs of 11 val ue 12 expenses, gi f t s, cash, and the servi ces of prosti tutes. 13 Franci s, i ncl udi ng m eals, entertai nm ent, travel and hotel c. D efendants further sought from 14 G D M A af t er t hei r reti rem ent from 15 ul ti m atel y hi red by G D M A. d. 16 In return Franci s em ploym ent w i th the U .S. N avy, though no defendant w as f or t hi s stream of benefi ts from Franci s, 17 defendants agreed to perform 18 of f i ci al s to perform 19 other of f i ci al s, know ing and i ntendi ng that such advocacy and advice 20 w ould form 21 i nterests as questi ons, m atters, and controversi es regardi ng i t s shi p 22 husbanding business w ere brought to defendants' attenti on. 23 of f i ci al acts; to exert pressure on other of f i ci al acts; and to advocate before and advise the basi s f or t hei r of f i ci al acts; al l to advance G D M A's e. D efendants inform ed Franci s of planned U .S. N avy shi p 24 m ovem ents by provi di ng Franci s wi th cl assi f i ed U .S. N avy shi p schedules 25 and narrati ve sum m aries of those schedules. D efendants provi ded Franci s wi th 26 f . 27 U .S. N avy i nform ati on. 28 13 i nternal , propri etary Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.20 Page 14 of 78 1 9- D efendants took of f i ci al acts and exerted pressure on, 2 advocated before, and provided advice to other U .S. N avy of f i ci al s, 3 know ing and intending that such advocacy and advice w ould form the basis 4 for such other of f i ci al s' decisions to di rect ships to ports that w ere 5 m ore l ucrati ve for Francis and G D M A. h. 6 D efendants took of f i ci al acts and exerted pressure on, 7 f i ci al s, advocated before, and provided advice to other U .S. N avy of 8 know ing and intending that such advocacy and advice w ould form the basis 9 for such other of f i ci al s' decisions on w hich husbanding services and in 10 w hat am ounts to purchase from G D M A. i . 11 D efendants authored and signed and arranged for other U .S. 12 N avy offi cers to author and sign l etters and com m unications prai si ng 13 G D M A's perform ance of husbanding services. 14 D • D efendants took of f i ci al acts and exerted pressure on, 15 f i ci al s, advocated before, and provided advice to other U .S. N avy of 16 know ing and intending that such advocacy and advice w ould form the basis 17 for such other of f i ci al s' decisions to pay G D M A's claim s, overlook 18 i nfl ated invoi ces, quash bi d protests 19 n G D M A's favor suppress com petition i n contract aw ards, and resolve i 20 other questions, m atters, and controversies regarding G D M A's husbanding 21 business. 22 k. In return f i l ed by G D M A's com petitors, for thi s stream of benefi ts from Francis, 23 defendants w ere also induced to do and om it to do acts i n vi ol ati on of 24 thei r of f i ci al duties, i ncl udi ng, am ong m any others, recei vi ng and 25 pt of thi ngs of value from f ai l i ng to report others' recei 26 contractor, a prohi bi ted source; fai l i ng to guard against and suppress 27 and correct di ssol ute and im m oral practi ces; f ai l i ng to prom ote and 28 safeguard the m orale, physical w ell-being, and general w elfare of other 14 a defense Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.21 Page 15 of 78 ,i 1 U .S. N avy O ffi cers; engaging i n and f ai l i ng to report vi ol ati ons of the 2 U C M J; and f ai l i ng to report fraudulent and im proper conduct by a U .S. 3 N avy contractor. 1. 4 In return for thi s stream of benefi ts from Francis, 5 defendants w ere also induced to do and om it to do acts i n vi ol ati on of 6 thei r of f i ci al duties w i th respect to cl assi fi ed inform ation, i ncl udi ng, 7 engaging i n and f ai l i ng to report acts of om ission or com m ission that 8 i ndi cate poor judgm ent, unrel i abi l i ty, or untrustw orthiness; f ai l i ng to 9 report vul nerabi l i ty to coercion, influence, or pressure that m ay cause 10 conduct contrary to the nati onal i nterests, and engaging i n and fai l i ng 11 to report others' acts of sexual m isconduct or perversion i ndi cati ve of 12 m oral turpi tude, poor judgm ent or lack of regard for the law s of society. 13 m. In return for thi s stream of benefi ts from Francis, 14 defendants w ere also induced to do and om it to do acts i n vi ol ati on of 15 thei r of f i ci al duties w i th respect to forei gn i ntel l i gence threats, 16 i ncl udi ng engaging i n and f ai l i ng to report others' im proper handling 17 and disclosure of cl assi fi ed inform ation; engaging i n and f ai l i ng to 18 report attem pts to entice co-w orkers i nto cri mi nal si tuati ons that could 19 lead to blackm ail or extorti on; engaging 20 attem pts to enti ce DO D personnel i nto si tuati ons that could place them 21 i n a com prom ising posi ti on; and f ai l i ng to report attem pts to place DO D 22 personnel under obl i gati on through special treatm ent, favors, gi f t s, or 23 m oney. 24 n. i n and f ai l i ng to report D efendants i denti fi ed, vetted, and careful l y recrui ted 25 m em bers to the conspiracy for thei r perceived di screti on as w ell as thei r 26 abi l i t y to perform of f i ci al acts and exert pressure on, advocate before, 27 and 28 controversies regarding G D M A's ship husbanding business, know ing and provide advice to other of f i ci al s on 15 questions, m atters, and Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.22 Page 16 of 78 1 i ntendi ng that such advocacy and advice w ould form 2 other of f i ci al s' deci si ons. 3 o. D efendants referred to the basi s f or such them selves col l ect i vel y, at 4 vari ous tim es i n the conspi racy, by term s such as "the C ool Ki ds," "the 5 Band of Brothers," "the Brotherhood," "the W ol fpack," the "f am i l i a, " and 6 "the Li on Ki ng' s H arem ," am ong others. 7 P- D efendants sought to conceal t hei r corrupt rel ati onshi p 8 wi th Franci s by com m unicating w i th Franci s usi ng pri vate em ail accounts, 9 rather than t hei r U .S. N avy accounts. D efendants / further sought to conceal t hei r corrupt 10 q- 11 rel ati onshi p 12 forei gn-based 13 nam es, such as Thom as A. Anderson and Troy Sm ith. 14 r . wi th Franci s by em ail servi ce D efendants establ i shi ng em ail accounts provi der cooltoad.com , usi ng and t hei r conspi rators wi th the f i ct i t i ous further sought to 15 conceal and cover up t hei r corrupt rel ati onshi p by, at ti m es, creati ng 16 fraudul ent "recei pts" f or thi ngs of val ue provi ded to defendants by 17 Franci s, though, i n fact, defendants pai d Franci s nothi ng f or the thi ng 18 of val ue or pai d a m ere token am ount know n to be a sm all fracti on of the 19 w orth of the thi ng of val ue. 20 s. D efendants and t hei r conspi rators sought to im pede, 21 obstruct and i nfl uence any i nqui ry or i nvesti gati on i nto the nature and 22 extent of t hei r corrupt rel ati onshi p by destroyi ng evidence, i ncl udi ng 23 a com puter hard dri ve taken from the U .S.S. G eorge W ashington, del eti ng 24 em ail accounts, and m aking fal se statem ents to Speci al Agents from 25 N aval C ri mi nal Investi gati ve 26 Investi gati ve Servi ce ("D C IS"). 27 / / 28 / / Servi ce 16 ("N C IS") and D efense the C ri mi nal Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.23 Page 17 of 78 O VER T AC TS 1 2 3 36 . In furtherance of the conspi racy and to effect i t s obj ects, the fol l ow i ng overt acts, am ong others, w ere com m itted: Al . 4 O n or about February 16, 2006, the Seventh Fl eet Judge 5 Advocate G eneral ("JAG ") ci rcul ated an ethi cs m essage 6 of f i cers of the Seventh Fl eet advi si ng them as to the ethi cs regul ati ons 7 perti nent to 8 regul ati ons speci fi c to recei vi ng gi f t s from 9 ol d Aruffo to forw ard t hi s G D M A, w hich w as a prohi bi ted source. N EW LAN D t recei vi ng gi f t s i n forei gn ports, to al l seni or i ncl udi ng those a defense contractor, l i ke 10 s w ould know ethi cs m essage to Franci s, so that Franci 11 rel ati onshi p a secret. 12 A2 . to keep t hei r The next day, on or about February 17, 2 0 06, duri ng the 13 U .S.S. Blue R i dge' s port vi si t to H ong Kong, N EW LAN D , D EG U ZM AN , G O R SU C H , 14 and others dined and drank at Franci s' s expense at the Petrus R estaurant 15 i n H ong Kong at a cost to Franci s of $20,435 U SD . 16 N EW LAND 17 H otel pai d for, i n part, by Franci s. 18 corrupt rel ati onshi p, Franci s created fraudul ent recei pts f or the Petrus 19 di nner i n an am ount that defendants knew w as a sm al l f ract i on of the 20 actual cost of the di nner. 21 and D EG U ZM AN A3 . W hile i n H ong Kong, al so stayed i n accom m odations at the Shangri-La To conceal and cover up t hei r O n or about M arch 8, 2006, Franci s sent Aruffo and N EW LAN D 22 an em ail asking N EW LAN D to arrange f or the Seventh Fl eet' s C om m anding 23 Vice Adm i ral to 24 i ncl uded exem plar l et t ers from 25 responded on March 8, 2 006: " [C]an do[,] easy!" 26 C om m anding Vice Adm i ral signed the l et t er f or Franci s. 27 28 A4 . si gn a "bravo et t er prai si ng G D M A. zul u" l Franci s other Adm i ral s as attachm ents. N EW LAN D On March 9, 2006, the O n or about M arch 9, 2006, duri ng the U .S.S. Blue R i dge' s port vi si t to Singapore, N EW LAN D , D EG U ZM AN , G O R SU CH , and others dined 17 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.24 Page 18 of 78 P ri or to di nner, 1 wi th Franci s at the Jaan R estaurant i n Singapore. 2 defendants N EW LAN D , D EG U ZM AN , G O R SU C H , and others enjoyed cocktai l s on 3 the excl usi ve hel i pad on the roof. 4 enjoyed f oi gras t erri ne, duck l eg conf i t , ox-t ai l soup, and roasted 5 C hi l ean sea bass, pai red w i th expensive w ine and cham pagne, fol l ow ed by 6 di gest i f s and ci gars, nam ely, H ennessy Pri vate R eserve 7 $600 per bottl e) and Paradis Extra (approxi m atel y $2000 per bot t l e), and 8 C ohiba C i gars ($2000 per box). A5 . 9 At di nner, defendants and others (approxi m atel y O n or about1 A pri l 4, 2006, Franci s sent H O R N BEC K over shi ps, l i ke w ho 10 coul d exert i nfl uence at C TF70 the U .S.S. Abraham 11 Li ncol n, that w ere t ransi t i ng through the Seventh Fl eet AO R -- an em ail 12 aski ng H O R N BEC K to exert pressure on and provi de advice to other U .S. 13 N avy of f i ci al s to send the U .S.S. Abraham Li ncol n to port i n Laem C habang, 14 Thai l and. 15 I ] f there i s anythi ng I can do f or you, please San D iego and added: " [ 16 don' t hesi tate to' ask." 17 A6 . H O R N BEC K responded by aski ng Francis i f G D M A w as hi ri ng i n O n or about A pri l 6, 2006, Franci s sent N EW LAN D an em ail 18 cri t i ci zi ng the U .S. N avy' s deci si on to requi re several escort ships 19 assigned to the Abraham Li ncol n C arri er Stri ke G roup ("ALSG ") to dock at 20 anchor at Sattahi p, Thai l and, rather than di recti ng them to dock pi ersi de 21 i n Laem 22 has t ol d m e that the 23 pi ersi de i n [Laem C habang]. 24 escorts m ay be going to Sattahi p? 25 send 26 destroyers al l pi er si de i n 27 wi th your st af fi fw e can m ake the ri ght deci si on and have them i n [Laem 28 C habang]." C habang: "I am them to i n H Kong w i th the ALSG , the [ ai rcraf t carri er] [ l ogi st i cs request] w i l l go out by M onday, to go That i s great, how ever I w as t ol d that the W hy are w e m aking l i f e di f f i cul t to anchor i n Sattahi p w hen w e [Laem C habang] ? 18 can berth the crui ser and [C ]oul d you ki ndl y check Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.25 Page 19 of 78 A7 . 1 N EW LAN D repl i ed that he w as exerti ng pressure on and 2 provi di ng advice to other U .S. N avy of f i ci al s i n an ef f ort to grant 3 Franci s' s request: " [W ]e j ust heard that [the U .S.S. Abraham 4 wi l l be approved pi ersi de. 5 of the escorts out [at anchor]. A8 . 6 C ountry team Li ncol n] i s pushing to spread the rest W e' re not done yet ! " O n or about A pri l 10, 2006, N EW LAN D w rote Franci s to 7 confi rm that hi s ef f ort s w ere successful and that the U .S. N avy w as 8 al l ow i ng al lthe shi ps i n the ALSG to dock pi ersi de: " [J]ust got of f i ci al 9 w ord, everybody i s approved i nto Laem C habang. C ongrats." In fact, from 10 A pri l 19-26, 2006 the ALSG m ade a port vi si t to Laem C habang, Thai l and, 11 servi ced by G D M A, duri ng w hich the U .S.S. Abraham Li ncol n and al l three 12 escort shi ps docked pi ersi de at Laem 13 U .S. N avy of $1,910,575. A9. 14 C habang, at a t ot al cost to the O n A pri l 29, 2 0 06, Franci s w rote to N EW LAN D : "[ L] et ' s 15 st art send[i ng] m ore shi ps there [Laem C habang] as w e have al l the pi er 16 space to accom m odate 2 17 [Thai l and] . . . [J]ust keep sending them over to Laem C habang." 18 s al so asked N EW LAN D to "put i n a good w ord f or m e w i th em ai l , Franci 19 [AB, a FISC of f i ci al ] " i n Yokosuka, Japan. [ st ri ke groups] . . . D on' t send shi ps to Phuket In t hi s 20 A10. O n or about M ay 2, 2006, N EW LAN D em ail ed Franci s to advise 21 that an am phibious group w ould be docking i n Laem C habang, not Sattahi p, 22 Thai l and, and com m ented: " [G ]ood new s." Al l . O n or about M ay 3, 2 006, N EW LAND 23 sent Franci s an em ail 24 advi si ng that the R onald R eagan C arri er S tri ke G roup w ould be docking at 25 Laem C habang, Thai l and l at er that sum m er. 26 A12 . In an em ai l dated on or about Jul y 4, 2006, H O R N BEC K asked 27 Franci s to throw a "w etti ng dow n" a raucous cerem ony f or new ly prom oted 28 of f i cers f or H O R N BEC K, w ho had j ust been prom oted to C aptai n, and 19 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.26 Page 20 of 78 other people. w etti ng-dow n cel ebrati on i s approxi m atel y 2 custom ari l y pai d 3 i nvi t es hi s fri ends. I ti s usual f or the of f i cer to spend the di fference 4 betw een hi s pay at hi s ol d rank and hi s pay at the new rank on the bar 5 tab f or hi s guests.) In H O R N BEC K's case, Franci s pai d f or the enti re 6 d on Jul y 26, 2006 at the Long Bar, i n the R affl es H otel , party, hel 7 Si ngapore. f or and hosted by the new ly prom oted of f i cer, w ho A13. O n or about August 12, 2006, Franci s sent N EW LAN D an em ail 8 9 75 (The 1 aski ng, " [A]ny pl ans f or the [U .S.S. Blue R idge] to vi si t Indonesia i n 10 the near future and a pierside visit to Phuket?" 11 m N EW LAND responded on the sam e day: "I' 12 st i l l need to w ork som e i ssues. . 13 port cal li n Indonesi a. ." hopi ng for pi ersi de i n Phuket, W e are pl anni ng a I ' l ll et you know the parti cul ars l at er. " A14. In an em ai l on August 16, 14 [Blue R idge] 2006, Franci s suggested to 15 H O R N BEC K that the U .S. N avy re-route the U .S.S. Lassen from 16 Laem 17 "just pushed a request 18 C habang] w i th us [the U .S.S. K i t t y H aw k]." C habang, Thai l and. Phuket, to H O R N BEC K responded l at er the sam e day that he for [the U.S.S. Lassen] to also go to [Laem 19 A15. O n or about Septem ber 9, 2006, N EW LAN D , D EG U ZM AN , and 20 others dined w i th Franci s at Franci s' s expense at the N ew York G ri l li n 21 Tokyo, Japan, and stayed at Franci s' s expense at the Park H yatt H otel , 22 at t ot al cost to Franci s of approxi m atel y $30,000. 23 A16. O n or about O ctober 20, 2006, LAU SM AN not i f i ed Franci s 24 that he w ould be on vacati on at the G rand H yatt, H ong Kong. 25 day, Franci s i nstructed a G D M A em ployee to upgrade LAU SM AN 's room 26 G D M A's expense because LAU SM AN w as "standi ng by to assi st w i th" ensuring 27 that the U .S.S. K i t t y H aw k w ould dock pi ersi de i n H ong Kong. 28 20 The next at Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.27 Page 21 of 78 >« 1 A17. O n or about O ctober 27, 2006, Franci s forw arded LAU SM AN 2 addi ti onal i nform ati on about the U .S.S. K i t t y H aw k berthi ng pi ersi de i n 3 H ong Kong. 4 stay i n Kow loon 5 goi ng to be i n Kow loon." s al so asked. LAU SM AN In the em ai l , Franci (as opposed to H ong Kong) i f he w anted to "because al l the shi ps are 6 s forw arded N EW LAN D A18. O n or about O ctober 27, 2006, Franci 7 confi rm ati on that a pi ersi de berthi ng w as avai l abl e f or the U .S.S. K i t t y 8 H aw k i n H ong Kong, but that Franci s needed an of f i ci al request from 9 U .S. N avy to berth the shi p pi ersi de. the N EW LAND responded the sam e day: Ul ti m atel y the U .S.S. K i t t y H aw k di d not 10 "C opy, w i l l w ork from here." 11 berth pi ersi de i n H ong Kong, though LAUSM AN di d recei ve from G D M A a hotel 12 room upgrade at the G rand H yatt. 13 A19. O n or about D ecem ber 19, 2006, N EW LAN D forw arded Franci s 14 an i nternal U .S. N avy em ai li n w hich a suppl y of f i cer f or the U .S. N avy 15 i n H ong Kong w as advocati ng agai nst al l ow i ng the U .S.S. Blue R idge to 16 dock pierside in Hong Kong. 17 of f i cer] i s goi ng to be di f f i cul t agai n." 18 N EW LAN D expressl y asked w here to di rect hi s advocacy: "W ho do I need to 19 t al k to get pi ersi de i n H ong Kong?" NEWLAND observed: " [L]ooks like [the supply Later i n the em ail stri ng, A20. O n or about January 2, 2007, D EG U ZM AN 20 em ailed Franci s, 21 noti ng that he "j ust spoke to [N EW LAN D ] re [H ong Kong]. I thi nk that he 22 wi l l speak to the ri ght people once he gets a few m ore i nfo t i dbi t s. 23 passed al l the i nfo you t ol d m e re the term i nal ." I 24 A21. O n or about January 4, 2007, N EW LAN D w rote an em ai l to 25 Franci s advi si ng that he t ol d the N aval Attache i n H ong Kong that a Vice 26 Adm i ral preferred to have the U .S.S. Blue R idge dock pi ersi de i n H ong 27 Kong: 28 w ants to be pi ersi de i n H K som ew here...." "I've written [the Attache], 21 [and] . told him [the Vice Admiral] Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.28 Page 22 of 78 ■i 1 A22 . The next day, Franci s suggested to N EW LAND that the U .S. 2 N avy dock the U .S.S. R entz pi ersi de i n H ong Kong "as a t est case before 3 the Blue R idge arri ves. " 4 m e know i fO LA [N aval Attache H ong Kong] i nt erf eres. " 5 N EW LAND 6 "w ould l ove to stay at the 7 [U .S.S. Blue R idge] w inds up." sought a hotel room A23. O n 8 9 N EW LAN D concurred, and i nvi ted Franci s to "l et from In the sam e em ai l , Franci s, noti ng that he and hi s wi fe [Shangri-La H otel ] cl osest to w herever the or about January 8 and 10, 2007, Franci s em ailed N EW LAND to ask f or N EW LAN D 's hel p i n resol vi ng a bi d protest lodged by 10 a G DM A com peti tor regardi ng 11 Philippines. 