Ethermac Exchange-'Fat Leonard' contractor in US Navy bribery scandal sentenced to 15 years in prison

SAN DIEGO — A former Malaysian military defense contractor was sentenced Tuesday to 15 years in prison for his role in an "unprecedented" bribery and Ethermac Exchangefraud scheme that targeted the U.S. Navy, prosecutors said.

Leonard "Fat Leonard" Francis, 60, was sentenced to 164 months for the bribery and fraud charges and 16 months for failing to appear for his original sentencing hearing in 2022, according to the U.S. Attorney's Office for the Southern District of California. In addition to his prison sentence, U.S. District Judge Janis L. Sammartino ordered Francis to pay the Navy $20 million in restitution and a $150,000 fine.

Francis was also ordered to forfeit $35 million in "ill-gotten proceeds from his crimes," the U.S. Attorney's Office said in a news release.

Prosecutors called Francis the "mastermind" behind a decade-long scheme, in which he bribed Navy officials with millions of dollars in cash, prostitution services, travel, and luxury gifts, among other lavish expenses. In exchange, prosecutors said Francis received classified information from the Navy and was able to defraud the agency of tens of millions of dollars.

Prosecutors said Francis first pleaded guilty to bribery and fraud charges in 2015. On Tuesday, he admitted in his second plea agreement that he fled the United States to avoid his initial sentencing hearing in September 2022.

Francis had cut off his GPS monitor while he was on house arrest and fled to Mexico and then Cuba, according to prosecutors. He was later arrested in Venezuela and brought to the U.S. in December 2023.

"Leonard Francis lined his pockets with taxpayer dollars while undermining the integrity of U.S. Naval forces," U.S. Attorney Tara McGrath said in a statement. “The impact of his deceit and manipulation will be long felt, but justice has been served."

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What was the 'Fat Leonard' scandal?

Francis, a Malaysian citizen who most recently resided in Singapore, owned and operated a ship servicing company, Glenn Defense Marine Asia Ltd. or GDMA. The company provided goods and services to Navy ships in Asia Pacific ports.

According to court documents, Francis and GDMA admitted to providing scores of Navy officials with "millions of dollars in things of value," including over $500,000 in cash; prostitution services; travel expenses that included first or business class airfare and five-star hotel accommodations; and lavish meals. He also bribed officials with luxury gifts, such as Cuban cigars, Kobe beef, Dom Perignon Champagne, and Spanish suckling pigs.

"Francis admitted that in return, U.S. Navy personnel and command staff advocated on behalf of Francis and his company during the procurement process and provided classified information about various U.S. Navy ships’ port visits, proprietary U.S. Navy information such as details about competitors’ bids for U.S. Navy contracts, and information about Naval Criminal Investigative Service and U.S. Navy investigations into GDMA’s practices, among other things," the U.S. Attorney's Office said.

Francis also admitted in his 2015 plea agreement that he used the classified information to overcharge the Navy for goods and services provided by his company, including fuel, tugboats, and sewage disposal, according to prosecutors.

In a statement, Kelly Mayo, director of the Defense Criminal Investigative Service, said that Francis' expansive scheme "ultimately cost the American taxpayer millions of dollars and weakened the public’s trust in some of our Navy’s senior leaders."

Federal authorities previously called the case one of "largest and most complex public corruption" criminal cases to be investigated in the U.S. military's history. Prosecutors said in 2018 that 33 defendants were charged in connection with the case and 22 pleaded guilty.

Prosecutors estimate that 'Fat Leonard' has 8.5 years left on his sentence

Francis was initially arrested in San Diego in September 2013 and remained in pretrial custody until December 2017, when he was released for a medical condition, prosecutors said. At the time, Francis served four years and three months in custody.

He then was ordered into house arrest until September 2022 when he fled the country, according to prosecutors. Prosecutors said Francis pleaded guilty and cooperated with authorities after he was caught.

For several years, he met with federal investigators to "discuss unprecedented levels of corruption within the U.S. Navy," according to the U.S. Attorney's Office. Francis provided information about hundreds of sailors, which included petty officers and admirals, and gave financial records, photographs, receipts, and Navy contracting documents.

Prosecutors said Francis has already served more than six years of his sentence, including time spent in custody in Venezuela, and has an estimated 8.5 years remaining. Prosecutors added that GDMA was also sentenced Tuesday to five years of probation and ordered to pay a $36 million fine.

Contributing: Tom Vanden Brook, USA TODAY