WASHINGTON -- Federal authorities are investigating three senior Navy intelligence officials as part of a probe into an alleged contracting scheme that charged the military $1.6 million for homemade firearms silencers that cost only $8,000 to make, court records show.
The three civilian officials, who oversee highly classified programs, arranged for a hot-rod auto mechanic in California to build a specially ordered batch of unmarked and untraceable rifle silencers and sell them to the Navy at more than 200 times what they cost to manufacture, according to court documents filed by federal prosecutors.
The purpose of the silencers remains a mystery. According to the court papers, one of the intelligence officials told a witness in the case that the silencers were intended for SEAL Team Six, the elite commando unit that killed Osama bin Laden.
The case is the second contract fraud investigation to entangle senior Navy intelligence officials in recent weeks. Last Friday, the Navy disclosed that Vice Adm. Ted "Twig" Branch, the director of naval intelligence, and Rear Adm. Bruce Loveless, director of intelligence operations, are under investigation in an unrelated bribery scandal involving Glenn Defense Marine Asia, a Singapore defense contractor.
Neither admiral has been charged. But the Navy suspended their access to classified materials after their names surfaced in an escalating probe into allegations that other officers provided sensitive information to the contractor in exchange for prostitutes and cash.
There is no known connection between the two corruption cases, but both reach high into the Navy hierarchy. The investigations call into question the Navy's ability to prevent fraud. In April 2011, after yet another contracting scandal, Navy Secretary Ray Mabus pledged a crackdown and appointed a special panel to improve oversight.
A few months later, however, civilian intelligence officials at Navy headquarters began circulating emails that set into motion the scheme to purchase the firearms silencers, according to affidavits from investigators and other documents filed recently by prosecutors in U.S. District Court in Alexandria, Va.
None of the three Navy civilian intelligence officials has been charged in the investigation, which is ongoing. Their names are redacted in most of the court documents, which refer to them as "Conspirator .1," "Conspirator .2" and "Conspirator .3."
But in one affidavit, federal investigators neglected to black out the name of Conspirator .2, identifying him as Lee Hall of Virginia. Mr. Hall is a longtime defense intelligence official who now works for the Navy. An attorney for Mr. Hall, Danny Onorato, declined to comment.
The same affidavit identifies Conspirator .1 by his first name, David. Three people familiar with the case said that is David Landersman, senior director for intelligence in the Navy's directorate for plans, policy, oversight and integration intelligence.
Stephen Ryan, an attorney for Mr. Landersman, declined to answer questions about the case, but said, "I'm confident that he did nothing wrong and will be fully exonerated." He said Mr. Landersman is a retired Marine colonel and decorated combat veteran who served in Somalia as well as multiple tours in Iraq.
Mr. Landersman and Mr. Hall were placed on administrative leave in the spring after the Naval Criminal Investigative Service opened a probe into the silencer purchases, the people familiar with the case said.
Rear Adm. John Kirby, the Navy's chief spokesman, declined to comment on the men's work status, saying he could not discuss an ongoing investigation.
Court records show that the only person charged has been the auto mechanic: Mark Stuart Landersman, 52, of Temecula, Calif. He is David Landersman's brother. Mark Landersman was arrested Oct. 29, charged with conspiracy to commit wire fraud and to transport unregistered firearms, and then released on $100,000 bond. His attorney, John Zwerling, declined to discuss the allegations. "We have been living with this set of facts for months," he said. "We are convinced that he has committed no crimes."
Court records describe Mark Landersman as a down-on-his-luck mechanic who struggled to keep his Temecula repair shop in business. He and his wife declared personal bankruptcy in July 2012. A month later, the charging documents say, Mark Landersman received a series of emails from his brother at the Pentagon about firearms silencers, including a link to a website with do-it-yourself instructions for building a certain model.
"Wow! Very simple," Mark Landersman replied in an email Aug. 14, 2012, the charging documents say. The next day, Navy finance officials informed David Landersman that they had approved a $2 million budget supplement he requested for "studies, assessments and research." Two days after that, Mr. Landersman's office transferred almost all of the money to a pre-existing Navy intelligence contract with CACI, a major contractor.
According to court documents, Mr. Hall and Conspirator .3 then directed CACI to buy the silencers from a California firm newly incorporated by Mark Landersman. Mr. Hall also told CACI to award the business without seeking a lower bid, investigators said. In emails, Mr. Hall said Mark Landersman's fledgling company was "the only responsible source for the engineering expertise sought," and that "their product is first that incorporates a unique design that significantly reduces the decibel ratings to near background-noise levels."
To manufacture the silencers, Mark Landersman turned to Carlos Robles, a machinist who used to work in his auto repair shop. He gave Mr. Robles blueprints for what he called "a small-engine muffler" and asked him to make 349 of them, according to charging documents.
Mr. Robles later told federal Bureau of Alcohol, Tobacco, Firearms and Explosives agents that he built the mufflers, and that Mr. Landersman paid him $8,000 to cover parts and labor. He acknowledged that the mufflers closely resembled silencers. ATF firearms examiners tested the devices and concluded that they were functioning silencers.
A CACI spokesman did not return phone calls or an email seeking comment.