12 up i n [the Phi l i ppi nes] . 13 know G D M A's husbanding contract i n the N EW LAN D responded: " I ' l lask [AB, a FISC of f i ci al ] w hat' s W e need you i n charge f or our vi si t . As you [D EG U ZM AN ] has som e am bi ti ous pl ans that depend on you." A24. O n or about January 10, 2007, Franci s i nstructed a G D M A 14 15 em ployee: "Ki ndl y m ake reservati ons f or 3 R oom s at the Isl and Shangri- 16 La for COS [Chief of Staff] and wife, David . . . Newland a Harbor [V]iew 17 Sui te," to w hich the em ployee responded: "H V 18 an arm and a neck! " A25. As 19 a resul t of the bi d [H arbor View ] sui tes cost protest lodged by G D M A's 20 com peti tor, i n or about January 2007, the U .S. N avy suspended G D M A's 21 contract to provi de husbanding servi ces to al l U .S. N avy vessel s i n the 22 Phi l i ppi nes and began the process 23 servi ces i n the Phi l i ppi nes on an ad hoc basi s. O n or about January 12, 24 2007, Franci s em ailed N EW LAN D , w i th a copy to Aruffo, to request that 25 N EW LAN D attem pt to advocate before and advise AB, a FISC of f i ci al , to 26 l i f t the contract suspension that resul ted from 27 by G D M A's to aw ard contracts com peti tor: "Addi ti onal pressure 28 22 f or husbanding the bi d protest lodged from 7th Fl eet to FISC Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.29 Page 23 of 78 r 1 Yokosuka' s [C om m anding 2 extrem el y hel pf ul ." O ffi cer] to vacate the suspension w ould be A26. O n or about January 22, 2007, Franci s em ailed N EW LAN D to 3 4 advise that "FISC 5 port vi si t s to [G D M A's com peti tor]." 6 is AFU 7 re doi ng al l w e can but i t ' s up to Phi l i ppi nes] and w e al l know i t . W e' 8 FISC w ho w e have no control over. 9 i nternal pol i t i cs. " [all i s consi deri ng to aw ard the upcom ing 3 fucked up] . [Phi l i ppi ne] N EW LAN D responded: "Leonard, Thi s We need GDMA in the RP [Republic of the W e' l l keep pushi ng but t hi s sti nks of Later that day, N EW LAN D em ail ed Franci s to say: 10 "Just got w ord that a deci si on has been m ade. G D M A w i l lhave the contract 11 i n 12 "Leonard, Aloha; j ust saw 13 w e' l l conti nue to do business w / you. 14 ck". paper. C ongratul ati ons and TER IM AH KASIH f or al lyour ef f ort s. R /R i 15 A27. O n or about February 2, 2007, the Seventh Fl eet JAG again 16 ci rcul ated an ethi cs m essage to al lseni or of f i cers of the Seventh Fl eet, 17 i ncl udi ng N EW LAN D , D EG U ZM AN , SH ED D , and others advi si ng them 18 ethi cs 19 i ncl udi ng those regul ati ons forbi ddi ng recei vi ng gi f t s from 20 contractor, l i ke G D M A. [the Phi l i ppi nes] ." regul ati ons In an em ail the the G AO perti nent to sam e rul i ng re day, D EG U ZM AN added: [the Phi l i ppi nes]; guess I w as al l spun up unt i l I saw the recei vi ng gi f t s i n as to the forei gn ports, a defense 21 A28. Inci dent to a port vi si t by the U .S.S. Blue R idge i n H ong 22 Kong on or about February 2-5, 2007, at N EW LAN D 's request, Franci s 23 arranged f or a seven-course di nner at G addi ' s i n The Peninsula H otel for 24 a sm al l group of Seventh Fl eet seni or of f i cers and t hei r w ives, for w hich 25 Franci s pai d the bi l land provi ded the w ine, though nei ther Franci s nor 26 any other G D M A em ployee attended. 27 28 A29. In H ong Kong, Franci s al so provi ded N EW LAND wi th l avi sh hotel room s and other thi ngs of val ue. 23 and others Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.30 Page 24 of 78 1 dent to a port vi si t by the U .S.S. Blue R idge and to A3 0 . Inci 2 cel ebrate G D M A's aw ard of the husbanding contract f or the Phi l i ppi nes, 3 on or about February 8-10, 2007, Franci s hosted and pai d f or a l avi sh ces of prosti tutes i n the M acArthur Sui te of the 4. party and the servi D uri ng the party, 5 M ani l a H otel , attended by N EW LAN D , am ong others. 6 hi st ori cal m em orabi lia rel ated to G eneral D ouglas M acArthur w ere used by 7 the parti ci pants i n sexual acts. 8 A31. D uri ng the port vi si t by the U .S.S. Blue R idge i n C ebu, 9 Phi l i ppi nes on or about February 11-14, 2007, N EW LAN D and others stayed Franci s al so pai d 10 at the Shangri-La H otel C ebu at Franci s' s expense. 11 f or prosti tutes f or several U .S. N avy O ffi cers, i ncl udi ng a prost i t ut e 12 del i vered by Aruffo to N EW LAN D 's hotel room . 13 N EW LAND sent Franci s an em ail i n w hich he acknow ledged: "Thank you for 14 your hospi t al i t y i n C ebu." O n February 14, 2 007, 15 A32. O n or about February 14, 2007, referenci ng the U .S.S. Blue 16 Ri dge' s upcom ing port vi si t to Singapore, N EW LAND sent an em ail to Aruffo 17 noti ng hi s proposed i t i nerary: "W e w ant to do Sunday brunch at R affl es 18 H otel around 1000 or 1100. 19 great. 20 shopping, shopping, shoppi ng." Som e ki nd of show or tour on Fri day w ould be Save M onday j ust f or the tw o of us [N EW LAN D and hi s wi f e] . Then 21 A33. D uri ng the U .S.S. Blue R i dge' s port vi si t to Singapore 22 from about February 22-27, 2007, Franci s pai d f or the hotel expenses for 23 N EW LAN D , D EG U ZM AN , G O R SU CH , Aruffo, and others at the Shangri -La H otel , 24 Singapore at a t ot al cost to Franci s of approxi m atel y $50,000. 25 A34. O n or about February 23, 2 007, duri ng the U .S.S. Blue 26 Ri dge' s port vi si t to Singapore, N EW LAN D , D EG U ZM AN , Aruffo, and others 27 di ned w i th Franci s at Franci s' s expense at the Bl u R estaurant w i thi n the 28 Shangri -La H otel , Singapore. 24 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.31 Page 25 of 78 1 A35. O n or about February 24, 2007 duri ng the U .S.S. Blue 2 Ri dge' s port vi si t to Singapore, N EW LAN D , D EG U ZM AN , H O R N BEC K, G O R SU C H , 3 Aruffo, and others attended a cocktai l recepti on hosted by Franci s on 4 the hel i pad of the Jaan R estaurant atop the Shangri -La H otel , fol l ow ed 5 by an extravagant di nner and l i ve entertai nm ent. 6 7 8 9 A36. O n or about February 26, 2007, Franci s hosted and pai d f or di nner at N adam an's i n Singapore f or N EW LAN D , Aruffo and others. A37. O n or about M arch 1, 2007, D EG U ZM AN forw arded to Franci s an i nternal U .S. G overnm ent em ai l i n w hich a State D epartm ent of f i ci al 10 com plained about an i nci dent i nvol vi ng G D M A personnel duri ng the U .S.S. 11 Blue R idge port vi si t to G eneral Santos C i ty, Phi l i ppi nes. 12 of the em ai l , D EG U ZM AN 13 control the G lenn M arine w ay to m i ni mi ze." In a separate em ail of M arch 1, 14 D EG U ZM AN advocated to m any U .S. of f i ci al s i n defense of G D M A, l ayi ng 15 blam e i nstead w i th l ocal Fi l i pi no personnel . 16 In the body advised Franci s: "R ecom m end som e qui ck dam age A38. Starti ng the sam e day, from on or about M arch 1-5, 2007, 17 i nci dent to a port vi si t by the U .S.S. Blue R idge to Kuala Lum pur, 18 M al aysi a, Franci s pai d f or l avi sh hotel room s at the Shangri -La Kuala 19 Lum pur f or N EW LAN D , D EG U ZM AN , G O R SUC H , Aruffo, and others. 20 A39. O n or about M arch 6, 2007, Franci s sent D EG U ZM AN an em ail 21 com pl ai ni ng about the M i l i t ary S eal i f t C om m and usi ng a G D M A com peti tor 22 as a husbanding agent. 23 Seventh Fl eet O ffi cer] i s goi ng to t ry to f i x i tl at er but f or now w e 24 have to pl ay ni ce w /[a com peti tor i n the P hi l i ppi nes]." 25 D EG U ZM AN responded: "[C ]opy. Li ke I sai d, [a s of A40. O n or about M arch 13, 2007, N EW LAN D advised Franci 26 the U .S.S. D ubuque's upcom ing port vi si t s to Indi a. 27 s Aruffo em ai led Franci s to pl an a di nner i n Tokyo. A ruffo advised Franci 28 that N EW LAN D had requested-fi ne w ine. 25 Later that sam e day, Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.32 Page 26 of 78 1 A41. O n or about M arch 24, 2007, N EW LAN D , D EG U ZM AN , H O R N BEC K, 2 and Aruffo attended a m ul ti -course di nner hosted by Franci s at the O ak 3 D oor i n Tokyo, Japan, duri ng w hich w as served, at Franci s' s expense, f oi 4 gras, Lobster Therm idor, and Sendai Tenderl oi n, and f or dessert, "Li berte 5 Sauvage," the w i nning cake of the 10th C oupe du M onde de l a Pati sseri e 6 2007, fol l ow ed by cognac and ci gars. 7 cham pagne or w i ne. 8 w earing custom -m ade G D M A neckti es that Franci s had gi ven them as gi f t s. 9 A42. O n or about M arch 26, 2007, D EG U ZM AN sent Franci s an em ail Each course w as pai red w i th fi ne D uring the event, the attendees posed f or photographs 10 thanki ng him 11 that D EG U ZM AN and hi s fam i l y w ould be travel i ng to the Phi l i ppi nes the 12 next m onth. 13 you i n [the P hi l i ppi nes] . 14 w ould l i ke you and [your w i fe] to j oi n m e. 15 dates f or M anil a and C ebu and I w i l l take care of the arrangem ents." 16 s enl i sted D EG U ZM AN 's hel p i n i ngrat i at i ng Later i n the em ai l , Franci 17 hi m sel f to a FISC of f i ci al w hose of f i ce w as tasked w i th adm i ni steri ng 18 G D M A's husbanding contracts: "O n another note I need to w arm up to [AB, 19 a FISC of f i ci al ] to m ove on and bui l d a sol i d w orking rel ati onshi p. . . 20 21 22 // f or hi s "hospi t al i t y, kindness and the gi f t s" and advi si ng Franci s responded: "I am l ooki ng forw ard to m eeting up w i th As discussed I w i l l be at the Shangri -La and Please provi de your arri val Franci s m used to D EG U ZM AN : "I hope [your w i fe] can be m y PR M anager and get us [Franci s and AB] together duri ng the next vi si t to Tokyo." A43. D EG U ZM AN responded vi a em ai l the sam e day: "W e have 23 i ni t i al l y booked room s [ i n the P hi l i ppi nes] ; how ever, [m y w i fe] real l y 24 l i kes the Shangri La and i fw e coul d get a corporate rate, w e w ould l i ke 25 to stay at the Shangri La i n M anil a and/or C ebu." ... "I thi nk [m y w i fe] 26 coul d arrange som ething w /[AB' s wi f e] . 27 thi ngs." (Em phasis i n the ori gi nal ). 28 26 She' s very good at ' arrangi ng' Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.33 Page 27 of 78 1 A44. In a further ef f ort to recrui t AB, the FISC of f i ci al ,i nto 2 the conspi racy, D EG U ZM AN , hi s wi fe, Aruffo, Franci s and others developed 3 and im plem ented a "shaping op[erati on] ." 4 wrote to Aruffo: "Ed san, Domo [thank you] for the tuna. 5 tuna to 6 Franci s, addi ng, "Begi nni ng our ' shapi ng' O P, dropped of f a chunk of tuna 7 that I bought in General Santos [City] for [DEGUZMAN's wife] to drop off 8 with [AB's wife]." [AB's w i fe] f or ' shapi ng. I O n M arch 30, 2007, D EG U ZM AN G ot the other Aruffo forw arded the m essage to n 9 A45. O n A pri l 5-7, 2007 D EG U ZM AN and hi s wi fe stayed at the 10 M akati Shangri -La, travel i ng from there to C ebu, Phi l i ppi nes, w here they 11 stayed from 12 al l ul ti m atel y at Franci s' s expense. A pri l 8-11, 2007 at the Shangri-La M actan R esort and Spa, 13 A4 6. O n or about A pri l 7, 2007, D EG U ZM AN em ailed Franci s to 14 advise that D EG U ZM AN pai d f or hi s room : "FYI, I pai d the M akati Shangri - 15 La (P$37,194) f or the room here. 16 M arine di d not get charged f or i t . " 17 com peti tor i n the Phi l i ppi nes] i s very i nteresti ng. 18 gets to som e 19 oversi ght by the S taff of the M akati Shangri-La f or chargi ng your credi t 20 card. 21 i nto your card account." 22 fact, 23 subsequentl y pai d f or by Franci s, 24 at the 25 f or paym ent there." 26 [the G D M A com peti tor i n the Phi l i ppi nes] w i th the 27 i nterested f ol ks. " Ij ust W anted to m ake sure that G lenn "The i nfo you sent m e re [a I ' l lm ake sure i t Franci s responded, " [T]here w as an They have assured m e that i tw i l l be reversed and credi ted back reversed, and the The charges to D EG U ZM AN 's credi t card w ere, i n hotel room at the M akati Shangri -La w as Franci s assured D EG U ZM AN , "The room [M ]actan Shangri-La i s confi rm ed and you w on' t have any issues Franci s conti nued: " [A]nythi ng you can do to bury w ould be appreci ated." 28 27 [ i ] nt el I provi ded Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.34 Page 28 of 78 A47. O n 1 or about A pri l 17, 2007, D EG U ZM AN confirm ed wi th 2 Franci s that he had passed the i nform ati on about the G D M A com peti tor i n 3 the Phi l i ppi nes on to N C IS, noti ng, "they know about i t as w el l as the 4 al l eged excessive charges agai nst the N avy." A48. O n or about A pri l 19, 2007, Franci s em ai led D EG U ZM AN : "O n 5 6 another note i tseem s SU BG R U 7 [Subm arine G roup 7] i s consi deri ng sending 7 one of t hei r assets to Subic [Bay, P hi l i ppi nes] . 8 som ew here but Subic pl ease. " 9 w /an al ternati ve, w e can get SU BG R U to buy of f on i t . " [B]ad Idea. Send i t D EG U ZM AN responded, "I thi nk i fw e com e up 10 A49. O n or about A pri l 22, 2007, D EG U ZM AN agai n em ailed Franci s 11 to assure him : "C opy al l your past em ai l re FISC and Subic. W e' l l fi nd 12 al ternati ves unt i l' Leonard' s W orl d' i s fi xed. " 13 A50. In or about A pri l 2007, at H O R N BEC K's request, Franci s 14 arranged f or one of H O R N BEC K's rel ati ves to recei ve a cul i nary i nternshi p 15 at the 16 Lum pur, M al aysi a. 17 2007, Franci s pai d the rel at i ve' s l i vi ng expenses at a t ot al cost of at 18 l east $13,000. C hal et Suisse R estaurant, w i thi n the Equatori al H otel , Kuala D uring the i nternshi p, from August 28-O ctober 23, 19 A51. O n or about M ay 9, 2007, D EG U ZM AN em ail ed Franci s, copyi ng 20 SH ED D by w ay of i ntroducti on, and noti ng that SH ED D "w ants to i ntroduce 21 other new team m em bers to you. I know they w i l ll earn a l ot from 22 SH ED D repl i ed al l , referenci ng that Aruffo had al so al ready i nform al l y 23 acquai nted Franci s wi th SH ED D . 24 A52. O n or about M ay 14, 2007, D EG U ZM AN 's wi fe you." spent the 25 m orning w i th AB' s (the FISC of f i ci al ' s) w i fe. 26 referenci ng the "shaping op": "H ow w as the bri ef @ FISC ?" 27 of [m y w i fe' s] shaping i s w orki ng." Al so on or about M ay 14, 2007, N EW LAND 28 28 D EG U ZM AN em ai led Franci s, ... "G uess al l Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.35 Page 29 of 78 1 em ailed Franci s: "W e' re al l di ei ng [si c] to know how your m eeting w i th 2 [AB] w ent yesterday." 3 s an A53. O n or about M ay 18, 2007, D EG U ZM AN forw arded Franci 4 i nternal U .S. N avy em ail chai n i n w hich D EG U ZM AN w as advocati ng before 5 and advi si ng another O ffi cer that he thought the U .S.S. P el el i u should 6 I ' l lhave to coordi nate dock pi ersi de duri ng a port vi si ti n M ani l a: " 7 w /PEI and PN as w el l as our H usbanding Agent. 8 the Presi denti al P i er." 9 duri ng i t s port vi si t to M ani l a. I thi nk i t can be done at In fact, the U .S.S. Pel el i u docked pi ersi de 10 A54. O n or about M ay 24, 2007, Franci s sent N EW LAN D an em ail 11 i nqui ri ng w hether the U .S. N avy w ould be sending any shi ps to Thai l and, 12 to w hich N EW LAN D responded: "I thi nk I got the boss to buy of f on l et t i ng 13 shi ps go to Phuket, [Thai l and]." A55. O n or about M ay 29, 2007, Franci s forw arded to D EG U ZM AN .14 15 several "bravo zul u" l et t ers prepared f or the si gnature of seni or U .S. 16 N avy of f i cers, i ncl udi ng LAU SM AN . 