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Inside the 'Fat Leonard' Navy Contract Scam

High-ranking officials accepted money, sex and gifts in a scheme that defrauded the Navy out of millions of dollars.

A war hero gone bad. A mastermind villain named Fat Leonard. Money and sex for favors and information. This story has it all – including the bad guys facing justice in the end.

Last week Robert Gilbeau became the first active duty admiral to be sentenced for a federal crime. He’ll serve 18 months in jail for lying about his relationship with Leonard Glenn Francis, better known as Fat Leonard due to his 350-lb. frame.

Although Gilbeau committed a number of crimes, his plea deal only holds him accountable for lying to investigators about his relationship with Fat Leonard.

The reality is that during his roles as supply officer on the USS Nimitz, head of the Tsunami Relief Crisis Team, head of the aviation material support team and commander of the Defense Contract Management Agency, he was accepting cash kickbacks of as much as $40,000 for awarding contracts to Glenn Defense Marine Asia, and overlooking inflated invoices from the company.

GDMA, of course, is owned by Fat Leonard. It’s a services company that provides food, water, fuel and waste removal services at ports throughout the Pacific to the U.S. Navy, as well as other fleets.

Now, it’s bad enough to provide preferential treatment, but GDMA was securing the contracts by undercutting other bids and then over-invoicing the Navy. During Gilbeau’s 15-year relationship with the company, he pushed these invoices through in exchange for cash, lavish dinners and prostitutes.

Fat Leonard is also in federal custody, having pled guilty to defrauding the U.S. Navy of $35 million. It’s estimated that he provided more than $500,000 in kickbacks that not only secured these contracts, but gave him access to information that kept him a step ahead of Naval investigators.

Gilbeau, who earned a Bronze Star during his time in service, was allowed to retire from the Navy last October. He was demoted to captain and ordered to pay $150,000 in fines and restitution, but retained his taxpayer-subsidized pension of $10,000/month.

Although more are suspected and under scrutiny for their roles in the scheme, 20 current and former Navy officials have been charged, with 10 pleading guilty to receiving similar bribes that even extended to Lady Gaga tickets.

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