The Complex

The Navy Cuts Ties With Contractor Accused of Trading Prostitutes for Secrets

The fall of "Fat Leonard" continues.

The U.S. Navy has killed three contracts worth about $200 million with Glenn Defense Marine Asia, the company accused of furnishing prostitutes, cash and other perks to active-duty officers in exchange for military information that was either sensitive or classified. The acknowledgement, first reported by USA Today, marks the latest woes for Glenn Defense and its CEO "Fat Leonard" Glenn Francis, a Singapore-based defense contractor implicated in a globe-spanning scandal that has threatened the career of several top officers.

A Navy official said Thursday that the service terminated three contracts worth about $196 million with Glenn Defense. In addition, another $7.5 million in contracts with the contractor will not be renewed. The official spoke on condition of anonymity, given the sensitivity of the case and investigation.

Francis was among the first charged in the case. Five men now face charges, including Cmdrs. Michael Vannak Khem Nisiewicz and Jose Luis Sanchez and John Bertrand Beliveau, a supervisory agent with the Naval Criminal Investigative Service. Another Glenn Defense official -- Alex Wisidagama, of Singapore -- also have been charged in connection with the scheme, in which Francis's company used information leaked by Navy officials to defraud the U.S. of millions of dollars, according to U.S. prosecutors.

Other Navy officials face scrutiny in the case. Among them are two senior officers whose access to classified information was suspended Nov. 8. Vice Adm. Ted Branch, pictured above, and Rear Adm. Bruce Loveless -- the service's director of naval intelligence and director of intelligence operations, respectively -- have not been charged with any crimes, but the suspension "was deemed prudent given the sensitive nature [of] their current duties and to protect and support the integrity of the investigative process," Rear Adm. John Kirby, the Navy's top spokesman, said in a statement at the time.

The Navy also relieved of command Capt. Daniel Dusek, the captain of the amphibious assault ship Bonhomme Richard, in connection with the investigation. He has not been charged with any crimes, but officials said that commanders lost confidence in him.

An examination of more than 100 pages in criminal complaints filed by U.S. authorities in the cases outlines a conspiracy in which Francis used bribery as a matter of course to get ahead in the business world. The colorful character has a number of nicknames, according to court documents, including "Fat Leonard," "the Godfather" and "Lion King." He allegedly arranged for prostitutes to meet with Navy officials in several cities across the Pacific. In exchange, they provided information that Glenn Defense used to its advantage while "husbanding" ships, providing food, water, waste removal, and other tasks, prosecutors say.

The officers implicated in the scandal nearly all share a common thread: service on the Blue Ridge, the command ship for the Navy's 7th Fleet, or service at Fleet Logistics Center Yokosuka in Japan. The facility provides repairs and maintenance to a variety of U.S. and allied ships and equipment.

Sanchez, accused of accepting prostitutes and at least $100,000 in bribes, served as the executive officer for the Navy's Fleet Logistics Center in Yokosuka from May 2012 until April 2013, according to court papers. Previously, he was the director of operations for the Navy's logistics center in Singapore from July 2010 to May 2012. From April 2008 to April 2010, he was the deputy logistics officer for the 7th Fleet, working primarily from Yokosuka.

Misiewicz, accused of accepting prostitutes, cash, concert tickets and other perks, was the commanding officer of the destroyer Mustin, home-ported in Yokosuka, from about June 2010 to January 2011, prosecutors say. From January 2011 to April 2012, he was the deputy operations officer aboard the Blue Ridge.

Dusek, the relieved commander of the Bonhomme Richard, served as the 7th Fleet deputy operations officer aboard the Blue Ridge from January 2009 through February 2011, according to his official biography. The Navy says that in that role, he was responsible for all aspect of fleet operations for 7th Fleet.

Branch, the three-star admiral, did not serve full-time at Yokosuka in any capacity, but was previously the executive assistant to the commander of U.S. Pacific Fleet, according to his official biography.  He would have traveled the region extensively in that position.