17 st art w orki ng 18 D EG U ZM AN and others a hotel room duri ng an upcom ing port vi si t to H ong 19 l on the l et t ers. ... C an I propose the Shangri -La or the Kong: "C opy al 20 Peni nsul a [H otel ] [i n H ong Kong]." on the D EG U ZM AN responded: "G ot them and w i l l ri ght si gnatures." Franci s repl i ed, offeri ng A56. O n or about June 5, 2007, D EG U ZM AN sent Franci s i nternal 21 22 U .S. N avy correspondence regardi ng the U .S.S. Pel el i u, forw ardi ng the 23 com m unication from hi s of f i ci al U .S. N avy em ail account to hi s personal 24 em ai l account and on to Franci s. A57. In reference to an upcom ing port vi si t by the U .S.S. Blue 25 26 R idge i n Sydney, A ustral i a, Franci s em ai led LAU SM AN 27 reservati ons at the Shangri-La H otel , organi zed by Aruffo, w ho Franci s 28 29 confi rm i ng hotel Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.36 Page 30 of 78 1 referred to as the conspiracy's "MWR [Morale, Welfare, and Recreation] 2 m anager, Yokosuka, D et[achm ent]!" A58. O n or about June 12, 2007, i n response to an em ail about 3 4 G D M A's capaci ty to support a port vi si t by the U .S.S. N i mi tz i n Indi a 5 and at w hat cost, Franci s w rote an em ail to vari ous U .S. N avy contracti ng 6 of f i cers, bl i nd copyi ng N EW LAN D and SH ED D . 7 A5 9. O n or about June 14, 2 007, Franci s sent an em ail to 8 Brooks, a U .S. N avy C aptai n servi ng as the U .S. N aval Attache i n M ani l a, 9 Phi l i ppi nes, advi si ng Brooks to di rect hi s com m ents i n support of G D M A 10 rel ated to the ongoing shi p husbanding di spute i n the Phi l i ppi nes to 11 fel l ow conspi rators N EW LAN D and H O R N BEC K. 12 support of G D M A's 13 personnel , as di rected, on June 16, 2007, w hich Franci s forw arded to 14 Aruffo and D EG U ZM AN l at er that sam e day. posi ti on, w hich AG O . O n or about June 15 had Brooks sent hi s com m ents i n been ghost-w ri tten by G DM A 14-18, 2007, duri ng the U .S.S. Blue 16 Ri dge' s port vi si t to Sydney, A ustral i a, N EW LAN D , D EG U ZM AN , LAU SM AN , 17 G O R SU C H , and others stayed at the Shangri-La H otel i n Sydney, Austral i a 18 at a t ot al cost to Franci s of over $10,000 U SD . A61. O n or about June 17, 2007, duri ng the U .S.S. Blue R i dge' s 19 20 port vi si t to Sydney, A ustral i a, Franci s hosted and pai d f or a farew el l 21 and 22 wi thi n the Shangri -La H otel . N EW LAN D , D EG U ZM AN , LAU SM AN , SH ED D , G O R SU CH , 23 Aruffo, and others dined on saute of scal l ops, f oi gras, and beef l oi n, 24 and 25 attendance at t hi s event. 26 approxi m atel y $11,898 AU D . 27 di sks contai ni ng cl assi f i ed port vi si t i nform ati on f or m any U .S. N avy 28 ships. nner event at the A l t i t ude R estaurant "changing of the guard" di signed an Al ti tude m enu dated June 17, 2007 ref l ect i ng t hei r The t ot al cost of thi s di nner at A l ti tude w as D uri ng di nner, G O R SUC H handed Franci s tw o 30 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.37 Page 31 of 78 A62. O n or about June 18, 2007, a G D M A em ployee sent Franci s 1 2 an em ai l , attachi ng the cl assi f i ed U .S. N avy shi p 3 G O R SU C H had provi ded the previ ous evening. schedules, w hich A63. In or about June 2007, to further conceal hi s corrupt 4 5 rel ati onshi p wi th Franci s, G O R SU C H regi stered an account w i th the forei gn 6 em ai l servi ce provi der "cool toad.com ," w hich he used to com m unicate w i th 7 Franci s usi ng a f i ct i t i ous nam e. 8 em ai l account, l yi ngi nthedark@ cool toad.com , G O R SU C H 9 hi s t hi rd party em ail w ebsite Franci s: "Bob here. Just got turned on to t 10 that the m i l i t ary fol ks can' t bl ock or track; and best of al li t can be 11 accessed from the shi p. For your i nfo - del i veri es [of gi f t s] m ade w i th 12 the excepti on of 1 box..." R eferenci ng cl assi f i ed U .S. N avy shi p schedules 13 that G O R SUC H had provi ded, Franci s repl i ed: "C opy al l and thanks f or the 14 updates." O n or about June 22, 2007, usi ng the sent an em ail to A64. O n or about Jul y 3, 2007, N EW LAN D sent Franci s an em ail 15 16 stati ng, " [JC ] j ust l ef tf or 2 w eeks leave before he m eets the shi p i n 17 Yoko [suka] and 18 yesterday. I leave the m orning of 9 Jul y. 19 him as your m ain PO C unt i l w e fi gure out how 20 C hi ef of S taff] w i l l respond. 21 a, N EW LAN D vi si t by the U .S.S. N i mi tz i n C hennai, Indi 22 Franci s: "Let m e know i fyou get any pushback on [port vi si t ] cost i ssues, 23 [and] I ' l ldo w hat I can." turns over w i th Jim D O LAN . [D EG U ZM AN ] j ust l ef t D on H O R N BEC K i s back, so use [the incom ing Seventh Fl eet R elated to the recentl y com pleted port further i nvi ted A65. O n or about Jul y 4, 2007, Franci s confirm ed N EW LAN D 's 24 25 f l i ght i nform ati on to Sydney and inform ed him that FISC w anted a di scount 26 f or 27 i ncredul ousl y, and i n a subsequent em ail attached the bi ography of hi s 28 successor as C hi ef of S taff f or the Seventh Fl eet. the servi ces G DM A provi ded 31 i n C hennai. N EW LAN D repl i ed Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.38 Page 32 of 78 ! A66. O n or about Jul y 6, 2007, Franci s veri f i ed that N EW LAN D 1 2 had recei ved a hotel confi rm ati on f or hi s upcom ing stay at the Shangri - 3 La H otel i n Sydney, A ustral i a, 4 of f i ci al s w ere com pl ai ni ng about the servi ce that G D M A provi ded i n N ew 5 C aledonia and Vanuatu. 6 kindness. I heard about Vanuatu from 7 them m ake a bi g deal out of i t . " Franci s advised N EW LAN D that U .S. N avy N EW LAN D responded: "Thank you very m uch f or your N 7. I understand. W i l l not l et 8 A67. In reference to di f f i cul t i es encountered duri ng a port 9 vi si tby the U .S.S. Stethem i n N oum ea, N ew C al edonia, SH ED D sent an em ail 10 setti ng f ort h the problem s and copyi ng m any parti es, w hich Franci s 11 percei ved as casti ng G D M A i n an unfavorabl e l i ght . 12 ng out f i res not em ail ed N EW LAN D to cover f or G D M A: "W e should be putti 13 copying alcon 14 " I ' l ltake SH ED D to the w ood shed f or t hat . " Franci s, i n turn, [ al l concerned] to m ake us l ook bad." N EW LAN D responded: 15 A68. O n or about Jul y 7, 2007, D EG U ZM AN em ailed Franci s: "I 16 know FISC ow es you f or the l i bert y f erry and everythi ng el se especi al l y 17 d [N EW LAN D ] i tw as you w ho funded the party i n M anil a as in India. I tol 18 w el l ... unfortunatel y, I don' t thi nk I ' l lbe abl e to i nfl uence people l i ke 19 I di d there at 7th Fl eet." 20 s discussed A6 9. O n or about Jul y 7, 2007, Aruffo and Franci 21 the turnover i n the Seventh Fl eet st af f and the im m inent departure of 22 several conspi rators. 23 he' l l spread the G lenn G ospel, hopeful l y w e' l l be up and runni ng again 24 i n no tim e f l at w i th the new crew . 25 thi nk w e should get the ol d CO S 26 new C O S. Let m e know w hat you' re thi nki ng, I ' l lt al k to C O S [N EW LAN D ]/Bob 27 [G O R SU C H ]/ [Steve] SH ED D ." O n or about Jul y 8-9, 2007, Franci s and Aruffo 28 conti nued to di scuss and vet the new m em bers of the Seventh Fl eet st af f Aruffo w rote: "I tal ked to [N EW LAN D ] yesterday; I f you m ake i tto Tokyo next m onth, [N EW LAN D ] to soci al i ze di nner w i th the 32 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.39 Page 33 of 78 1 and how to ef f ect i vel y use the rem aining m em bers of the conspi racy to 2 thw art G D M A's adversari es. A70. O n 3 or about Jul y 8, 2007, Franci s sent an em ai l to 4 G O R SU C H 's cool toad.com account aski ng f or bi ographi cal i nform ati on on 5 the new 6 ncl udi ng D EG U ZM AN 's certai n new m em bers of the Seventh Fl eet st af f , i 7 replacem ent 8 A ruf f o' s replacem ent - "N 34 i s a good guy - al ready tal ked w i th him 9 he w ants to m eet you too." Seventh Fl eet C hi ef of S taff. G O R SUC H responded, eval uati ng "bel i eve he got a good turnover from [D EG U ZM AN ]" and and As f or the new C O S, G O R SUC H expl ai ned he "i s 10 a great guy, easy going, but w i l l need to be eased i nto fi ne di ni ng, 11 etc. accordi ng to [N EW LAN D ]." A71. O n or about Jul y 9, 2007, Franci s pai d f or the hotel 12 13 expenses and ai rport transfers of N EW LAN D at the Shangri-La H otel , 14 Sydney, A ustral i a duri ng N EW LAN D 's t ransi t i on out of Seventh Fl eet and 15 to hi s next assignm ent w i th the U .S. N avy. A72. O n or about Jul y 22, 2007, Franci s w rote to H O R N BEC K, 16 17 urgi ng him to exert pressure and otherw i se advocate that the U .S. N avy 18 not cancel the U .S.S. K i t t y H aw k's planned vi si t to Port Klang, M al aysi a: 19 "I respectful l y sol i ci t and w ould si ncerel y appreci ate any support you 20 can m uster to m ake the [ Ki t t y H aw k] vi si ta real i t y. " H O R N BEC K responded, 21 "A l ll ooks l i ke i t ' s com ing together f or the 22 about Jul y 25, 2007, H O R N BEC K provi ded Franci s hi s pri vate em ai l .address 23 hosted by m sn.com . 24 Ki t t y H aw k conducted a port vi si t to Port Kl ang, M alaysia, at a t ot al 25 cost of $1,859,977. [ Ki t t y H aw k] vi si t . " O n or In fact, from August 28-Septem ber 1, 2007, the U .S.S. 26 A73. O n or about August 20, 2007, G O R SU C H sent Franci s an em ail 27 addressed to "Boss" agai n vet t i ng m em bers of the Seventh Fl eet st af f for 28 m em bership i n the conspi racy: "I am getti ng w i th [S]teve SH ED D l at er'and 33 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.40 Page 34 of 78 1 wi l lw ork on personal i ty profi l es... W e w i l l com e up w i th a pl an and gi ve 2 you an update shortl y. 3 H [O R N BEC K] . " I have al ready spoken to Too Tal l [LAU SM AN ] and 4 ed Franci s to A74. O n or about August 26, 2007, G O R SUC H em ail 5 provi de G O R SU C H 's and SH ED D 's assessm ent of w hether a part i cul ar U .S. 6 N avy of f i cer w as 7 som eone you can reach out to and have a di al ogue w i th, but [S]teve SH ED D 8 i sn' t sure i f he i s som eone w ho coul d keep hi s m outh shut about fi ne 9 di ni ng. . . . st i l lw orki ng on i t . " corrupti bl e: "[The U .S. N avy of f i cer] i s certai nl y ng hi s A75. O n or about Septem ber 5 and 7, 2007, G O R SU C H , usi 10 s em ai ls t ryi ng to establ i sh di rect account, sent Franci 11 cooltoad.com 12 com m unication betw een Franci s and H O R N BEC K and SH ED D i n order that they 13 m ight provi de updated, cl assi f i ed shi p schedules to Franci s on a m ore 14 ti m el y basi s than G O R SUC H often coul d. G O R SU C H prom ised: "Steve SH EDD 15 wi l l hel p you out w i th w hatever you need." 16 A76. O n or about Septem ber 16-17, 2007, Franci s travel ed to 17 Yokosuka, Japan,1 w here he m et and di ned w i th H O R N BEC K, D O LAN , LAU SM AN , 18 LO VELESS, and others w i th the i ntent of vetti ng and i ncorporati ng certai n 19 addi ti onal m em bers of the Seventh Fl eet st af f , i ncl udi ng the new C O S and 20 D EG U ZM AN 's replacem ent i nto the conspi racy. A77. 21 On or about O ctober 25, 2007, G O R SU CH , usi ng hi s 22 cooltoad.com account, sent Franci s an em ai l recounti ng how , the previ ous 23 day i n Yokosuka, Japan, he had provi ded Franci s wi th tw o di sks contai ni ng 24 the cl assi f i ed schedules of shi ps assigned to the U .S. N avy' s Seventh 25 Fl eet: "By the w ay, the tw o di sks. . . . the yel l ow one i s the l at est 26 wi th current C 7F 27 i nvesti gate on the dates f or the shi ps you requested and get back to you 28 short l y. " [Seventh Fl eet] sked as bri efed to the boss. 34 I wi l l Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.41 Page 35 of 78 A78. O n or about N ovem ber 18, 2007, SH ED D , usi ng a cooltoad.com 1 2 account he had recentl y establ i shed, sent Franci s an em ail descri bi ng i n 3 narrati ve form the cl assi f i ed planned m ovem ents of the U .S.S. Taraw a and 4 U .S.S. Essex f or D ecem ber 2007. 5 usi ng hi s cooltoad.com 6 narrati ve form the cl assi f i ed planned m ovem ents of the U .S.S. Port R oyal 7 f or D ecem ber 2007. s an em ail descri bi ng account, sent Franci i n A79. O n or about N ovem ber 29, 2007, Franci s w rote an em ail to 8 9 O n or about N ovem ber 21, 2007, SH ED D , D O LAN and H O R N BEC K not i f yi ng them that G D M A w as seeki ng from the U .S. 10 N avy a "cancel l ati on settl em ent" paym ent rel at i ng to expenses that G D M A 11 purportedl y sustai ned af t er the U .S.S. K i t t y H aw k canceled a port vi si t 12 to H ong Kong due to di pl om ati c issues w i th C hina. 13 asked D O LAN to exert i nfl uence over FISC to pay the settl em ent: "FISC i s 14 deferri ng resol uti on, and G D M A 15 subcontractors 16 assi stance f or your si de w ould be appreci ated." O n or about N ovem ber 30, 17 2007, 18 Front ] : 19 pri nci pal s a note to ' do the ri ght contractual and l egal ' thi ngs w i thout 20 de1ay." 21 that are DOLAN responded: I understand In the em ai l , Franci s needs to set t l e wi th our [H ong Kong] becom ing i ncreasi ngl y "I'll help as required... contractual m atters here, i m pati ent. BLUF and . . Any [Bottom Line Up wi l l send FISC A80. O n or about D ecem ber 1, 2007, Franci s dined and parti ed 22 wi th LO VELESS, SH ED D , and others i n Singapore, at a cost to Franci s of 23 approxi m atel y $5,000. 24 wi fe w i th U lysse N ardi n w atches, w orth $25,000. On t hi s occasi on, Franci s provi ded SH ED D and hi s 25 A81. O n or about D ecem ber 16, 2007, Franci s sent an em ail to 26 D O LAN and H O R N BEC K seeking t hei r assi stance i n a bi l l i ng di spute betw een 27 G D M A and the U .S.S. C hicago and the U .S.S. C onnecti cut as w el l as i n 28 resol vi ng the U .S.S. K i t t y H aw k cancel l ati on settl em ent. D O LAN forw arded 35 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.42 Page 36 of 78 1 Franci s' s em ail to several of f i cers responsi bl e f or m aking 2 paym ents, i ncl udi ng the N 3 of Subm arine G roup Seven 3 adm onishm ent: "I f these 4 D O LAN forw arded hi s em ail to Franci s, w i th the com m ent: "Late paym ent 5 l i ke t hi s i s unsat [ i sf act ory] . 6 a shout." 7 i nt ernal , U .S. N avy com m unications about paym ent from 8 conti nued w i th respect to Franci s' s ongoing request that D O LAN 9 pressure and advise other U .S. N avy personnel to cl ose or reduce st af f i ng (C SG -7), w i th the are accurate, l et ' s get them pai d soonest." I f not resol ved expedi ti ousl y, gi ve m e O n or about D ecem ber 18, 2007, D O LAN forw arded to Franci s the C SG -7. 10 at the Ship Support O ffi ce 11 adversary: "Still working the [Hong Kong] piece with FISC." 12 13 14 A82 . On or D O LAN exert ("SSO ") i n H ong Kong, a t radi t i onal G D M A about January 1, 2008, SH ED D , usi ng hi s cooltoad.com account, sent Franci s a docum ent m arked cl assi f i ed. A83. On or about January 11, 2008, SH ED D , usi ng hi s s the narrati ve schedules of vari ous account, sent Franci 15 cooltoad.com 16 U .S. N avy shi ps f or several m onths hence. 17 those A84. O n or about January 19-21, 2008, SH ED D , and others stayed 18 f or tw o ni ghts at the R i tz C arl ton i n Tokyo. 19 hosted and pai d f or a "boys ni ght out" di nner at the Azure Forty-Fi ve 20 R estaurant, w hich SH ED D , G O R SU C H , and others attended. 21 D uring the stay, Francis A85. O n or about January 24, 2008, SH EDD advised Franci s that, 22 at Franci s' s behest, SH ED D had del i vered ci gars and fi ne w ine to LAU SM AN 23 and H 0R N BEC K, and f i ne w ine to LO VELESS and D O LAN . 24 A86. In the sam e em ai l , SH EDD corresponded w i th Franci s about 25 hotel accom m odations and di nner duri ng the U .S.S. Blue R i dge' s upcom ing 26 port vi si t to H ong Kong. 27 to bri ng AG 28 good al ternate f or m e, even i f he i s A ustral i an." As to AG , a new attendee, SH ED D w rote: "I w ant i nto the l oop i f that i s al ri ght w i th you. 36 He w i l l be a SH ED D added, "Al so, Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.43 Page 37 of 78 V 1 w e' l l need recei pts f or t hi s one," and i n cl osi ng, SH ED D pledged, "I have 2 a num ber of port vi si t updates f or you. 3 to qui et dow n t hi s eveni ng." 4 room s, no w orri es on the hotel vouchers from 5 i t covered." I have to w ai tf or the of f i ce Franci s repl i ed: "M ore to fol l ow on the the t ravel agent[.] [G ]ot A87. O n or about January 25, 2008 at 12:25 a.m ., SH ED D , using 6 7 hi s 8 schedul es. 9 schedule of the U .S.S. Fi tzgeral d to accom m odate Franci s. 10 cooltoad.com account, D uri ng em ai led Franci s t hi s exchange, SH ED D m ul ti pl e confirm ed cl assi f i ed a change to ship the A88. Later on or about January 25, 2008, SH ED D , usi ng hi s s about Franci s' s provi di ng hotel account, em ailed Franci 11 cool toad.com 12 room s at the JW M arri ott i n H ong Kong duri ng the upcom ing port vi si t by 13 the U .S.S. Blue R idge: "D O LAN 14 W anchai i s a perfect hotel - not too opul ent! [Y]ou are a true m aster!" 15 Franci s responded, confi rm i ng room s f or D O LAN , H O R N BEC K, SH ED D , AG , and 16 LO VELESS, and com m ented: "W i l l w orry about the paym ent l at er. . . I am 17 at the Shangri -La to ensure that w e are al l not together at the sam e 18 s di nner on the low si de, the H K SSO [Ship Support O ffi ce] hotel . Keep thi 19 are bi g ti me ' M F' ". 