U.S. Navy’s ‘Sex for Secrets’ bribery scandal biggest in Navy history

SAN DIEGO (KUSI) — The "Sex for Secrets" bribery scandal is the biggest in the history of the United States Navy and it’s growing.

A grand jury indictment unveiled in San Diego is shedding new light on the bribery and sex scandal involving senior Navy officers and a defense contractor known as "Fat Leonard."

The Seventh Fleet is the Navy’s largest and its motto is, "Ready Power for Peace."

But according to the new indictment, some of the fleet’s commanders were ready for parties and prostitutes. 

Prosecutors said Retired Rear-Admiral Bruce Loveless and eight other officers accepted luxury travel, expensive dinners and prostitutes and in return, they gave a civilian contractor classified information about their ships’ movements.

"This is beyond the pale. When you look at the ranks and the level of officers that are involved in this scandal, it is something the Navy has not dealt with literally in decades," said Commander Kirk Lippold, Retired Former Commander of the USS Cole. 

According to the indictment, when some of the officers docked in Manila in 2007, they went to a party at the Macarthur Suite in the Manila Hotel. 

The prosecutors wrote that "during the party, historical memorabilia-related to General Douglas Macarthur were used by the participates in sexual acts."

"Totally disgusting. There is absolutely — when you look at that, that is the history of the United States of America. And to take those artifacts and embarrass General MacArthur and his family in that manner … being used in what is purported to be those sexual acts, it’s just, be- I, I – there’s no words that can describe it," said Commander Lippold.

The contractor who allegedly supplied the lavish gifts and parties was Leonard Glenn Francis, also known as "Fat Leonard," a wealthy, flamboyant executive who ran a marine contracting agency, which provided dockside services to U.S. Navy ships.

"Fat Leonard" Francis has pleaded guilty in San Diego and is awaiting sentencing. But until now, many of the details of what happened were not public.

In May 2008, according to prosecutors, Francis allegedly paid for Admiral Loveless and five other Navy men to stay at the Shanghai-La Hotel in Manila. 

In the indictment, prosecutors write, "Francis hosted a raging multi-day party with a rotating carousel of prostitutes in attendance, during which the conspirators drank all of the Dom Perignon available at the Shanghai-La," to the tune of more than $50,000.

For some officers, in 2006, there was a dinner in Singapore with a "Foi Gras Terrine," "Duck Leg Confit," "Roasted Chilean Sea Bass," followed by expensive drinks and "Cohiba Cigars, $2,000 per box."

Prosecutors said in return, the officers helped steer Navy ships to ports operated by Francis, where he over-billed the Navy by tens of millions of dollars.

Experts said Admiral Loveless, who was a top intelligence officer, and the others charged took massive ricks that could have exposed American secrets.

"They’re susceptible to being blackmailed by foreign intelligence agencies, by other corporations, by this person himself, who they’ve been involved with,’ said John Altenburg, Former Army Jag Officer. 

Admiral Loveless was arrested Tuesday in his Coronado penthouse apartment. His attorney said Loveless has no comment on the case.