Loveless, the other flag officer implicated, also was aboard the Blue Ridge while serving as the assistant chief of staff for intelligence for 7th Fleet, according to his official biography.

As an NCIS agent, Beliveau did not serve on the Blue Ridge. But court documents say he served as an agent assigned to the 7th Fleet in Yokosuka from 2005 through 2008. From 2008 to April 2012, he was stationed in Singapore for NCIS, working with Navy officials and local authorities to safeguard security for ships. It is in this context that Beliveau had regular contact with Francis and other Glenn Defense officials, authorities allege.

The Navy began investigating the case in 2010 after discovering irregularities in Glenn Defense's business practices, officials say. That is one year after Glenn Defense allegedly arrange for prostitutes to meet with Sanchez and other Navy officers, court documents say.

It isn't clear how many more officers could be charged, but an unidentified U.S. citizen and former Navy officer is accused of working on Glenn Defense's behalf to recruit some of the officers currently charged in the case. The unnamed recruiter is identified as "EA" in court documents, and purportedly left the service in 2007.

The criminal complaint for Misiewicz includes an alleged exchange in which the commander forwards sensitive information about ship schedules to Glenn Defense. "EA" then allegedly wrote "him!! :)", using an emoticon in the process. Francis's alleged response appears cocky.

"You bet the Godfather," he wrote, according to court documents.

EA's response: "All hail!!!"

Vanderlei Almeida/AFP/Getty Images

The Complex

The FBI is Helping the NSA Spy, but Senators Don't Want to Know About It

James Comey's first appearance before a congressional committee as the new director of the FBI was a walk in the park. The hearing Thursday, on threats to the U.S. homeland, was notable not for what Comey said, so much as what he didn't say, and what he wasn't asked.

After telling members of the Homeland Security and Governmental Affairs Committee that he thinks cyber attacks and homegrown extremists are the biggest threats to U.S. national security, Comey, who was sworn in on September 4, was asked only a few questions about the role of government surveillance in monitoring those threats. And the questions were not about the FBI's activities, but the National Security Agency's. Which is a shame. While the leaks of the last five months have mostly been about the NSA's snooping, it's the bureau that actually serves surveillance orders on telephone companies, e-mail and Internet service providers, and other corporations in the United States whose data the government wants to analyze.

Classified documents disclosed by the former NSA contractor Edward Snowden show a little-known FBI organization, the Data Intercept Technology Unit, is apparently in charge of obtaining information from companies like Google and Facebook as part of the NSA's Prism system, and then providing the data to the NSA. It's this handoff of information, some security experts say, that allows the companies to avoid the appearance of complicity in surveillance programs by saying they don't give information directly to the NSA. The Senate panel asked no questions about Prism.

The lack of inquiry on surveillance was all the more surprising considering that Comey has famously held forth on that subject before. Appearing before another Senate committee in May 2007, Comey recounted how, three years earlier, he had rushed to the hospital bedside of a critically ill Attorney General John Ashcroft and fended off White House aides who wanted him to sign an order authorizing President George W. Bush's so-called warrantless wiretapping program. Comey, along with other senior Justice Department officials, had concluded that a significant part of the program was illegal. As the acting attorney general, Comey refused to sign the order, and he later told Congress that he was "very upset; I was angry" at the White House officials' attempts to "take advantage of a very sick man..."

"That night was probably the most difficult night of my professional life, so it's not something I forget," Comey said.

Not that the Senate panel was convened to revisit history. But considering that the administration has stressed the importance, and the legality, of surveillance programs in protecting the United States, the FBI director is a logical official to address the role of law enforcement in those efforts.

Instead, Congress has focused more attention on the NSA director, Keith Alexander, even though he technically neither orders surveillance operations nor has the legal responsibility for executing them in the United States. Alexander has appeared six times before congressional committees since the first Snowden leak in June, according to a review of public documents. Robert Mueller, whom Comey replaced at the head of the FBI, testified about those programs twice, in his last appearances before the House and Senate judiciary committees. Those were previously-scheduled hearings about a range of FBI oversight issues, and they took place shortly after the initial leaks, when relatively few surveillance programs had been disclosed.