20 need f or m ax di scret i on." 21 i s now i n f or a room . ... JW M arri ott i n SH ED D responded: "C opy al l . ... Ful l y understand the A89. O n or about January 28-February 1, 2008, D O LAN , H O R N BEC K, 22 LO VELESS, SH ED D , and AG stayed i n H arbor View C lub Fl oor room s at the JW 23 M arri ot t i n H ong Kong at a rate of about $626 per room per ni ght pai d 24 f or by Franci s. 25 cover up t hei r corrupt rel ati onshi p, Franci s di st ri but ed to the U .S. N avy 26 O ffi cer-attendees f i ct i t i ous recei pts ref l ect i ng a cost of $126 27 i ncl usi ve) per room per ni ght. As requested by SH ED D , how ever, i n order to conceal and 28 37 (tax Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.44 Page 38 of 78 \ 1 ng the U .S.S. Blue A90. O n or about January 29, 2 008, duri 2 Ri dge' s port vi si t to H ong Kong, Franci s hosted and pai d for a di nner 3 event i n the Alsace R oom of the Petrus R estaurant, w hich D O LAN , H O R N BEC K, 4 LO VELESS, LAU SM AN , SH ED D , and AG attended. 5 ei ght course m eal, featuri ng bl ack t ruf f l e soup, rock l obster salad, 6 oscetra cavi ar, pan-seared duck l i ver w i th pear and sunchoke, D over sol e, 7 gri l l ed W agyu beef tenderl oi n R ossi ni , a sel ecti on of fi ne cheeses, and 8 baked Alaska f or dessert. 9 w ine. The t ot al cost of the event 10 Di nner that evening w as an Each course w as pai red w i th C ham pagne or fi ne venue, entertai nm ent, di nner, and w ine - w as approxi m atel y $18,371. 11 A91. O n or about January 29, 2008, H O R N BEC K em ailed Franci s to 12 thank him f or a ni ght of entertai nm ent and to sol i ci ta j ob: "Just w anted 13 to send a qui ck note 14 together l ast ni ght . 15 m usic, and w ine w ere w onderful... As w e bri ef l y discussed, i tl ooks l i ke 16 I ' l lbe l eavi ng the N avy around June 2009. 17 i n t hi s j ob unt i l reti rem ent, or i fI ' l lget orders back to the States 18 l at er t hi s year. 19 of f i ce i n San D iego i n the near-future, I w ould very m uch be i nterested 20 i n bei ng a part of t hat . " A92. 21 to say thank you f or i ncl udi ng m e i n the getR eal l y enjoyed t al ki ng to you and the food, N ot sure w hether I w i l l stay In any event, i f you are st i l lconsi deri ng opening an On or about February 12, 2008, SH ED D , usi ng hi s 22 cooltoad.com account, em ailed Franci s the cl assi f i ed planned m ovem ents 23 f or vari ous U .S. N avy shi ps and subm arines f or up to si x m onths hence, 24 i ncl udi ng the proposed port vi si t schedule of al l ai rcraf t carri ers 25 t ransi t i ng through the Seventh Fl eet AO R . A93. O n or about February 12, 2008, Franci s requested that 26 27 LAU SM AN author 28 accom pl ishm ents: and send a bravo "M ay I hum bly request an 38 zul u l et t er touti ng of f i ci al BZ G D M A's m essage that Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.45 Page 39 of 78 V 1 includes a cc to the OLA [Hong Kong Naval Attache] , 2 [Commander of Logistics Western Pacific]/FISC Yoko[suka] 3 and other key pl ayers to ensure everyone know s of your sati sfacti on w i th 4 ed, sending the requested bz l et t er m y com pany's support." LAU SM AN com pli 5 on or about February 19, 2008. A94. 6 On or about February 12, 2008, 7th [Fleet] , CLWF and Singapore SH ED D , usi ng hi s s an em ail descri bi ng f i ve m onths of account, sent Franci 7 cooltoad.com 8 schedules for vari ous U .S. N avy shi ps and subm arines. A95. O n or about February 17, 2008, Franci s asked SH ED D 9 to 10 provi de him wi th propri etary i nvoi ce i nform ati on f or G D M A com peti tors 11 "from 12 Tahi t i , C om oros, M adagascar, Seychel l es, M auri ti us, G uam 13 07 and 08. I need data i nf o to pl an f or U pcom ing sol i ci t at i ons. " 14 I ' l lw ork on the cost reports once I return from H aw aii ... W hat repl i ed: " 15 are your thoughts about a get-together?" Vietnam , C am bodia, H oniara and A96. 16 On or about [p]ort vi si t s, i n Saipan, Palau, February 29, 2008, f or years 06, SH ED D , usi ng SH EDD hi s s an em ail to w hich w as attached an account, sent Franci 17 cool toad.com 18 i nternal U .S. N avy docum ent m arked "draf t pre-deci si onal " that descri bed 19 the 20 throughout the Seventh Fl eet A0R f or the next year. cl assi f i ed planned m ovem ents of U .S. N avy ai rcraf t carri ers 21 A97. O n or about M arch 6, 2008, usi ng hi s cooltoad.com account, 22 SH ED D em ailed Franci s, attachi ng cl assi f i ed shi p schedules f or the U .S.S. 23 Blue R idge and the U .S.S. Abraham Li ncol n. A98. O n or about M arch 26, 2008, SH ED D , usi ng hi s cooltoad.com 24 25 account, em ail ed Franci s, attachi ng 26 i dent i f i ed the cl assi f i ed planned m ovem ents of the U .S.S. Pel el i u and 27 the U .S.S. P atri ot f or the upcom ing three m onths. 28 39 U .S. N avy t ransi t m aps that Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.46 Page 40 of 78 A99. O n or about A pri l 16, 2008, Franci s em ai led D O LAN 1 and 2 H O R N BEC K requesti ng that D O LAN take of f i ci al acts and exert pressure on 3 other U .S. N avy of f i ci al s to 4 subm arines w ere not paying G D M A's bi l l s on ti m e. 5 delayed due to suspected fraudul ent charges by G D M A. 6 Franci s' s em ail to tw o U .S. N avy subm arine of f i cers, w i th the adm oni ti on: 7 "The below 8 paym ent scenari o l ai d out i n an e-m ai l I sent you i n D ecem ber. 9 C SG -7 bi l l paying responsiveness had been fi xed unt i l I recei ved the rem edy the problem i s not f l at t eri ng, and that Seventh Fl eet These i nvoi ces w ere D O LAN forw arded i s si mi l ar to the Please read below caref ul l y, and f i x the problem . non-responsi ve I thought 10 bel ow . 11 i ssue, resol ve i texpedi ti ousl y." U pon readi ng D O LAN 's response, Franci s 12 tri um phantl y em ai led other em ployees of G D M A: "That w as a qui ck bl ast . 13 H a ha." A100. O n or about A pri l 16, 2008, LAU SM AN 14 em ai led Franci s, 15 aski ng that that Francis book a hotel room 16 M ay 1-4, 2008: "I w i l l be hom e by 2130 Tokyo ti m e. 17 i n [P]attaya 1-4 [M ]ay." 18 scuss som e pl ans for Pattaya at the Sheraton," and added, "I w ant to di 19 the port s." 20 he had booked room s at the Pattaya Sheraton i n Thai l and and al so at the 21 Shangri-La i n Singapore. ... Just need a hotel Franci s agreed, "I w i l lm ake arrangem ents ... at O n A pri l 19, 2008, Franci s em ai led LAU SM AN to confi rm 23 an 24 " [F]ast track and VIP servi ce. 25 t ri p and tour f or shopping i n Bangkok. 26 Cheap price [.] 28 i n Thai l and • from that A101. O n or about A pri l 19, 2008, Franci s sent a G D M A em ployee 22 27 f or him I f there' s an email referencing [LAUSMAN's wife's] upcoming trip to Thailand: Best room at Sheraton. Arrange [m ]arket She w ants to m ake si l k pants. [GDMA] pay ha ha." A102. From A pri l 30-M ay 4, 2008, LAU SM AN and hi s wi fe stayed at the Pattaya Sheraton, w i th the costs borne by Franci s. 40 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.47 Page 41 of 78 Jt A103. O n or about A pri l 30, 2008, SH ED D sent Franci s an em ail 1 2 aski ng Franci s to provi de hotel room s 3 H O R N BEC K, and LO VELESS duri ng the U .S.S. Blue R i dge' s upcom ing port vi si t 4 to Laem 5 LO VELESS, and SH ED D 6 C onrad H otel i n Bangkok, Thai l and, duri ng w hich they w ere entertai ned by 7 num erous prosti tutes pai d f or by Franci s. C habang, Thai l and. 10 O n or about M ay 2, 2008, D O LAN , H O R N BEC K, stayed at Franci s' s expense f or one ni ght at the A104. O n M ay 4, 2008, SH EDD em ailed Franci s to not i f y him that 8 9 i n Thai l and for SH ED D , D O LAN , D O LAN , H O R N BEC K, and LO VELESS t hei r ' one ni ght i n Bangkok. t "w ere al l sm il es on the dri ve hom e over u A105. O n or about M ay 5, 2008, Franci s sent an em ai l to D O LAN 11 12 and H O R N BEC K aski ng agai n 13 betw een G D M A and FISC Singapore. A106. 14 f or.D O LAN 'S Inci dent to the support i n a bi l l i ng di spute U .S.S. Blue Ri dge' s port vi si t to 15 Singapore from 16 stayed at Franci s' s expense at the Shangri -La H otel i n Singapore. 17 about M ay 6, 2008, Franci s hosted di nner at M ezza9, af t er w hich, Franci s 18 arranged 19 LO VELESS. 20 M ay 6-9, 2008, D O LAN , H O R N BEC K, LAU SM AN , and LO VELESS f or several prosti t utes to entertai n D O LAN , O n or H O R N BEC K, and A107. O n or about M ay 7, 2008, H O R N BEC K em ailed Franci s to say Al so real l y enjoyed M y 21 "thank you f or a fantasti c di nner l ast ni ght. 22 s new M ongolian Fri end," a reference to a prost i t ut e, to w hich Franci 23 responded: "H ot M ongolian [B]arbeque R i bs!" 24 A108. Inci dent to t hi s port vi si t , on or about M ay 8, 2008, 25 Franci s al so hosted di nner at N adam an's R estaurant, w hich w as attended 26 by the new 27 Franci s of over approxi m atel y $8,000. 28 wrote to Francis, Seventh Fl eet C O S "The 3 and several others, at a t ot al cost to O n or about M ay 10, 2008, SH ED D [E]nsigns [DOLAN, HORNBECK, and LOVELESS] were 41 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.48 Page 42 of 78 H ornbeck sai d he coul dn' t 1 al l gri ns t hi s m orning as w e got underw ay! 2 have survi ved another ni ght i n Singapore w i th you!" A109. Inci dent to t hi s port vi si t , from M ay 6-14, 2008, Franci s 3 4 pai d f or tw o hotel room s at the Shangri-La H otel , Singapore and al l 5 i nci dental charges f or SH ED D and hi s fam i l y, as w el l as a room f or LAU SM AN 6 and hi s wi fe from M ay 4-10, 2008. 7 A110. O n or about M ay 9, 2008, SH ED D em ailed Franci s to ask 8 that Franci s pay f or hi s fam i l y' s travel (four passengers) from Singapore 9 to M alaysia and back to Japan. O n or about M ay 11, 2008, Franci s responded that 10 i f I' m 11 he w ould provi de the travel arrangem ents, and di d so, i ncl udi ng booking 12 reservati ons at the 13 M ay 14-20, 2008. 14 Franci s to confi rm that she had "arri ved i n [M alaysia] and everythi ng i s 15 t er r i f i c. 16 opt i cs. 17 Singapore and M al aysi a, ai rf are, change fees, and i nci dental expenses, 18 the t ot al cost of t hi s SH ED D fam i l y vacati on w as approxi m atel y $30,000. 19 out of l i ne. " SH ED D i nvi ted Franci s to "spank m e hard M agellan Sutera H arbor f or SH ED D 's fam i l y from A fter SH ED D 's w i fe departed Singapore, SH ED D em ailed She' s at the M agell an Sutera H arbor w hich i s perfect for The Shangri-La w ould l ook bad f or m e." Incl usi ve of hotel s i n 7 Al l l . O n or about M ay 10, 2008, SH ED D , usi ng hi s cooltoad.com 20 account, sent Franci s an em ail to w hich w as attached cl assi f i ed schedules 21 f or U .S. N avy shi ps through June 2008. 22 A112. O n or about M ay 10, 2 008, SH ED D em ai led Franci s about 23 SH ED D 's and H O R N BEC K's assessm ent of w hether the new Seventh Fl eet C O S 24 w as corrupti bl e and hence a potenti al recrui t to the conspi racy: "I had 25 a good t al k wi th H O R N BEC K regardi ng [C O S]. 26 wi th hi s part i ci pat i on i n events. [C O S] w as com pl etel y com fortabl e wi th 27 you the other ni ght at N adam ans and f el t safe." 28 42 W e st i l lneed to be cauti ous Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.49 Page 43 of 78 t A113. O n or about M ay 12-14, 2008, duri ng a port vi si t by the 1 2 U .S.S. Blue R idge i n Jakarta, Indonesi a, Franci s pai d f or hotel 3 accom m odations at the Shangri -La H otel and the servi ces of prosti t utes 4 f or D O LAN , H O R N BEC K, and LO VELESS, am ong others. 5 A114. O n about M ay 15, 2008, Franci s em ailed H O R N BEC K using 6 U .S. N avy term i nol ogy appropri ated to reference t hei r escapades w i th 7 prosti tutes: "The 8 returni ng to Singapore. 9 f or m ore M inex Ex. The M enu w as great!" 10 PASSEX and D IVEX [E]x w i l l conti nue We wi l l m eet up i n Kota today, I am [Kinabal u, M alaysia] A115. O n or about M ay 15, 2008, Franci s em ailed SH ED D to 11 com pl ain that another of f i cer "w as very cauti ous around m e l ast ni ght . " 12 SH ED D responded: " [That of f i cer] i s def i ni t el y poisoned. ... 13 see w hy I haven' t attem pted to bri ng him 14 A116. Also or about M ay 15 cooltoad.com 16 schedules f or vari ous U .S. N avy shi ps. 17 account, on em ailed Franci s N ow you can i n. " 15, the 2008, SH ED D , cl assi f i ed usi ng shi p hi s exerci se A117. On or about various dates between May 14-21, 2008, during 18 a port vi si t by the U .S.S Blue R idge i n M alaysia, D O LAN , 19 LO VELESS, and AG , stayed at the 20 M alaysia at Franci s' s expense. 21 M agellan Sutera H arbor w i th hi s wi fe and chi l dren. 22 Kota Ki nabal u, i ncl udi ng a fuel purchase authori zed by LAU SM AN , cost the 23 U .S. N avy approxi m atel y $2,218,037. Shangri-La H otel i n Kota H O R N BEC K, Ki nabal u, SH ED D stayed at Franci s' s expense at the The port vi si t to 24 A118. O n or about M ay 22-25, 2008, duri ng a port vi si t by the 25 U .S.S. Blue R idge to M ani l a, Phi l i ppi nes, H O R N BEC K, D O LAN , LO VELESS, 26 LAU SM AN , SH ED D , and Sanchez stayed at Franci s' s expense at the M akati 27 Shangri -La i n M anil a, Phi l i ppi nes, w here f or hi m sel f and the U .S. N avy 28 attendees, Franci s booked the Presi denti al Sui te. In t hi s venue, Franci s 43 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.50 Page 44 of 78 u 1 hosted a ragi ng m ul ti -day party, w i th a rotati ng carousel of prosti t utes 2 i n 3 Perignon avai l abl e at the Shangri-La. 4 Franci s exceeded $50,000 U SD . 5 Franci s to say "j ust w anted to say thanks - w as great seeing you again. 6 Alw ays a pl easure spending tim e w i th you." O n M ay 30, 2008, SH ED D em ailed 7 Franci s "I f i nal l y detoxed m yself from M ani l a. 8 of days. 9 dri nki ng! ! ! " ng attendance, duri I t ' s been w hich the a conspi rators drank al l of the D om R oom and al cohol charges born by O n or about M ay 25, 2008, H O R N BEC K em ailed w hi l e si nce I ' ve That w as a crazy couple done 36 hours of strai ght 10 t i ci zed a U .S. N avy A119. O n or about June 7, 2008, LAU SM AN cri 11 FISC of f i ci al f or retai ni ng one of G D M A's com peti tors to render servi ces 12 to the U .S.S. Blue R idge duri ng an upcom ing port vi si t to Vl adi vostok, 13 R ussia 14 short f al l s i n support." 15 pressure on other of f i ci al s wi thi n the U .S. N avy w i th the i ntent to 16 i nfl uence 17 contract to G D M A. 18 ' one-ti m e' contract to 19 Vl adi vostok from 20 aw ard, Franci s forw arded the aw ard em ail to LAU SM AN , H O R N BEC K, and D O LAN . 21 A120. O n or about Jul y 21 and 23, 2008, Franci s em ai led SH ED D 22 and H O RN BEC K a naked pi cture of one of the prosti tutes from M ani l a, w i th 23 the notati on to SH ED D , "I thought t hi s photo w i l l bri ng m em ories of the 24 Ens[i gns] i n M ani l a. Especi al l y D on." 25 si m pl y w rote: "She m isses you." 26 pet? f or any In the fol l ow i ng days, LAU SM AN and D O LAN exerted t hei r deci si on Georgous! "responsi bl e/accountabl e to aw ard the Vl adi vostok shi p husbanding i f i ed of a O n or about June 21, 2008, G D M A w as not support the U .S.S. Blue R idge port vi si t to U pon bei ng inform ed of the contract Jul y 2-5, 2008. In hi s em ail to H O R N BEC K, Francis hi s D on's SH ED D repl i ed: W O W !! ! ! ! Is t [sic] Great memories!" A121. O n or about August 6, 2008, SH EDD sent Franci s an em ail 27 28 and threatened to hol d FISC usi ng hi s cooltoad.com account provi di ng 44 updated cl assi f i ed ship Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.51 Page 45 of 78 In cl osi ng 1 schedules and t ransi t pl ans f or vari ous U .S. N avy shi ps. 2 oi ned m e as a resi dent aboard the SH ED D w rote: "Brother H O R N BEC K has j 3 good shi p BLU E R ID G E. 4 tim e to com e up to Tokyo f or som e ' guys' ti m e." Late August or earl y Septem ber w ould be a good A122. O n or about August 20, 2008, AG 5 sent Franci s an em ail 6 from hi s account, di ngol l @ cool toad.com , usi ng the nam e 7 contai ni ng 8 recrui ted to the conspi racy by SH ED D , AG had i ni t i at ed a cooltoad.com 9 account at SH ED D 's di recti on. cl assi f i ed U .S. N avy shi p A123. 10 On schedul es. or about Septem ber 18, 2008, [AG ] A ustral i a, A fter having been SH ED D , usi ng hi s s an em ail to w hich w as attached an account, sent Franci 11 cooltoad.com 12 i nternal U .S. N avy Judge Advocate G eneral m em orandum concerning the U .S. 13 N avy' s im proper paym ent of excessive port fees, 14 spoken w i th D O LAN and Sanchez about the m atter and that they advised 15 Franci s to "send a repl y l et t er to [AB' s replacem ent at FISC ] and i nvi t e 16 him 17 propri etary i nform ati on to Franci s, SH ED D al so i nqui red: "Boys ni ght out 18 on Saturday or Friday? 