Guam link revealed in ‘epic’ Navy bribery scandal

"This is a fleecing and betrayal of the United States Navy in epic proportions, and it was allegedly carried out by the Navy's highest-ranking officers." – acting U.S. Attorney Robinson

A defense contractor who has pleaded guilty in a massive case alleging U.S. military officials received bribes – including luxury hotel stays, fancy dinners and services from Manila prostitutes – also tried to undercut a Guam bidder for a contract that provides services to visiting U.S. Navy ships and submarines, a federal indictment states.

The U.S. Department of Justice announced the indictment March 14.

The Guam part of the case was a small portion of a major bribery scandal that has indicted newly retired U.S. Navy Rear Admiral Bruce Loveless and eight other high-ranking Navy officers. They're charged in a federal indictment with accepting luxury travel, elaborate dinners and services of prostitutes from foreign defense contractor, according to the indictment.

The Guam tie allegedly involves Lt. Cmdr. Stephen Shedd, 48, of Colorado Springs, Colorado, who was among nine people charged with accepting luxury travel, elaborate dinners and the services of prostitutes from foreign defense contractor Leonard Francis, who was the chief executive officer of Glenn Defense Marine Asia. The contract provides services to visiting military ships, including tugboats, and replenishment of ship supplies.

The military officials received the bribes "in exchange for classified and internal U.S. Navy information," according to the Justice Department.

The indictment described instances when some of the indicted military officials helped provide advance information – sometimes months ahead – to Francis on when Navy warships and submarines would make port visits to places like Manila, Singapore, Hong Kong and other destinations.

Guam connection

The Guam mention in the 70-plus page indictment states that on or about Feb. 12, 2008, Shedd, using his cooltoad.com email account, sent Francis an email describing five months of schedules for various U.S. Navy ships and submarines, according to the indictment.

"On or about Feb. 17, 2008, Francis asked Shedd to provide him with proprietary invoice information for (Glenn Defense Marine Asia) competitor "from Vietnam, Cambodia, Honiara and port visits, in Saipan, Palau, Tahiti, Comoros, Madagascar, Seychelles, Mauritius (and) Guam" in 2006 , 2007 and 2008, according to the indictment.

"I need data info to plan for upcoming solicitations," according to an email from Francis to Shedd, the indictment states. The indictment states Shedd replied: "I'll work on the cost reports once I return from Hawaii ... What are your thoughts about a get-together?"

Some of these meetings were paid for by Francis and involved other Navy officers and a Marine Corps officer.

Justice Department: Defendants 'sold their honor and responsibility'

"The defendants in this indictment were entrusted with the honor and responsibility of administering the operations of the U.S. Navy's Seventh Fleet, which is tasked with protecting our nation by guarding an area of responsibility that spanned from Russia to Southeast Asia and the Indian Ocean," said acting Assistant Attorney General Kenneth A. Blanco, in the Justice Department statement. "With this honor and awesome responsibility came a duty to make decisions based on the best interests of the Navy and the 40,000 sailors and Marines under their care who put their lives at risk every day to keep us secure and free.

"Unfortunately, however, these defendants are alleged to have sold their honor and responsibility" in exchange for personal enrichment.

'A staggering degree of corruption'

"This is a fleecing and betrayal of the United States Navy in epic proportions, and it was allegedly carried out by the Navy's highest-ranking officers," said acting U.S. Attorney Robinson. "The alleged conduct amounts to a staggering degree of corruption by the most prominent leaders of the Seventh Fleet – the largest fleet in the U.S. Navy - actively worked together as a team to trade secrets for sex, serving the interests of a greedy foreign defense contractor, and not those of their own country."