The leaks themselves, however, were the subject of some discussion at Thursday's hearing. Comey and his fellow witnesses argued that Snowden had damaged the work of government security agencies and tipped off the United States' enemies.

Comey said that in his first two months on the job, he has seen terrorists "change their behavior," he argued as a result of knowing how the government monitors their communications.

"Terrorists are seeking to learn about the ways we collect intelligence," said Matt Olsen, the director of the National Counterterrorism Center. The leaks about NSA programs have "made our job significantly harder." Neither Olsen nor Comey provided any information to substantiate those claims.

The hearing was nominally about threats to U.S. security, and in his appraisal, Comey put himself in lock step with his predecessor. Terrorism and cyber attacks top the list, he said. The risk of a "spectacular" attack on the scale of the September 11 attacks had diminished since 2001, thanks to counterterrorism operations overseas, Comey judged. But that the risk remains high of an attack by extremists in the United States who are inspired by terrorist propaganda and successful attacks in foreign countries. Olsen and Rand Beers, the acting secretary of the Homeland Security Department, concurred with that assessment.

Comey said that Mueller had told him that the threat of cyber attacks would become the most pressing issue facing the FBI in Comey's time as director. Now that he's in the job, Comey said he agrees. Americans have connected all aspects of their personal and professional lives to the Internet, and placed their money, their secrets, and their intellectual property there, Comey said. "There are no safe neighborhoods." Everything and everyone is a target.

Comey praised the work of the Homeland Security Department, with which the FBI "is working better than ever." For years the department has feuded with the NSA over which agency should have the primary responsibility for protecting U.S. computer networks and critical infrastructure, such as the power grid and the financial sector, from cyber attackers and spies. The Snowden revelations, which have damaged NSA's credibility in the eyes of many lawmakers and businesses, have put wind in Homeland Security's sales as it asserts its role in leading national cyber security strategy, current and former U.S. officials say.

Beers, who urged the Senate to confirm President Obama's nominee for secretary, Jeh Johnson, said that the department is doing all it can to implement the administration's cybersecurity policy under current authorities and an executive order. But it cannot move forward without legislation from Congress, Beers said. Topping the department's wish list is a provision in law that would allow companies to share information with the government for the purposes of preventing cyber attacks without the threat of being sued if that information turns out to contain private information about Americans.

At the FBI, which is responsible for investigating computer crimes and intellectual property theft, Comey said cyber task forces have been set up in each of the bureau's 56 field offices across the country. They work with state and local officials and businesses to investigate and help prevent crime. And FBI agents are working in the offices of law enforcement agencies in Romania, Estonia, the United Kingdom, the Netherlands, and other countries, Comey said.

Comey warned that mandatory budget cuts, as part of the sequestration process, would hinder the FBI's operations. "I worry we're approaching a situation where we're going to do less with less," Comey said. The bureau is not hiring additional personnel. There are about 36,000 employees at the FBI now, and Comey said he will cut that number down to 31,000, about where it was in 2009. He said that he will also cut $700 million in expenditures from the FBI's budget this year, on top of $600 million Mueller took out last year.

As the hearing came to a close, Committee Chairman Thomas Carper, from Delaware, asked Comey if he could assure Americans that the NSA was not using their personal information inappropriately. (No one from the spy agency was present for the hearing.)

"I've seen no indications NSA is acting outside the law," Comey said, adding that the agency is "obsessed with compliance" and operating by the rules. Olsen, who once served as general counsel of the NSA, concurred.

Comey said he welcomed the opportunity to discuss surveillance operations, and said committee hearings were a fundamental component of the constitutional system of checks and balances.

"We shouldn't be doing anything we can't explain," Comey said.

It was a commendable sentiment, but odd in the moment, considering Comey wasn't asked to explain much of anything.