19 to your of f i ce for an ' i nform al tour,/ n SH ED D added that he had H aving passed i nt ernal , W hat sui ts you?" A124. O n or about Septem ber 23, 2008, having been recrui ted 20 i nto the conspi racy by SH ED D and AG , Sanchez sent Franci s an em ai l from 21 hi s new l y-m i nted cooltoad.com 22 nam e created as an am algam ation of Troy Aikm an and Em m itt Sm ith, form er 23 f oot bal l pl ayers f or the D al l as C ow boys, i n w hich he w rote: "W anted to 24 di scuss the operati ons f or next w eek w hen you [ ' re] i n the area. 25 seni or bubbas are chom ping at the bi t . " 26 account, usi ng the nam e ' Troy Sm i th,' a A125. In advance of a t ri p to Tokyo, Japan from The O ctober 3-7, 27 2008, Franci s sent to SH ED D 's cooltoad.com account prom oti onal m ateri al s 28 from VIP Tokyo Escort, a hi gh-end cal l gi rl servi ce. 45 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.52 Page 46 of 78 1 A126. O n or about O ctober 7, 2008, Franci s forw arded G D M A's 2 response to a controversy regardi ng shi p husbanding servi ces f or M SC 3 shi ps i n the Phi l i ppi nes to D O LAN and Sanchez. A127. O n 4 or about O ctober 9, 2008, Franci s em ai led other 5 em ployees at G D M A, stati ng: "D uring m y di scussi on w i th Jim 6 Jose 7 paym ents w i th Subgru 7[C SG -7], KH K 8 ABE, FFV C anx. 9 above to consol i date and present to Jim D O LAN ." [D O LAN ] and [Sanchez], they had offered to resol ve any outstandi ng issues for [U .S.S. K i t t y H aw k], M ercy PI, PN G , M ay I have a sum m ary of al l pending i nvoi ces f or the 10 A128. O n or about O ctober 15, 2008, fol l ow i ng up on a topi c 11 discussed previ ousl y i n Tokyo, SH ED D sent Franci s an em ai l , usi ng hi s 12 cooltoad.com account, from hi s new posi ti on i n Tennessee: "I ' ve got about 13 10 days before I' m 14 assi stance. 15 personal debt] I gave you i n Yokosuka. 16 di rect l y, m y account i s: [account det ai l s] ... 17 w ould l i ke to handle t hi s i n another m anner. 18 i nform ati on you need." 19 ent i t l ed: "2008-10 D ebt R eport". i n bi g troubl e and I real l y, real l y appreci ate your I ' ve attached the el ectroni c copy of the sam e report [of I f you prefer w i re transfer O r, l et m e know I ' l lget you w hatever Attached to the em ail w as an Excel spreadsheet A129. In response, Franci s w rote: "I requi re 20 i f you [AG ] or H ER R ER A 21 to advi [s]e w hat i s the pl an f or shi p vi si t to the P aci fi c Isl ands 09 22 i ncl udi ng M ercy or P el [ el i u] . The i nfo i s requi red by tom orrow ." 23 repl i ed: "I j ust spoke to 24 have detai l s for you i n the next 3 to 4 hours. 25 C TF 26 [cool t]oad[ . com ] account above." As prom ised, AG forw arded the requested 27 shi p schedules ei ght hours l at er from 28 SH ED D and Sanchez. Synchroni zati on VTC H e' s on i t and should [AG ] over the phone. at 1230 46 Japan SH ED D H e' s got the w eekly C 7F- Tim e. I ' ve hi s cooltoad.com cc' ed [h] i s account, cc' i ng Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.53 Page 47 of 78 1 led Franci s A130. O n or about O ctober 19, 2008, D EG U ZM AN em ai 2 about a j ob w i th G D M A, "I w ould l i ke to know m ore about G D M A i fyou thi nk 3 I can be part of the 4 H eadquarters] re m y future [,] but next sum m er i s a target i fj ob prospects 5 are good. " 6 I have team . to t al k to [U .S. M arine C orps A131. O n or about O ctober 20, 2 008, SH ED D sent Franci s an em ai l 7 w hich asked, "I w as w ondering i fyou have reached a deci si on on m y SH ED D 8 Bai l out/R escue Loan proposal ." 9 A132. Fol l ow i ng hi s em ail from O ctober 19, 2008, on or about 10 N ovem ber 2, 2008, D EG UZM AN 11 Franci s hi s resum e and ask Franci s f or a j ob: "Pi s f i nd i n the attachm ent 12 m y C V; I thi nk you know w hat I can do f or G M D A. I bel i eve that I can be 13 of val ue to the com pany as a Strategi c Planner and O ps D i rector, 14 respected and adm ired how you grew your com pany and w ould l ove to assi st 15 you i n keeping G M D A's l eads." 16 used hi s personal em ai l account to send s em ail ed Sanchez: A133. O n or about N ovem ber 2, 2008, Franci H ER R ER A or [AG ] . Since Steve 17 "I requi re seeds ... from 18 out I have been kept bl i nd on seeds and com m s." 19 talk to [AG] and Mario [HERRERA] this morning." 20 I 've [SHEDD] chopped Sanchez repl i ed: "W i l l A134 . O n or about N ovem ber 16, 2008, D EG U ZM AN used hi s personal 21 em ai l account to ask Franci s, "W hat w ould you thi nk i fI j oi ned G D M A i n 22 2010 vi ce 2009? 23 venues f or M arine and G D M A busi ness." 24 In the m eantim e, I can conti nue to t ry to open up m ore A135. In or about m id-N ovem ber 2008, Franci s and Sanchez 25 com m unicated frequentl y about arrangem ents f or an upcom ing port vi si t by 26 the U .S.S. Blue R idge i n H ong Kong. 27 prosti tutes that Franci s planned to bri ng i n from 28 m y bosses w ant to know how your scouti ng t ri p w ent to M anil a and i f you 47 In preparati on, Sanchez w rote of M ani l a: "By the w ay, Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.54 Page 48 of 78 Franci s 1 coul d share som e pi ctures of the tal ent w e expect to see." 2 subsequently reserved room s from N ovem ber 25-30, 2008 at the Shangri -La 3 Kow loon H otel f or D O LAN ,' H O R N BEC K, Sanchez, and AG . In anti ci pati on of 4 t hei r upcom ing 5 pi ctures of [a prost i t ut e] and i s ready to go © ." expl oi ts, Sanchez com m ented: "JD [D O LAN ] sa[w ] the 6 A136. O n or about N ovem ber 20, 2008, Sanchez em ailed Franci s 7 to say that H O R N BEC K had rej ected H ER R ER A'S part i ci pat i on i n the upcom ing 8 f est i vi t i es i n H ong Kong. 9 rhythm going to be similar to [the Philippines][,] meeting in your suite 10 or di f f erent type of set up. [D O LAN ] i s very exci ted and w anted to know 11 i f you 12 N ovem ber 20, 2008, about a U .S. N avy C aptai n: "W hat i s yours and JD ' s had Sanchez conti nued: "By the w ay, i s the battl e addi ti onal photos." 13 [DOLAN's] opinion on [the Captain]? 14 i n the future?" 15 sure about 16 perhaps i n Tokyo ... not H K." Franci s i nqui red on Shall we bring him in the brotherhood Sanchez repl i ed, "Spoke to JD [the Captain] of Sanchez, [D O LAN ] and he i s not and wants to f [ee]1 out some of the new folks 17 A137. O n or about N ovem ber 21, 2008, Sanchez em ailed Franci s 18 usi ng hi s personal em ai l account: "I spoke to [D O LAN ] about the contracts 19 and si nce I gave them 20 of t hi s m onth before w e push i t to the next l evel . " 21 that day, Franci s urged Sanchez to "turn the heat on and have [D O LAN ] 22 engage" the U .S. N avy on several contract aw ards, to w hich Sanchez 23 responded: "JD [DOLAN] is locked and ready to fire." 24 a push l ast w eek, w e are gi vi ng them t i lthe end In another em ail A138. O n or about N ovem ber 25, 2008, D EG U ZM AN used hi s personal 25 em ai l account to advi se Franci s that he w ould be stayi ng i n the M arine 26 C orps unt i l at l east 2010, but that he i s "w i l l i ng to t ry [to secure a 27 j ob w i th G D M A] again next year. M eanw hile I can conti nue to see i f the 28 48 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.55 Page 49 of 78 1 U SM C and G D M A can have a rel ati onshi p f or BK 2 G old] , [Marine Corps exercises in the Philippines]." A139. 3 On [Bal i katan] and C G or about N ovem ber 25-29, 2008, [C obra Franci s, D O LAN , 4 H ER R ER A, Sanchez, AG , and others stayed at the Kow loon Shangri -La, dined 5 at 6 speci f i cal l y fl ow n i n from M anila f or t hi s event, al lat a t ot al cost to 7 Franci s of over approxi m atel y $55,000. 8 Sanchez w rote to Franci s: "Li on .King, once agai n, the brotherhood i s very 9 thankful f or everythi ng you provi ded duri ng t hi s port vi si t... Please pass 10 m y best to ' Lynn' [a prost i t ut e] . . . perhaps a short vi si t to Japan i s 11 needed. 12 contracts and I w i l l rel ease tom orrow ." the Petrus R estaurant, and w ere entertai ned by prosti tutes O n or about N ovem ber 29, 2008, I have al ready drafted m y em ail to FISC about the status of A140. O n or about N ovem ber 29-30, 2008, Sanchez, over several 13 14 em ail s usi ng hi s cooltoad.com account, em ai led Franci s to recount the 15 expl oi ts i n H ong Kong. 16 perfect and the Indo[nesian] Det [achment] 17 JD 18 Kong one f or the ages." Franci s repl i ed: "Let' s keep the Brothers t i ght 19 and req[ui re] the C hoke 0IC 20 proj ect l i st of [U .S. C oast G uard], N ATO , and C anadian nam es and dates 21 port s. " H e descri bed vari ousl y, "BT [a prost i t ut e] w as [other prostitutes] as well. [D O LAN ] coul d not be any happi er and t hi s m ade hi s l ast t ri p to H ong [H ER R ER A] to provi de w eekly updates and the 22 A141. D uring the f est i vi t i es i n H ong Kong, Franci s again asked 23 D O LAN and Sanchez, am ong others, to exert pressure on and to advi se other 24 U .S. N avy of f i ci al s to cl ose or real i gn the duti es of the Ship Support 25 O ffi ce i n H ong Kong. 26 D ecem ber 1, 2008, D O LAN w rote a l engthy em ai l to the R ear Adm i ral Supply 27 O ffi cer (N 4) of the P aci fi c Fl eet recom m ending that the U .S. N avy reduce 28 st af f i ng i n the Ship Support O ffi ce i n H ong Kong. In furtherance of that obj ecti ve, on or about 49 D O LAN forw arded a Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.56 Page 50 of 78 1 separate copy of the em ai l to Franci s wi th the rhetori cal f l ouri sh: "W ho 2 loves you, Brother?" 3 em ai l , D O LAN forw arded the Adm i ral ' s response to Franci s, noti ng, "I t ' s 4 now on hi s radar." A142. 5 On W hen the Adm i ral responded to D O LAN 'S or about D ecem ber 2, 2008, Sanchez, ori gi nal usi ng hi s 6 cooltoad.com account, em ai led Franci s cl assi f i ed shi p schedules obtai ned 7 from H ER R ER A: "Li on King, here' s the i nform ati on you requested from C hoke 8 O IC 9 Sanchez: "Thanks f or the updates. 10 [H ER R ER A] attached." U pon recei pt of the schedule, Franci s w rote to O utstandi ng. C hoke has secured 3 hrs of Lap Dancing in [Tokyo]." 11 A143. O n or about D ecem ber 11, 2008, Sanchez em ailed Franci s, 12 vetti ng a potenti al m em ber of the conspi racy: "D on' t thi nk i t w ould be 13 a good idea to i ncl ude [O ffi cer]... w e w ould pl ace too m uch ri sk out there. 14 Think our group i s the ri ght m ix and ri ght i nfl uence, 15 about the Li on Ki ng[ '] s em pire and harem expands w i th passi on and l ust 16 ... yes i ndeed!". 17 Il i ke the l i ne A144. O n or about D ecem ber 17, 2008, SH ED D , from Tennessee, 18 usi ng hi s cooltoad.com account, sent Franci s the m onthl y roster of Flag 19 O ffi cers i n the U .S. N avy, noti ng, "I' m on di st ro f or the m onthl y [ f ] lag 20 rosters and I ' l lshoot i t to you." SH EDD 21 H ong Kong: "H ow w as the brotherhood duri ng that vi si t ?" i nqui red of the escapades i n 22 A145. O n or about C hristm as Eve, 2008, H O R N BEC K em ail ed Franci s 23 wi th C hri stm as w ishes, expl ai ni ng, "Sorry I m issed you i n H ong Kong and 24 Tokyo - [G ]ot pul l ed i n a couple of t ri ps at the l ast m i nute," to w hich 25 Franci s repl i ed: "D on, G reat to hear from 26 brother from the Li on Kings H arem ." 27 28 you. I w as m issi ng m y other A146. O n or about D ecem ber 29, 2008, Sanchez sent an em ai l to Aruffo and Franci s confi rm i ng that he provi ded D O LAN w i th tw o boxes of 50 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.57 Page 51 of 78 1 beef, fi ne w ine, a box of ci gars, and a l arge f rui t basket and H ER R ER A 2 wi th tw o boxes of beef. 3 A147. O n or about January 7-8, 2009, Sanchez em ai led Franci s 4 about a proposal to aw ard a separate shi p husbanding contract f or the 5 C ooperation A fl oat R eadiness and Trai ni ng 6 unseati ng G D M A as the contractor f or t hi s event. 7 propri etary, i nt ernal U .S. N avy proposal on t hi s topi c, and separatel y 8 assured Franci s: "I w i l lbe t al ki ng to [D O LAN ] about t hi s topi c tom orrow 9 si nce I bel i eve som eone i s sm oking ("C AR AT") exerci se, thereby Sanchez forw arded the som ething...." Sanchez conti nued 10 several hours l at er, " [DOLAN] won't be back until Monday... however we 11 spoke about the C AR AT contract and are going to put the f ul lpress w i th 12 [P aci fi c Fl eet] on w hy w e are doing t hi s. " 13 A148. O n or about January 12, 2009, D EG U ZM AN , usi ng hi s pri vate 14 em ail account, provi ded Franci s wi th advice and counsel on how to respond 15 to 16 servi ces for C AR AT. 17 personal em ail account, 18 t al ki ng poi nts. 19 "As w e take care of your sai l ors, m arines, shi ps and ai rcraf t , I w ould 20 l i ke to bri ng to your attenti on that there conti nue to be detractors 21 am ong certai n st af f s i n the N avy that have m ade i t di f f i cul t to bri ng 22 our qual i t y servi ce to you. 23 to support C AR AT 09. 24 nce t hei r m ain purpose and pound f ool i sh' si 25 getti ng the contract w i thout l ooki ng i nto the second and t hi rd effects 26 of t hei r acti on. 27 but I w ould l i ke to stress the fl aw l ess perform ance of G D M A i n supporti ng 28 the Fl eet as i tconducts operati ons i n t hi s AO R ." the s proposal to U .S. N avy' separatel y contract shi p husbanding ng hi s O n or about January 16, 2009, D EG U ZM AN , usi provi ded Franci s wi th addi ti onal suggested S peci fi cal l y, D EG U ZM AN suggested Franci s argue that: There i s currentl y an ef f ort to save m oney I bel i eve that t hi s m ay be a case of ' penny w ise i s to exclude G D M A from I understand savi ng m oney i n these tough econom ic tim es 51 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.58 Page 52 of 78 A149. O n or about January 15, 2009, Sanchez sent Franci s three 1 2 separate em ails contai ni ng com prehensive cl assi f i ed shi p schedules for 3 vari ous shi ps i n and t ransi t i ng the Seventh Fl eet AO R . A150. O n or about January 18, 2009, D EG U ZM AN used hi s personal 4 5 em ail account to ask Franci s f or a j ob at G D M A: " [ I ] f you st i l lw ant m e 6 to w ork f or you next year (sum m er 2010)., w here do you thi nk you w ant m e 7 l ocated? 8 need support. 9 account w hen I am at w ork. 10 At corporate H Q ? ... M eanw hile, I am at your servi ce w hen you I t ' s best to gi ve m e a heads up si nce I don' t open t hi s Pis send a note to [D EG U ZM AN 'S w i fe] at her address (on the ' cc' l i ne)." 11 A151. O n or about February 2, 2009, i n response to an i nqui ry 12 by Franci s, Sanchez used hi s cooltoad.com account to advise Franci s: "JD 13 [D O LAN ] does not know about any ongoing i nvesti gati on..." A152. Throughout January-February 2009, Sanchez, H ER R ER A and 14 15 others provi ded Francis wi th cl assi f i ed shi p schedule i nform ati on, 16 i ncl udi ng on February 13, 2009, w hen Sanchez provi ded Franci s wi th the 17 schedules of al lai rcraf t carri ers i n or proj ected to t ransi t the Seventh 18 Fl eet AO R i n 2009. 19 A153. O n or about February 4, 2009, i n preparati on f or the 20 U .S.S. Blue R i dge' s upcom ing vi si tto M ani la, Phi l i ppi nes, Sanchez, using 21 hi s cooltoad.com 22 visit how does the new det[achment][of prostitutes] look? 23 I 24 prosti t utes provi ded by Franci s duri ng 25 February 11, 2009, Sanchez asked Franci s, "H ow 's the tal ent search going.., 26 photos (JD ' s [D O LAN 's] getti ng exci ted)." 27 em ail attachi ng cl assi f i ed shi p schedules of m any types of U .S. N avy 28 shi ps, Sanchez asked Franci s, "For the cabins can em ail account, em ail ed Franci s aski ng, "For the port share with JD [DOLAN] : )" Again referenci ng 52 the Any pictures the prospect of upcom ing port vi si t , on O n February 15, 2009, i n an [accom m odations], i s i t Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.59 Page 53 of 78 \ H ow 's the new tal ent? Is [nam e of 1 the sam e l ocati on as l ast tim e? 2 prost i t ut e] , 3 there. I' m fi ne w i th [nam e of prost i t ut e] f or the enti re ti m e, JD [D O LAN ] 4 i s fi ne w i th i tas w el l : )! " [nam e of prost i t ut e] , or [nam e of prost i t ut e] gonna be 5 A154. O n or about February 16, 2009, D O LAN em ailed Franci s, 6 am id a di scussi on about how a U .S. N avy shi p coul d rent an i sl and i n the 7 M al dives 8 upcom ing act i vi t i es i n M ani l a, Phi l i ppi nes the fol l ow i ng w eek, w rote: 9 "Look forw ard to seeing you, Brother." f or three A155. From 10 days f or crew l i bert y. D O LAN , anti ci pati ng the on or about February 19-22, 2009, D O LAN , Sanchez, 11 s' s expense at the M akati Shangri H ER R ER A, and others stayed at Franci 12 La at a cost to Franci s of approxi m atel y $30,000 U SD . 13 i n M ani l a, Franci s pai d f or m eals, al cohol , and prosti tutes to entertai n 14 these O ffi cer-attendees. 15 cooltoad.com em ail account, sent Franci s and em ail stati ng, "A w arm thank 16 you from 17 great tim e..." . 18 D uri ng t hei r stay O n about February 23, 2009, Sanchez, from hi s the brotherhood.. .w e thoroughl y enjoyed oursel ves and had a A156. On or about M arch 24, 2009, Sanchez, usi ng hi s 19 cooltoad.com account, sent an em ail to Franci s that provi ded a narrati ve 20 descri pti on of the planned m ovem ents of num erous U .S. N avy shi ps through 21 August 2009, w i th the com m ent: "The fol l ow i ng i nfo i s provi ded from C H O KE 22 23 [H ER R ER A]." A157. O n or about A pri l 6, 2 009, D EG U ZM AN , i n one of m any ei ther personal l y or through hi s advice to 24 em ail s assi sti ng Franci s 25 or advocacy before others 26 G D M A's business i n the Phi l i ppi nes, w rote: " [W ] ho should I t al k to re 27 com p package i fyou have a pl ace i n G DM A f or m e i n 2010?" wi th i ssues and controversi es rel ated to 28 53 O n or about Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.60 Page 54 of 78 \ 1 A pri l 10, 2009, D EG U ZM AN used hi s personal em ail account to ask Franci s: 2 "W hen can w e t al k about com pensation?" A158. 3 On or about A pri l 28, 2009, Sanchez, usi ng hi s 4 cooltoad.com 5 the 6 therew i th a cl assi f i ed narrati ve descri pti on of the planned schedules of 7 several U .S. N avy shi ps through Sum m er 2009. fol l ow i ng 10 update from C H O KE [H ER R ER A] ... © ." Sanchez i ncl uded A159. O n or about M ay 27, 2009, D EG U ZM AN , usi ng hi s personal 8 9 account, sent an em ail to Franci s w hich stated: "R eceived em ail account, sent Franci s a docum ent descri bi ng, " [W ]hat I thi nk I can do f or G D M A" as Franci s' s "C hi ef of S t af f . " A160. Throughout M arch-June 11 2009, Sanchez, usi ng hi s em ail 12 account at cooltoad.com , conti nued to frequentl y provi de Franci s wi th 13 cl assi f i ed shi p 14 t ransi t i ng the Seventh Fl eet A0R . schedule i nform ati on f or al l U .S. N avy shi ps i n or A161. O n or about June 8, 2009, Sanchez sent Franci s an em ail 15 16 attachi ng the shi p schedules of num erous U .S. N avy shi ps i n the Seventh 17 Fl eet A0R , w hi l e noti ng: "W ould l i ke to get together f or 3-4 days ... i n 18 Bangkok with the B0YZ 19 Regarding JD's 20 you i n Singapore ... Should I t el lhim he w i l lbe stayi ng i n the Shangrala 21 22 (JD [DOLAN] , myself, and [another Officer] . ... [DOLAN's] detachment plans, he want[s] to come to visit [si c]?" A162. O ver the next several days, Franci s and Sanchez 23 corresponded about the dates and parti cul ars of the events planned for 24 Bangkok and f or D O LAN 's farew el l tour. 25 "I will lock down hotel rooms for JD [DOLAN] in Singapore and T[he] Gang 26 f or BAN G KO K." 27 sent to N C IS regi onal l y ... to 28 i n port f or vi si t i ng shi ps." In one i nstance, Franci s w rote: In return, Franci s requested from Sanchez "som e guidance [b]ut t out of [force protecti on] deci si ons 54 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.61 Page 55 of 78 A163. O n or about June 20, 2009, Sanchez confi rm ed that onl y 1 "W i l l need onl y 2 D O LAN and he w ould be attendi ng the events i n Bangkok. 3 se i n the brotherhood w as abl e to room s f or JD and m yself... [N ]o one el 4 ast w i th you, m y l ast m onth as a LC D R com e, how ever w e should have a bl 5 and JD's [DOLAN's] last blast in the land of smiles." 6 "Lim o w i l lbe w ai ti ng f or you on arri val . " Franci s repl i ed: A164 . O n or about June 29, 2009, D EG U ZM AN sent Franci s an em ail 7 8 requesti ng "any i nfo you have on your nem esis 9 Phi l i ppi nes] to determ i ne w hat ki nd of fraud, w aste, and abuse w e can 10 use. " 11 rap sheet of the C EO of t hi s com peti tor. 12 [a com peti tor i n the O n or about Jul y 1, 2009, Franci s sent D EG U ZM AN a m ug shot and A165. From Jul y 1-4, 2009, D O LAN and Sanchez stayed at 13 Franci s' s expense at the Shangri -La H otel i n Bangkok, duri ng w hich tim e, 14 Franci s gave 15 prosti tutes, at a t ot al cost of at l east $8,500. 16 em ailed Franci s, am id a di scussi on about a controversy surroundi ng a port 17 vi si t i n R eunion, stati ng si m pl y: "The 18 Thanks f or Everythi ng, Brother!" 19 Sanchez a w ad of cash to pay f or m eals, al cohol , and O n Jul y 5, 2009, D O LAN refl ash w atch i s set . " "P.S. A166. O n or about Jul y 7, 2009, Sanchez sent Franci s "JD ' s 20 upcom ing i t i nerary f or your pl anni ng purposes." O n Jul y 9-10, 2009, 21 D O LAN em ai led Franci s to al ert him that he had or w ould perform of f i ci al 22 ai nts acts or exert pressure on others on G D M A's behal f, R elated to com pl 23 about unti m el y transportati on provi ded by G D M A duri ng the C AR AT Thai land 24 exerci se, D O LAN w rote of hi s ef f ort s to i ntercede: "Jose 25 Iwi l lt ry to defl ash t hi s. " [Sanchez] and 26 A167. O n or about Jul y 21, 2009, D EG U ZM AN , usi ng hi s personal 27 em ai l account, em ai led Franci s, i nqui ri ng: "W i l lyou be i n Singapore next 28 55 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.62 Page 56 of 78 I w anted to di scuss som ething w i th you that m ay cem ent G D M A's 1 w eek? 2 posi ti on as the U SN 's husbanding agent." 3 A168. O n or about Jul y 26, 2009, LAU SM AN , now the C om m anding 4 O ffi cer of the ai rcraf t carri er U .S.S. G eorge W ashington, asked Francis 5 to provi de addi ti onal w ater taxi s to f erry sai l ors of f of the U .S.S. 6 G eorge W ashington duri ng i t s upcom ing vi si t to M ani l a. Franci s forw arded 7 LAU SM AN 's request to a G D M A em ployee: "C O 's concern f or both Singapore 8 and M ani l a. 9 O ffi cer] buys our [w ]ater taxi es, [the Supply O ffi cer] has to accept the W e have to m ake t hi s happen f or hi m !. . . I f the [C om m anding 10 enti re package. 11 N O 1 Fan." 12 We wi l l be good to go, C apt Too Tal l [LAU SM AN ] i s our A169. O n or about Jul y 29, 2009, Sanchez sent Franci s an em ail 13 advi si ng that H ER R ER A w as exerti ng pressure on and advocati ng before 14 other U .S. N avy 15 Thai l and: "C hoke 16 l i ke t hi s i s goi ng to happen)." O n or about Septem ber 22-26, 2009, the 17 U .S.S. R onald 18 Thai l and, at a cost to the U .S. N avy of over $1.5 m i l l i on. 19 of f i ci al s to route the U .S.S. Abraham Li ncol n to [H ER R ER A] i s pushi ng f or R EAG AN to go to Phuket (looks R eagan, i n fact, conducted a port vi si t to A170. O n or about August 10, 2009, LAU SM AN Phuket, sent Franci s an 20 em ail regardi ng a vari ety of topi cs about the upcom ing port vi si t of the 21 U .S.S. G eorge W ashington to M ani l a, Phi l i ppi nes. 22 em ai l : "Your obedi ent and hum ble servant." 23 24 LAU SM AN A171. O n or about August 19, 2 009, SH ED D signed hi s sent Franci s the roster of U .S. N avy Flag O ffi cers f or August 2009. 25 A172. O n or about August 21, 2009, H ER R ER A sent Franci s an 26 em ail confi rm i ng, "I ' ve j ust sent a good update to J[ose Sanchez], plus 27 you can now contact m e at chachi09@ cooltoad.com ." 28 Sanchez em ai led Franci s, copying H ER R ER A: "Forw arded updates per your 56 O n August 21, 2009, Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.63 Page 57 of 78 ' C hoke' Anderson w as Sanchez' s very hel pf ul . " em ail 1 request. M r. 2 contai ned excerpts of other em ail from 3 from 4 [SAN C H EZ] and l i st ed future port vi si t s for num erous U .S. N avy shi ps from 5 Septem ber to N ovem ber 2009. "M r. T.A. Anderson" the cul t cl assi c, The M atri x, adopted by H ER R ER A a m oniker to M r. Sm ith A173. O n or about August 21, 2009, H ER R ER A em ailed Franci s 6 "Leonard, C urrent sked... H oping Lum ut vi si t goes aw ay for 7 stati ng, 8 som ething i n Thai l and, but not l i kel y, Vr, C hoke." 9 vi si t s f or the U .S.S. Blue R idge f or through N ovem ber 10, 2009. Sanchez's 10 The em ail l i st ed port em ail account, navy94@ cooltoad.com , w as copied thereon. A174. O n or about August 25, 2009, Franci s sent Sanchez and 11 12 H ER R ER A an em ai l thanki ng 13 i nstructi ng them to send shi ps to Phuket, Thai l and: "Thanks Thom as C hoke, 14 Jose 15 fam i l i a here © 16 Stri ke G roup] shi ps to Phuket, C hristm as i s approaching and Santa LK 17 [Lion King] 18 to Thai l and pl ease." 19 n fact, conducted a port vi si t to Phuket, Thai l and, at a t ot al ESG , i 20 cost to the U .S. N avy of over $500,000. [Sanchez] them f or the educate the BEAN counters [S]end the BH R ESG updated shi p [at FISC], schedules and it's a priceless [U .S.S. Bonhom m e R ichard Expedi ti onary [Francis] needs a party. Too many ships to Singapore more O n or about O ctober 29-N ovem ber 3, 2009, the BH R 21 A175. O n or about August 28, 2009, Franci s purchased the Port 22 Klang Star C rui se Port and Term i nal , w hich he began to aggressi vel y 23 m arket to the U .S. N avy as an opti on f or port vi si t s. 24 y Septem ber 2009, Franci s sent Sanchez an em ail A176 . In earl 25 com m enting on the conspi racy and assessing several m em bers of the U .S. 26 N avy: "Jose, W e are fam i l i a, [JM , a U .S. N avy ci vi l i an i n the P aci fi c 27 Fl eet] i s st i rri ng shi t now that he has m oved back across the fence. H e 28 wi l l sel f-destruct i n due ti m e. Let' s study [a U .S. N avy C aptain] duri ng 57 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.64 Page 58 of 78 1 the sw ing? Every sai l or has a w eakness som ew here?" On or about 2 Septem ber 2, 2009, Sanchez i n response w rote: "Thank you si r . . . you[ ' re] 3 correct about f am i l i a, and I thi nk your spot on concerning 4 don' t thi nk he has a cl ue, but he i s st i rri ng thi ngs up and [the U .S. 5 N avy C aptai n] i s eati ng i t up. [JM ] , but W i l l pul l out the m agni fyi ng gl ass on 6 [the U .S. N avy C aptai n] and f i nd out... W i l l pul se C hoke [H ER R ER A] about 7 the AO R shi p l i st s, our boy from 8 on. C hoke i s def i ni t el y steppi ng up w i th updates, and w i l l st i l lbe able 9 to be engaged from C N FJ [C om m and N aval Forces Japan, H ER R ER A'S subsequent dow n under [AG ] should be taki ng t hi s 10 assignm ent] 11 U nable, ul ti m atel y, to tem pt the U .S. N avy C aptai n, Franci s and hi s 12 conspi rators began to refer to him as C aptai n "Pubi c H ai r." 13 A177. O n or about Septem ber 8, 2009, Sanchez al erted Franci s 14 and H ER R ER A that the cooltoad.com netw ork w as tem porari l y i naccessi bl e 15 aboard the U .S.S. Blue R idge. 16 i nterrupti on, on or about Septem ber 13, 2009, Sanchez advised Franci s 17 and H ER R ER A 18 updated 19 Septem ber 14, 2009, am ong other dates. To rem edy the ongoing com m unications that he w ould establ i sh a cl assi f i ed shi p schedules to Facebook account to transm i t Franci s, w hich he did on A178. O n or about Septem ber 19, 2009, Sanchez w rote to Franci s 20 21 from hi s Facebook account: "By the w ay, Port Klang seed has been l ai d 22 and i s an opti on i n case Lum ut, [M al aysia] f al l s of f , your t al k wi th the 23 boss m ight push i t over the top © ... [M ]ore to fol l ow ." 24 A179. Begi nning on or about O ctober 16, 2009 and conti nui ng 25 unt i l the port vi si t , Sanchez used hi s Facebook account to com m unicate 26 wi th Franci s about the upcom ing port vi si t by the U .S.S. Blue R idge i n 27 Kuala Lum pur, stati ng: "S i r, f or KL 28 fol l ow i ng group [Kuala Lum pur] and Singapore, the are part of the W olf Pack, C hoke 58 [H ER R ER A], m ysel f, Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.65 Page 59 of 78 ► , 1 [officer], 2 see som e pi ctures f or a bi t of m oti vati on." 3 l y confi rm ed, arrange a nest f or you guys and som e bi rds. " Sanchez greedi 4 usi ng a favori te tagl i ne coi ned by D O LAN : "Yum m y ... daddy l i ke. 5 days l ef t © ." 6 [officer], A180. O n [and officer]. As we get near, wouldn't mind to or about O ctober 25, [ W ] i l l Franci s repl i ed: " 2009, H O R N BEC K, O nly 7 using hi s 7 personal em ail address hosted by hotm ail.com , advi sed Franci s that he 8 had been assigned aboard the U .S.S. C arl Vinson, and expected to return 9 to the Seventh Fl eet AO R the fol l ow i ng year. 10 A181. O n or about O ctober 26-28, 2009, duri ng a port vi si t of 11 the U .S.S. Blue R idge to Kuala Lum pur, M alaysi a, Franci s pai d f or hotel 12 accom m odations and the servi ces of prosti tutes f or H ER R ER A, Sanchez, and 13 other U .S. N avy O ffi cers. 14 A182. O n or about O ctober 29-N ovem ber 3, 2009, duri ng a port 15 vi si t of the U .S.S. Blue R idge, to Singapore, Franci s agai n pai d for hotel 16 accom m odations and the servi ces of prosti tutes f or H ER R ER A, Sanchez and 17 other U .S. N avy O ffi cers. 18 19 20 A183. O n or about D ecem ber 7, 2009, SH ED D sent Franci s vi a em ail the updated D ecem ber 2009 Flag R oster. A184. O n or about D ecem ber 9, 2009, N EW LAND em ai led Franci s 21 sol i ci t i ng a j ob: "W ould you know of any 22 Si ngapore/Asi a f or a guy w i th m y background?" j ob opportuni ti es i n 23 A185. O n or about D ecem ber 13, 2009, Aruffo sent Franci s an 24 em ail confi rm i ng that he del i vered vari ous l avi sh C hristm as gi f t s to 25 LAU SM AN and others and recounti ng a conversati on that he had w i th LAUSM AN 26 regardi ng sending U .S. N avy shi ps to the port that G D M A ow ned i n Port 27 Klang, Malaysia: "I chatted with [LAUSMAN] for about an hour, he had lots 28 of questi ons about the G D M A Star C rui se Term i nal , I happened to have a 59 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.66 Page 60 of 78 1 brochure i n the car. H e' s a bi g supporter, m entioned that he w as thankful 2 f or your generosi ty as a fri end, and that w e can m anage to keep our 3 fri endshi p di screte." A186. 4 Fol l ow i ng an em ail that Franci s sent to SH ED D 's 5 cooltoad.com account requesti ng i nsi ghts on the personal i ti es of several 6 of f i cers nom inated f or hi gh l evel posi ti ons i n the U .S. N avy, on or about 7 January 15, 2010, SH ED D 8 cooltoad.com account frequentl y, Franci s shoul d al ert SH ED D of any em ail s 9 sent to SH ED D 's cooltoad.com account. responded that, because he di d not check hi s S peci fi cal l y, SH EDD w rote: "Sorry 10 f or the del ay - I haven' t been checking toad as frequentl y as I should. 11 I f som ething, com es up, you 12 steve. shedd@ navy.m il. " can shoot m e a ' check toad' m essage to 13 A187. O n or about February 24, 2010, H ER R ER A, from C om m and 14 N aval Forces Japan, al erted Franci s that FISC w as recom m ending[ a l ocal 15 husbanding agent, not G D M A, to provi de servi ces to t ransi t i ng R oyal Thai 16 N avy shi ps vi si t i ng Japan. 17 "M ari o H ER R ER A over at C N FJ has been [the] poi nt of contact, I al ready 18 tal ked to [H ER R ER A] , he w i l l hel p lean them our w ay..." Aruffo j oi ned the em ail st ri ng, noti ng, A188. In a bravo zul u l et t er dated A pri l 7, 2010, LAU SM AN 19 20 lauded the shi p husbanding servi ces rendered to the U .S.S. G eorge 21 W ashington by G D M A and Franci s: "As w e begi n the pl anni ng f or our second 22 deploym ent cycl e, your w ide range of advanced pl anni ng, support servi ces, 23 force protecti on, l ogi st i cs expedi ti ng, and em ergent servi ce requests, '24 set your organi zati on, and m ost i m portantl y, your em ployees f ar above 25 and beyond any other contract servi ce provi ders i n the Paci fi c... I cannot 26 overstate m y si ncere appreci ati on f or the qual i t y custom er support your 27 team 28 s the ul ti m ate com plim ent. You have earned t hi s trust..." you' i of professi onal s have provi ded to m y shi p. The statem ent ' It rust 60 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.67 Page 61 of 78 k i 1 A189. O n or about M ay 23, 2009, Sanchez sent Franci s an em ail 1 Sanchez m used: "Just l i ke [D O LAN ] 2 wi th pi ctures of hi m sel f i n R ussi a. 3 & Frank Si natra sai d...l i fe i s about w ine, w om an and song. 4 responded: 5 © !" Franci s I need the G W and Pel[ el i u] AR G Seed." A190. O n or about June 3, 2010, LAUSM AN sent Franci s an em ail 6 w hich tel egraphed that the U .S.S. G eorge W ashington w ould be m aking a 7 port vi si t to Franci s' s port i n Port Klang, M al aysi a: "Looking forw ard 8 to seeing you agai n w elcom ing us i nto port. © " Franci s forw arded t hi s 9 em ail to several G D M A em ployees w i th the com m ent: "From the C O of [the 10 U .S.S. G eorge W ashington] i nform i ng m e that he i s on the w ay to our 11 Term i nal next m onth." 12 A191. O n or about June 18, 2010, Aruffo sent Franci s an em ail 13 descri bi ng 14 i ndi cati ng to Franci s that he w ould attem pt to ascertai n w hether the 15 U .S.S. G eorge 16 M al aysi a: "I w i l l ask LAU SM AN 's w i fe i f she i s heading to [KL] © ." 17 a party that he W ashington w as w as pl anni ng scheduled f or LAU SM AN 's to travel to wi fe, and Kuala Lum pur, A192. O n or about June 19, 2010, LAU SM AN em ai led Franci s, "I 18 w ould l i ke to qui et l y expl ore the possi bi l i t y of new ports f or G W [the 19 U .S.S. G eorge W ashington] [ ; ] of course at the top of the l i st i s Kota 20 Ki nabal u[ , ] m aybe f or next sum m er." 21 A193. O n or about June 21, 2010, LAU SM AN em ail ed Franci s about 22 an upcom ing port vi si tf or the U .S.S. G eorge W ashington to Franci s' s port 23 at the Port Klang C rui se C enter, M al aysi a. 24 I can confi rm 25 the Sw iss C hal et restaurant... [Aruffo] has the detai l s and opti ons f or 26 the Shang[ri -La] ... and i fyou' d l i ke I can have him pop over to discuss 27 room opti ons w i th [LAU SM AN 's w i f e] ." Franci s asked LAU SM AN i fthere w as 28 a potenti al f or the U .S.S. G eorge W ashington to vi si t Singapore. LAU SM AN Franci s repl i ed, "R i ght now an 'R M N ' [R oyal M alaysian N avy] hosted di nner arranged at 61 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.68 Page 62 of 78 "I am t ryi ng 1 repl i ed, 2 [Singapore] l at er i n to get [the [the] year." U .S.S. G eorge W ashington] to Ul ti m atel y, the port vi si t to PKC C 3 w as cancel l ed, about w hich LAU SM AN w rote, "Sorry f or the fal se st art w i th 4 PK[C C ]... [H ]ope 5 opening up new ports w i th G W and revi si t i ng ol d ones as w el l . " the . uncertai nti es w i l l cl ear soon...looking forw ard to 6 A194. O n or about June 26, 2010, Franci s sent Aruffo an em ai l : 7 "W e need m ore business at our term i nal [Port Klang C rui se C enter, PKC C , 8 M al aysi a], keep hi t t i ng on D usek. 9 on the changes f or hi s seed." Too Tal l [LAU SM AN ] dropped m e a note 10 A195. Beginni ng i n or around Jul y 2010, w hen D usek w as servi ng 11 as D eputy D i rector of O perati ons f or the Seventh Fl eet, D usek j oi ned the 12 ongoing 13 i ncl udi ng m eals, al cohol , entertai nm ent, dozens of ni ghts and i nci dental s 14 at l uxury hotel s, gi f t s, and the servi ces of prosti tutes, i n return for 15 D usek' s provi di ng to G D M A, cl assi f i ed U .S. N avy shi p schedules and other 16 propri etary, i nternal U .S. N avy i nform ati on, and as opportuni ti es arose, 17 usi ng hi s posi ti on and i nfl uence w i thi n the U .S. N avy to benefi t G D M A. conspi racy, w hereby G D M A w ould gi ve D usek thi ngs of val ue, A196. O n or about Jul y 6, 2010, Aruffo sent Franci s an em ail 18 19 advi si ng, "Just chatted w i th LAU SM AN , he w ould l i ke to st art soci al i zi ng 20 hi s upcom ing schedul e," to w hich Franci s responded to Aruffo, "In 1 hour 21 pass him 22 [LAU SM AN ] the C i gars." A197. O n or about Jul y 11, 2010, Aruffo sent Franci s an em ail 23 recounti ng a conversati on i n w hich LAU SM AN reveal ed the schedule of the 24 U .S.S. G eorge W ashington: "G W 25 ai r, but t hei r current pl an i s Singapore on 16 Aug and M anil a on 2 Sep. 26 . . Looks l i ke PKCC 27 but [LAU SM AN ] i s st i l lw orki ng." [U .S.S. G eorge W ashington] i s st i l li n the [Port Klang, M alaysia] i s a non starter t hi s ti m e, 28 62 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.69 Page 63 of 78 1 A198. O n or about Jul y 19, 2010, G D M A pai d f or a hotel room 2 f or D usek and hi s fam i l y at the M arri ott W ai ki ki , and l ess than a m onth 3 l at er, on or about August 5, 2010, G D M A provi ded D usek w i th a hotel room 4 at the Shangri -La H otel i n M akati , Phi l i ppi nes and w hi l e there, G DM A 5 provi ded D usek w i th the servi ces of a prost i t ut e. 6 Franci s, 7 behal fi n bri ngi ng the ai rcraf t carri er, the U .S.S. Abraham Li ncol n, and 8 i t s associ ated st ri ke group, to Port Klang, M alaysia, a l ucrati ve port 9 nterests i n t hi s regard, ow ned by Franci s. In furtherance of G D M A's i 10 D usek em ailed Aruffo on August 21, 2010, reporti ng a "good di scussi on 11 wi th N 00 12 choi ce. " 13 had "everyone i n agreem ent that the next [C arri er S tri ke G roup] through 14 the AO R w i l l stop at PKC C . D ates w i l l be 08-12 O ct." 15 conversati on w i th Aruffo on or about Septem ber 17, 2010, D usek reported 16 "a l ot of push back on PKC C " but that "he w i l l be abl e to overcom e and 17 get the carri er [U .S.S. Abraham Li ncol n] i n port . " 18 n fact, m ake a port vi si t at Port Li ncol n C arri er Stri ke G roup di d, i 19 Klang C rui se C enter on or about O ctober 8-12, 2010 . 20 Thereafter, G D M A, and Aruffo asked D usek to exerci se hi s i nfl uence on G D M A's [Adm i ral ] today and convinced him that PKC C O n or about August 24, 2010, D usek reported to Franci s that he In a fol l ow up The U .S.S. Abraham A199. O n or about O ctober 6, 2010, a G D M A em ployee sent an 21 em ail to Franci s confi rm i ng that LAU SM AN 22 bow ls f or w hich G D M A pai d 26,680 Thai baht ($834 U SD ). 23 i s the better recei ved a pai r of elephant A200. O n or about D ecem ber 9, 2010, Aruffo sent Franci s an 24 em ail boasti ng, "H ere i s your C hristm as iPad f or [LAU SM AN 's w i f e] , wi l l 25 see w ho she bri ngs along to the party on 17 D ec [em ber] . " 26 a pi cture of a w rapped iPad to t hi s em ai l . 27 w rote to Franci s: "M et [LAU SM AN 's w i fe] today, she got the fl ow ers and 28 the iPad, she i s happy." Aruffo attached O n D ecem ber 13, 2010, Aruffo For C hri stm as 2010, Franci s al so provi ded an 63 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.70 Page 64 of 78 1 iPad to D usek, am ong others, and boxes of ten-count steaks valued at $900 2 per box to LAU SM AN , D usek, and others. A201. O n or about D ecem ber 28, 2010, H O R N BEC K sent an em ai l to 3 4 Franci s advi si ng him that the U .S.S. K i t t y H aw k C arri er Stri ke G roup 5 w ould be vi si t i ng Port Klang i n January 2011. A202. O n or about February 12, 2011, H O R N BEC K sent Franci s an 6 In the em ai l , H O R N BEC K w rote, "Q uick 7 em ail aski ng f or a j ob w i th G D M A. 8 questi on f or you. 9 on w hether I rem ain i n the N avy f or one m ore tour af t er t hi s or w hether Am w i thi n a few m onths of needing to m ake a deci si on W anted to see i f you have room w i thi n your organi zati on 10 I w rap i tup. 11 i n about a year. 12 thoughts. " 13 be an honor to have you aboard but presentl y the U SN has been taki ng, i n 14 m y opi ni on, extrem e m easures to cut cost w i th t hei r focus bei ng port 15 vi si t s and husbanding. Thi s has affected our naval support arm , w hich w e 16 have been act i vel y dow nsizing over the l ast year as a resul t. 17 I do bel i eve that thi ngs m ay im prove i n the next few years w hen an of f er 18 coul d be consi dered. I w i l l keep t hi s i n m ind and w hen thi ngs st art 19 pi cki ng 20 opportuni ty." H ave attached a copy of m y bi o - w ould appreci ate your Franci s responded to H O R N BEC K i n an em ail stati ng, "I t w ould up again i t w ould be my pri vi l ege to di scuss a H ow ever career 21 A203. O n or about A pri l 1, 2011, H O R N BEC K and Franci s exchanged 22 em ai ls regardi ng H O R N BEC K's ef f ort s to exert pressure on and advocate 23 before other U .S. N avy O ffi cers w i th the i ntent that the U .S.S. C arl 24 Vinson m ake a port vi si ti n Thai l and i n M ay 2011. 25 i nform s m e that w e w i l l m eet up i n the l and of sm i l es next m onth." 26 H O R N BEC K responded, "Look forw ard to seeing you. 27 to push that through 7™ 28 heari ng anythi ng through C TF70 yet." Franci s: "M y [ i ] nt el N eed the C ountry Team FLEET to m ake i t happen, though. 64 W e aren' t Francis repl i ed, "I have the dates Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.71 Page 65 of 78 1 from the C ountry [T]earn af t er I pl anted the pl an w i th 7FL at PKC C w i th 2 [the VAD M ] and S t af f . I am i n Bangkok on M onday and w i l l ensure i tpul l s 3 true. 2nd to 6th M ay." A2 04. O n or about Jul y 30, 2011, Franci s w rote LAU SM AN i n the 4 5 context of an upcom ing port vi si t , pi ersi de, by the U .S.S. G eorge 6 W ashington i n Laem C habang, Thai l and. 7 LAU SM AN to advocate w i thi n the U .S. N avy to send shi ps to the Port Klang 8 C rui se C enter and Kota Ki nabal u: "I hope you have not forgotten Port 9 Klang C [rui se C enter] or Kota Ki nabal u." In the em ai l stri ng, Franci s urged LAU SM AN responded: "H ave not 10 forgotten the form er si nce w e di d al l of the advance w ork w i th you and 11 had i t cancel ed...sti l lt ryi ng to encourage the l atter...l ove to t al k about 12 the potenti al w hen I see you[ . ] " 13 A205. O n or about August 24, 2011, Aruffo em ailed Franci s 14 advi si ng: " [LAU SM AN 'S w i fe] m entioned that you w ere t al ki ng to her about 15 t hi s t ri p 16 you... [LAU SM AN ] w i l lbe taki ng the w eek of f , so he i s avai l abl e, thi nk he 17 i s l ooki ng f or you to fund another fam i l y vacati on." [to Japan], she sai d you m ay be taki ng [the LAU SM AN S] w i th 18 A206. O n or about O ctober 13-15 and 11-17, 2011, respecti vel y, 19 i nci dent to a port vi si t of the U .S.S. G eorge W ashington to Singapore, 20 Franci s arranged and subsi di zed the 21 coupl e' s stay at the Shangri-La H otel , Singapore, at a cost to Franci s 22 of over $3,000. LAU SM AN S's and another U .S. N avy 23 A207. O n or about O ctober 18, 2011, LAU SM AN em ailed Franci s, 24 di scl osi ng that the U .S.S. M usti n w as depl oyi ng to Thai l and to render 25 hi s betw een us onl y. Late breaki ng assi stance to fl ood vi cti m s: "Keep t 26 U] nof f i ci al from m e. M U STIN i s l ooki ng to go i nto port very short fused. [ 27 wi thi n 28 fl oodi ng...don' t know w ho know s t hi s yet . " 24 hours...possibly [Laem C habang] 65 to provi de C O M SERV for Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.72 Page 66 of 78 1 A208. O n or about N ovem ber 11, 2011, Franci s purchased a 2 desi gner purse from a Versace store i n H ong Kong f or $11,345.83 SG D , 3 w hich he gave to LAU SM AN 'S w i fe on or about N ovem ber 12, 2011. 4 fe about N ovem ber 13, 2011, LAU SM AN 's w i 5 ovel y gi f t . referenced the Versace purse: "Leonard gave m e a l W hen I 6 got back to the room W hen I 7 looked at the bag m ore cl osel y I noti ced one of the l et t ers w hich w as i n 8 gol d w as broken of f and i n the bag. 9 l et t ers i t too cracked of f . O n or sent Aruffo an em ail w hich I opened i tup and i t w as a Versace purse. W hen I touched one of the other [W ] e w ent over to the Versace store and 10 they had the sam e purse, and they sai d they w ould send i ti n to get i t 11 repai red. " 12 i fyou st i l lhave i t , " to w hich LAU SM AN 'S w i fe agreed, confi rm i ng, "D ave 13 [LAU SM AN ] ... w i l l gi ve the bag to [the G D M A em ployee] w hen she com es on 14 board to pay bi l l s wi th the [U .S.S. G eorge W ashington Supply O ffi cer] i n 15 the m orni ng." Aruffo repl i ed: "Best to hand i t to [another G D M A em ployee] 16 A209. O n or about N ovem ber 14, 2011, the G D M A em ployee w rote 17 th m e," and confi rm ed, " [Versace] to Franci s, "I have the Versace bag w i aced i tw i th a new one. ... They sent t hei r apol ogi es." 18' repl 19 20 A210. Franci s subsequentl y arranged f or the replacem ent Versace bag to be m ai l ed to LAU SM AN 's w i fe. 21 A211. O n or about January 18, 2012, Franci s and a G D M A em ployee 22 exchanged em ai ls di scussi ng a gol f outi ng i n O ctober 2011 that G D M A 23 provi ded f or the LAU SM AN S at a cost of $550 SG D . 24 A212. O n or about January 31, 2012, SH ED D , usi ng a new 25 cooltoad.com account, ci garl l @ cool toad.com , w i th the handle John Sm ith, 26 al erted Franci s: "I' m 27 ve O ffi cer, "w ould pul li nto U .S.S. M i l i us / of w hich SH ED D w as the Executi 28 Port Klang, M alaysia i n a w eek." back up on ' toad I n and advi sed Franci s that the SH ED D conti nued, "I f you don' t happen 66 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.73 Page 67 of 78 >* 1 i nk up on our return to be i n Kuala Lum pur next w eek, I hope w e can l 2 t ri p i n the Jul y tim efram e. N ot sure of port vi si t s, but w e are tal ki ng 3 wi th Seventh Fl eet to hi t tw o ports out of Phuket, Singapore, Kota 4 Kinabalu, Hong Kong, 5 you to m eet - he' s our ki nd of guy. 6 from 7 Indonesi a and of course Phuket. 8 expensive f or the sai l ors and so are the hotel s." Franci s m e !" or Manila. responded: I've got a good [supply officer] for Let m e know i f you need anythi ng "M ay I suggest that you vi si t B al i , Singapore and H ong Kong are j ust too A213. O n or about June 12, 2012, LAU SM AN transm i tted a cable 9 10 from the U .S.S. G eorge W ashington to several U .S. N avy com m ands, 11 i ncl udi ng the FLC 12 Busan, Korea: "As husbanding servi ce provi der, [G D M A] provi ded f l exi bl e 13 and cost effecti ve servi ces cri t i cal to the success of our port vi si t . 14 The fact that G W 15 with [GDMA] as the [husbanding service provider] was transparent [sic], 16 t hei r professi onal i sm w as evi dent i n the excepti onal support provi ded." 17 A214. O n or about Jul y 6, 2012, Franci s, having recei ved a 18 l audatory personal em ai l from LAU SM AN regardi ng the port vi si ti n Busan, 19 sent LAU SM AN an em ail aski ng f or the "favor f or an of f i ci al l et t er and 20 AAR 21 and C 7F. 22 as w e expand our servi ce i nto Korea." H aving recei ved Franci s' s request, 23 on or about August 2, 2012, LAU SM AN w rote an af t er acti on report addressed 24 to the Fl eet Logi sti cs C enter i n Yokosuka, Japan w hich effused about 25 G D M A's perform ance supporti ng the U .S.S. G eorge W ashi ngton' s vi si t to 26 Busan, Korea: "C om pared to the previ ous ei ght [port vi si t s], t hi s w as 27 undoubtedl y 28 wi tnessed. si ng G D M A's perform ance i n i n Yokosuka, Japan, prai w as the f i r st C VN [ ai rcraf t carri er] to vi si t Busan [ af t er acti on report] m essage to i ncl ude N AVSU P FLC Si te Singapore Such docum entation w ould hel p sol i di f y G D M A's perform ance f i l e the sm oothest executi on of servi ce and support I have W hat i s especi al l y notew orthy i s that t hi s w as the f i r st U S 67 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.74 Page 68 of 78 1 N avy vi si t to 2 Provi der (H SP). I w ould l i ke to t el lyou the t ransi t i on of provi ders w as 3 absol utel y fl aw l ess ... 4 professi onal i sm , and 5 LAU SM AN concluded w i th a request to provi de addi ti onal i nsi ghts on hi s 6 i ke to of f er up m y team ' s operati onal view s on G D M A's acum en: "I w ould l 7 experti se throughout the [Seventh Fl eet' s Area of R esponsi bi l i ty] to you 8 and your contract m anagers. 9 on w hat w orks and w hat does not w ork and to hel p shape the servi ces that 10 Busan under your new ly contracted H usbanding Servi ce I w as extrem el y pleased at the perform ance, servi ce provi ded by the new ly contracted H SP." W e are standi ng by to gi ve our perspecti ve are provi ded at ports throughout the Seventh Fl eet." A215. Around the tim e of LAU SM AN 's change of com m and cerem ony, 11 12 m arki ng hi s departure from 13 i n Yokosuka, Japan on or about August 11, 2012, Franci s gave LAU SM AN a 14 John Paul Jones fountai n pen, w orth over $2,000. 15 2012, LAUSM AN w rote to Franci s: "Thank you f or a very speci al and rel axi ng 16 eveni ng. 17 perfect day. 18 a bot t l e of i nk. . : )" O n or about August 12, The sim pl e elegance of the evening w as the perfect end to a Iwi l l w ri te you a l et t er w hen w e get to H aw aii and I get A216 . 19 the U .S.S. G eorge W ashington, w hich occurred In an ef f ort to conceal the nature and extent of hi s 20 corrupt rel ati onshi p wi th Franci s and obstruct the 21 hi s 22 i nvesti gators, and otherw i se obstructed j ust i ce, as fol l ow s: conduct, LAU SM AN i . 23 destroyed evidence, m ade i nvesti gat i on i nto fal se statem ents to O n or about Septem ber 16, 2013, i n an i ntervi ew w i th 24 Speci al Agents from the N C IS and D C IS, LAU SM AN denied that G D M A had ever 25 pai d f or or subsi di zed a hotel room 26 G D M A had ever booked or reserved a hotel room f or him , LAU SM AN responded: 27 "N ot f or m e. I ' ve alw ays cal l ed ahead of ti m e and gotten room s under m y 28 nam e." 68 f or him . W hen then asked w hether Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.75 Page 69 of 78 w. * i i . On 1 or about Septem ber 16-17, af t er being 2 contacted by N C IS 3 dri ve 4 contai ned cl assi f i ed i nform ati on, i ncl udi ng docum ents and em ails he sent 5 and recei ved w hi l e acti ng as the C om m anding O ffi cer of the U .S.S. G eorge 6 W ashington. that he had and D C IS 2013, rem oved Speci al Agents, LAU SM AN destroyed a hard from W ashington w hich the U .S.S. G eorge 7 i i i . O n or about February 19, 2014, duri ng an i ntervi ew 8 conducted at the O ffi ce of the U ni ted States Attorney f or the Southern 9 Di st ri ct of C al i forni a, LAU SM AN m ade the fol l ow i ng fal se statem ents: (1) 10 LAU SM AN denied ever attendi ng a recepti on hosted by G D M A or Franci s; and 11 (2) LAU SM AN denied that Franci s ever booked or pai d f or hotel s f or him . 12 f ort to conceal the nature and extent of hi s A217 . In an ef 13 corrupt rel ati onshi p wi th Franci s and obstruct the i nvesti gati on i nto 14 hi s 15 otherw i se obstructed j ust i ce, as fol l ow s: conduct, LO VELESS i . 1:6 m ade fal se statem ents to i nvesti gators, and ng an i ntervi ew O n or about N ovem ber 5, 2013, duri th an N C IS Speci al Agent, LO VELESS, w hen asked i fhe had ever recei ved 17 w i ng" of val ue from 18 "anythi Franci s, repl i ed: "N ever." 19 i i . O n or about N ovem ber 5, 2013, during an interview 20 wi th an N C IS Speci al Agent, Lovel ess, w hen asked i f had ever stayed i n 21 a hotel room 22 repl i ed: "N o. I don' t thi nk so." duri ng hi s tim e i n the N avy f or w hich he di d not pay, 23 A218. C onti nui ng throughout the durati on of t hi s conspi racy, 24 pursuant to t hei r corrupt rel ati onshi p, D usek provi ded G D M A, Franci s, 25 and Aruffo w i th cl assi f i ed schedules of proj ected port vi si t s by U .S. 26 N avy vessel s approxi m atel y dozens of tim es and w henever speci f i cal l y 27 requested to do so by Franci s and Aruffo. D usek del i vered these schedules 28 i n person to Aruffo at the G D M A of f i ce i n Japan or em ai led them di rect l y 69 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.76 Page 70 of 78 •k 1 to Aruffo and Franci s, taki ng steps to avoi d detecti on by law enforcem ent 2 and U .S. N avy personnel . A219. O n 3 or about Septem ber 17, 2013, upon l earni ng that 4 Franci s, and others had been arrested, D usek del eted the contents of hi s 5 em ail account i n an ef f ort to avoi d detecti on by law enforcem ent. 6 Al li n vi ol at i on of Ti t l e 18, U ni ted States C ode, Secti on 371. C O U NT 2 - Bri bery (D AVID N EW LAN D ) (18 U .S.C . § 201(b)(2)(A) and (C )) 7 8 9 10 37 . hi s Indi ctm ent are reParagraphs 1 through 30, and 36 of t al l eged and i ncorporated by reference. 11 38 . Begi nning i n or about February 2006 on the hi gh seas and out 12 of the j uri sdi ct i on of any part i cul ar di st ri ct , and conti nui ng through 13 at 14 aka "N ew l y," a publ i c of f i ci al , engaged i n a course of conduct w hereby 15 he 16 accepted, and agreed to recei ve and accept thi ngs of val ue, personal l y 17 and f or other persons, i ncl udi ng entertai nm ent, hotel stays, and the 18 servi ces 19 perform ance of of f i ci al acts and i n return f or bei ng induced to do and 20 om i t to do acts i n vi ol at i on of hi s of f i ci al duti es, as opportuni ti es 21 arose. 22 Al li n vi ol at i on of Ti t l e 18, U ni ted States C ode, Secti on 201(b)(2)(A) 23 and (C ). l east i n di rect l y or and about Septem ber i ndi rect l y, of prosti tutes, i n 2013, corruptl y return defendant dem anded, f or bei ng D AVID sought, i nfl uenced N EW LAN D , recei ved, i n the C O U NT 3 - Bri bery (EN R IC O D EG U ZM AN ) (18 U .S.C . § 201(b)(2)(A) and (C )) 24 25 26 27 39. hi s Indi ctm ent are reParagraphs 1 through 30, and 36 of t al l eged and i ncorporated by reference. 28 70 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.77 Page 71 of 78 “ I*, 40 . 1 Begi nning i n or about February 2006 on the hi gh seas and out 2 of the j uri sdi ct i on of any part i cul ar di st ri ct and conti nui ng through at 3 l east i n or about Septem ber 2013, defendant EN R IC O D EG U ZM AN , aka "R i ck," 4 a publ i c of f i ci al , engaged i n a course of conduct w hereby he di rect l y 5 and 6 agreed to recei ve and accept thi ngs of val ue, personal l y and f or other 7 persons, i ncl udi ng entertai nm ent, hotel stays, gi f t s, and the servi ces 8 of prosti tutes, i n return f or bei ng i nfl uenced i n the perform ance of 9 of f i ci al acts and i n return f or bei ng induced to do and.om i t to do acts i ndi rect l y, corruptl y dem anded, sought, recei ved, accepted, and 10 i n vi ol at i on of hi s of f i ci al duti es, as opportuni ti es arose. 11 Al li n vi ol at i on of Ti t l e 18, U ni ted States C ode, Secti on 201(b)(2)(A) 12 and (C ). C O U N T 4 - Bri bery (D O N ALD H O R N BEC K) (18 U .S.C . § 201(b)(2)(A) and (C )) 13 14 15 41. 16 17 al l eged and i ncorporated by reference. 42 . 18 19 20 21 22 23 24 25 26 27 28 Paragraphs 1 through 30, and 36 of t hi s Indi ctm ent are re- Beginni ng i n or about February 2006 on the hi gh seas and out of the jurisdiction of any particular district and continuing through at l east i n or about Septem ber 2013, defendant D O N ALD H O R N BEC K, aka "Bubbl es," a publ i c of f i ci al , engaged i n a course of conduct w hereby he di rect l y and i ndi rect l y, corruptl y dem anded, sought, recei ved, accepted, and agreed to recei ve and accept thi ngs of val ue, personal l y and f or other persons, i ncl udi ng entertai nm ent, hotel stays, and the servi ces of prosti tutes, i n return f or bei ng i nfl uenced i n the perform ance of of f i ci al acts and i n return for bei ng induced to do and om it to do acts i n vi ol at i on of hi s of f i ci al duti es, as opportuni ti es arose. 71 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.78 Page 72 of 78 J», 1 Al li n vi ol at i on of Ti t l e 18, U ni ted States C ode, Secti on 201(b)(2)(A) 2 and (C ). C O U N T 5 - Bri bery (JAM ES D O LAN ) (18 U .S.C . § 201(b)(2)(A) and (C )) 3 4 5 6 7 43 . Paragraphs 1 through 30, and 3 6 of t hi s Indi ctm ent are re- al l eged and i ncorporated by reference. 44 . Begi nning i n or about January 2008 on the hi gh seas and out of 8 the j uri sdi ct i on of any part i cul ar di st ri ct and conti nui ng through at 9 l east i n or about Septem ber 2013, defendant JAM ES D O LAN , aka "JD ," a 10 publ i c of f i ci al , engaged i n a course of conduct w hereby he di rect l y and 11 i ndi rect l y, corruptl y dem anded, sought, recei ved, accepted, and agreed 12 to recei ve and accept thi ngs of val ue, personal l y and f or other persons, 13 i ncl udi ng entertai nm ent, hotel stays, and the servi ces of prosti tutes, 14 i n return f or bei ng i nfl uenced i n the perform ance of of f i ci al acts and 15 i n return f or being induced to do and om i t to do acts i n vi ol at i on of 16 hi s of f i ci al duti es, as opportuni ti es arose. 17 Al li n vi ol at i on of Ti t l e 18, U ni ted States C ode, Secti on 201(b)(2)(A) 18 and (C ). C O U N T 6 - Bri bery (BR U C E LO VELESS) (18 U .S.C . § 201(b) (2) (C )) 19 20 21 22 23 24 25 26 27 28 45 . Paragraphs 1 through 30, and 36 of t hi s Indi ctm ent are re- al l eged and i ncorporated by reference. 46 . Begi nning i n or about Jul y 2 007 on the hi gh seas and out of the j uri sdi ct i on of any part i cul ar di st ri ct and conti nui ng through at l east i n or about Septem ber 2013, defendant BR U C E LO VELESS, a publ i c of f i ci al , engaged i n a course of conduct w hereby he di rect l y and i ndi rect l y, corruptl y dem anded, sought, recei ved, accepted, and agreed to recei ve and accept thi ngs of val ue, personal l y and f or other persons, 72 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.79 Page 73 of 78 1 i ncl udi ng entertai nm ent, hotel stays, and the servi ces of prosti tutes, 2 i n return f or bei ng induced to do and om it to do acts i n vi ol at i on of 3 hi s of f i ci al duti es, as opportuni ti es arose. 4 Al li n vi ol at i on of Ti t l e 18, U ni ted States C ode, Secti on 201(b)(2)(C ). COUNT 7 - Bribery (DAVID LAUSMAN) (18 U.S.C. § 201(b)(2)(A) and (C)) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 47 . hi s Indi ctm ent are reParagraphs 1 through 30, and 36 of t al l eged and i ncorporated by reference. 48 . From i n or about February 2006 on the hi gh seas and out of the j uri sdi ct i on of any part i cul ar di st ri ct and conti nui ng through at l east i n or about Septem ber 2013, defendant D AVID LAU SM AN , aka "Too Tal l , " publ i c of f i ci al , engaged i n a course of conduct w hereby he di rect l y and i ndi rect l y, corruptl y dem anded, sought, recei ved, accepted, and agreed to recei ve and accept thi ngs of val ue, personal l y and f or other persons, n return f or being i ncl udi ng entertai nm ent, hotel stays, and gi f t s, i i nfl uenced i n the perform ance of of f i ci al acts and i n return f or being induced to do and om it to do acts i n vi ol at i on of hi s of f i ci al duti es, as opportuni ti es arose. Al li n vi ol at i on of Ti t l e 18, U ni ted States C ode, Secti on 201(b)(2)(A) and (C ). C O U N T 8 - Bri bery (STEPH EN SH ED D ) (18 U .S.C . § 201(b)(2)(A) and (C )) 21 22 23 24 25 26 27 28 a 49. hi s Indi ctm ent are reParagraphs 1 through 30, and 36 of t al l eged and i ncorporated by reference. 50 . Begi nni ng i n or about M ay 2007 on the hi gh seas and out of the j uri sdi ct i on of any part i cul ar di st ri ct and conti nui ng through at l east i n or about Septem ber 2013, defendant STEPH EN SH ED D , a publ i c of f i ci al , engaged i n a course of conduct w hereby he di rect l y and i ndi rect l y, corruptl y dem anded, sought, recei ved, accepted, and agreed to recei ve 73 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.80 Page 74 of 78 1 and accept thi ngs of val ue, personal l y and f or other persons, i ncl udi ng 2 cash, entertai nm ent, hotel stays, gi f t s, and the servi ces of prosti tutes, 3 i n return f or bei ng i nfl uenced i n the perform ance of of f i ci al acts and 4 i n return f or being induced to do and om i t to do acts i n vi ol at i on of 5 hi s of f i ci al duti es, as opportuni ti es arose. 6 Al li n vi ol at i on of Ti t l e 18, U ni ted States C ode, Secti on 201(b)(2)(A) 7 and (C ). C O U NT 9 - Bri bery (M AR IO H ER R ER A) (18 U .S.C . § 201(b)(2)(A) and (C )) 8 9 51. Paragraphs 1 10 11 14 15 16 17 18 19 20 21 22 23 24 25 26 27 of t hi s Indi ctm ent are re- al l eged and i ncorporated by reference. 52 . 12 13 through 30, and 36 Begi nning i n or about M ay 2008 on the hi gh seas and out of the j uri sdi ct i on of any part i cul ar di st ri ct and conti nui ng through at l east i n or about Septem ber 2013, aka "C hoke defendant M AR IO O IC ," a publ i c of f i ci al , engaged H ER R ER A, i n a aka "C hoke," course of conduct w hereby he di rect l y and i ndi rect l y, corruptl y dem anded, sought, recei ved, accepted, and agreed to recei ve and accept thi ngs of val ue, personal l y and f or other persons, i ncl udi ng entertai nm ent, hotel stays, gi f t s, and the servi ces of prosti tutes, i n return f or bei ng i nfl uenced i n the perform ance of of f i ci al acts and i n return f or bei ng induced to do and om i t to do acts i n vi ol at i on of hi s of f i ci al duti es, as opportuni ti es arose. Al li n vi ol at i on of Ti t l e 18, U ni ted States C ode, Secti on 201(b)(2)(A) and (C ). C O U N T 10 - Bri bery (R O BER T G O R SUC H ) (18 U .S.C . § 201(b)(2)(A) and (C )) 53. Paragraphs 1 through 30, and 36 of t hi s Indi ctm ent are re-al l eged and i ncorporated by reference. 28 74 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.81 Page 75 of 78 4 1 54 . Begi nning i n or about February 2006 on the hi gh seas and out of 2 the j uri sdi ct i on of any part i cul ar di st ri ct and conti nui ng through at 3 l east i n or about Septem ber 2013, defendant R O BER T G O R SU C H , a publ i c 4 of f i ci al , engaged 5 i ndi rect l y, corruptl y dem anded, sought, recei ved, accepted, and agreed 6 to recei ve and accept thi ngs of val ue, personal l y and f or other persons, 7 i ncl udi ng 8 prosti tutes, i n 9 of f i ci al acts and i n return f or bei ng induced to do and om i t to do acts i n a course entertai nm ent, return of conduct w hereby hotel stays, f or bei ng he gi f t s, and i nfl uenced i n the the di rect l y and servi ces of perform ance of 10 i n vi ol at i on of hi s of f i ci al duti es, as opportuni ti es arose. 11 Al li n vi ol at i on of Ti t l e 18, U ni ted States, C ode, Secti on 201(b) (2) (A) 12 and (C ). C O U N T 11 - False Statem ents (D AVID LAU SM AN ) (18 U .S.C . § 1001(a) (2)) 13 14 15 16 Paragraphs 1 through 30 of t hi s Indi ctm ent are re-al l eged and 55. i ncorporated by reference. 56 . O n or about February 19, 2014, w i thi n the Southern D i st ri ct of 17 C al i forni a, defendant D AVID 18 wi l l f ul l y 19 representati ons i n a m atter w i thi n the j uri sdi ct i on of the Executi ve 20 Branch of the U ni ted States, to w i t : i n an i ntervi ew w i th Speci al Agents 21 of N C IS and D C IS, LAU SM AN sai d: a) he di d not attend recepti ons hosted 22 by Franci s; and b) Franci s never booked or pai d f or a hotel room 23 LAU SM AN . 24 m ade 57. These m ateri al l y LAU SM AN , fal se aka and "Too Tal l , " know i ngl y and fraudul ent statem ents and representati ons w ere statem ents and for fal se because, as 25 defendant D AVID LAU SM AN then and there w el l knew : a) LAU SM AN attended, 26 and w as photographed at, recepti ons hosted by Franci s; and b) on num erous 27 occasi ons, i ncl udi ng, am ong others, on A pri l 30-M ay 4, 2008, M ay 4-10, 28 75 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.82 Page 76 of 78 » *1 1 2008, and August 1-7, 2009, Franci s booked and pai d f or hotel room s for 2 LAU SM AN . 3 Al li n vi ol at i on of Ti t l e 18, U ni ted States C ode, Secti on 1001(a)(2). C O U NT 12 - O bstructi on of Justi ce (D AVID LAU SM AN ) (18 U .S.C . § 1519) 4 5 6 7 58. Paragraphs 1 through 30 of t hi s Indi ctm ent are re-al l eged and i ncorporated by reference. 8 59. O n or about Septem ber 16-17, 2013, w i thi n the Southern D i st ri ct 9 of C al i forni a, and elsew here, defendant D AVID LAU SM AN , aka "Too Tal l , " 10 know i ngl y m uti l ated and destroyed a tangi bl e obj ect, to w i t, a hard dri ve 11 contai ni ng docum ents and em ai l s sent and recei ved by LAU SM AN w hi l e he 12 w as the C om m anding O ffi cer of the U .S.S. G eorge W ashington, w i th the 13 i ntent to im pede, obstruct, and i nfl uence the i nvesti gati on and proper 14 adm i ni strati on of j usti ce regardi ng a m atter that the defendant knew w as 15 wi thi n the j uri sdi ct i on of N C IS, D C IS, and the D epartm ent of Justi ce, 16 agencies of the U ni ted States. 17 Al li n vi ol at i on of Ti t l e 18, U ni ted States C ode, Secti on 1519. 18 C O U N T 13 - C onspi racy To C om m it H onest Servi ce Fraud (A l l D efendants) (18 U .S.C . § 1349, 1346 & 1343) 19 20 21 22 23 24 25 26 27 28 60. Paragraphs 1 through 30, and 33 through 36 of t hi s Indi ctm ent are re-al l eged and i ncorporated by reference. 61. Begi nning i n or about February 2006 on the hi gh seas and outsi de the j uri sdi ct i on of any part i cul ar di st ri ct and conti nui ng through at l east February D EG U ZM AN , aka 2014, defendants D AVID "R i ck," D O N ALD N EW LAN D , H O R N BEC K, aka aka "N ew ly," EN R IC O "Bubbl es," JAM ES D O LAN , "aka JD ," BR U C E LO VELESS, D AVID LAU SM AN , aka "Too Tal l , " STEPH EN SH ED D , M AR IO H ER R ER A, aka "C hoke," aka 76 C hoke O IC ," and R O BER T G O R SU C H Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.83 Page 77 of 78 , b >. • 1 (col l ect i vel y "the defendants") di d know i ngl y and i nt ent i onal l y conspi re 2 and agree w i th each other and w i th others, i ncl udi ng Franci s, Aruffo, 3 AG , Brooks, Sanchez, and D usek, to devise a m ateri al schem e and art i f i ce 4 to defraud the ci ti zens of the U ni ted States and the U .S. N avy of t hei r 5 ri ghts to the honest, l oyal , and f ai t hf ul , servi ces, deci si ons, acti ons, 6 and perform ance, through bri bery and kickbacks and the concealm ent of 7 m ateri al i nform ati on; and f or the purpose of executi ng 8 defendants 9 transm i tted w ri ti ngs, si gns, and si gnal s by m eans of w i re com m unication and t hei r conspi rators forei gn com m erce, transm i tted and t hi s schem e, caused to be 10 i n i nterstate and 11 conspi rators. 12 Al li n vi ol at i on of Ti t l e 18, U ni ted States C ode, Secti ons 1349, 1346, 13 and 1343. FO R FEITU R E ALLEG ATIO N S 14 15 i ncl udi ng m any em ail s am ong the 62 . The al l egati ons set f ort h i n C ounts 1 through 10 and C ount 13 16 of t hi s Indi ctm ent are 17 al l egi ng f orf ei t ure to the U ni ted States pursuant to Ti t l e 18, U ni ted 18 on 981(a) (1) (c), and Ti t l e 28, U ni ted States C ode, States C ode, Secti 19 Secti on 2461 (c) . 20 63 . i ncorporated by reference f or the purpose of Pursuant to Federal R ule of C ri mi nal Procedure 32.2, noti ce i s 21 hereby gi ven to the above-nam ed defendants that upon convi cti on of the 22 offenses set f ort h i n C ounts 1 through 10 and C ount 13, the U ni ted States 23 wi l lseek f orf ei t ure as part of any sentence i n accordance w i th Ti t l e 18, 24 U ni ted States C ode, Secti on 981(a)(1)(c), and Ti t l e 28, U ni ted States 25 C ode, Secti on 2461(c), i ncl udi ng but not l i mi t ed to al l property, real 26 and personal , w hich consti tutes or i s deri ved from proceeds traceabl e to 27 the offenses of conspi racy, bri bery, and conspi racy to com m it honest 28 servi ces w i re fraud, as al l eged i n t hi s Indi ctm ent. 77 Case 3:17-cr-00623-JLS Document 1 Filed 03/10/17 PageID.84 Page 78 of 78 64 . 1 I fany of the above-described forfei tabl e property, as a resul t 2 of any act or om ission of the defendants - 3 upon the exercise of due di l i gence; (b)has been transferred or sold to, 4 or deposited w ith, a thi rd party; (c) 5 j uri sdi ct i on of the C ourt; (d) has been substanti al l y dim inished in 6 value; or (e) 7 subdivided w ithout di f f i cul t y; i ti s the i ntent of the U nited States, 8 pursuant to Ti t l e 9 incorporates the has (a) be cannot been placed located beyond the has been com m ingled w ith other property w hich cannot be 18, U nited provisi ons States of C ode, Ti tl e 21, Section 2461(c) w hich U nited States C ode, 10 Section 853(p), 11 defendants up to the value of the property described above as being 12 subject to forfei ture. to seek forfei ture of any other property D ATED : M arch 9, 2017. 13 BILL: 14 15 16 17 ALAN A W . R O BIN SO N Acting U nited States Attorney 18 19 By: M AR K W . PLETC H ER PATR IC K H O VAKIM IAN Assi stant U .S. Attorneys 20 21 22 24 ANDREW W EISSM AN N C hief, Fnaud Section, C rim inal D i vi si on C 25 By* 23 26 BR IAN R . YO UNG Assi stant C hief, Fraud Section, C rim inal D i vi si on 27 28 78 of the