Leonard Glenn Francis, a wealthy Malaysian contractor at the heart of one of the U.S. Navy's largest bribery scandals in decades, seemed to have stepped right off the set of "Casablanca."
At 6 feet 3 inches and 350 pounds, Mr. Francis hosted dinners at luxury hotels in Malaysia, Singapore and Hong Kong for senior officers who knew him as Fat Leonard, dispensing boxes of Cuban cigars and dropping the names of admirals he knew, senior Navy officers said.
But as his reputation for lavish parties spread, so too did warnings about his business practices, according to Navy officials and court documents. Emails obtained by criminal investigators show that from 2009 to early 2011, several ship crews and contracting officials filed complaints about his "gold-plated" fees for fuel, port security and other services. In 2010, the Naval Criminal Investigative Service opened investigations into questionable charges in Thailand and Japan by his company, documents show.
Despite those red flags, in June 2011, the Navy awarded Mr. Francis $200 million in contracts, giving him control over providing supplies and dockside services for its fleet across the Pacific.
Now, Mr. Francis is at the center of a widening investigation into an overbilling scheme in which federal prosecutors say he used cash, prostitutes and gifts to bribe Navy officials to help him defraud the service out of tens of millions of dollars. Two Navy commanders and a naval investigative agent have been charged with accepting bribes, while two admirals and a captain are also under investigation. Officials say they expect more service members to be implicated.
Interviews with U.S. officials and documents The New York Times obtained provide the first detailed look at how Mr. Francis and his company, Glenn Defense Marine Asia, lowballed rivals to win contracts as the first step in the overcharging scheme. The company submitted winning bids that experts say seemed so low that the Navy should have questioned whether they were realistic.
Once it had locked up contracts, investigators say, the company -- with the assistance of Navy officers -- began pumping out fake invoices to inflate its billings.
Though Glenn Marine's low bids might have seemed enticing, military contracting experts who reviewed those bids for The Times said the Navy should have been wary, and certainly more watchful, of Mr. Francis, particularly given the numerous warnings raised about his business practices over the years.
"The Navy watchdogs were sleeping while a burglar walked out with everything in the house," said University of Baltimore School of Law professor Charles Tiefer, a former member of the federal Commission on Wartime Contracting in Iraq and Afghanistan.
The Navy's criminal investigators now say they are examining how Mr. Francis won those contracts. Navy Secretary Ray Mabus has also ordered a review of similar supply contracts in other parts of the world, officials said. The Navy has canceled all of its contracts with Mr. Francis' company and suspended it from future bidding.
The case first received news media attention, focused mainly on the salaciousness of the charges, after the Navy lured Mr. Francis, 49, and an associate to a meeting in San Diego, where they were arrested in September. Mr. Francis was detained on bribery conspiracy charges as federal agents also arrested Cmdr. Michael Misiewicz, who had scheduled port stops for warships in the Pacific, and John B. Beliveau II, a naval investigator accused of warning Mr. Francis about the inquiry. Another officer, Cmdr. Jose Luis Sanchez, who oversaw supply contracts, was arrested this month.
The three Navy officials were charged with conspiracy to commit bribery, accused of accepting Asian trips, the services of prostitutes and other gifts, which varied from "The Lion King" and Lady Gaga tickets to $100,000 in cash.
Cmdr. Misiewicz and Mr. Beliveau have pleaded not guilty, as have Mr. Francis and his associate. Mr. Francis' lawyer, Pat Swan, declined to comment on the case. A hearing is scheduled today in San Diego on Mr. Francis' request for bail.
Cmdr. Sanchez's lawyer, Vincent Ward, said, "We are confident Cmdr. Sanchez isn't the person the government has portrayed him to be, and we look forward to defending him."
The breadth of the case became clearer Nov. 8, when the Navy placed two high-level officials, Vice Adm. Ted N. Branch, the director of naval intelligence, and Rear Adm. Bruce Loveless, the director of intelligence operations, on leave while it investigated allegations that they took gifts from Mr. Francis before becoming admirals. The questions about Adm. Branch date to his command of an aircraft carrier, the USS Nimitz, from 2004 to 2007, officials said.
A sixth officer, Capt. Daniel Dusek, has been relieved of command of an assault ship because of ties to Mr. Francis, the Navy said. The admirals and Capt. Dusek declined through the Navy to comment.
Mr. Francis' grandfather started the ship-service business in 1946, and his father expanded it. Mr. Francis skipped college to work for his father, and before long, he was earning enough to indulge in a love of fancy cars and jewelry, said San Markan Ganapathy, a Malaysian lawyer.
Mr. Francis spent time in jail in his early 20s on handgun charges, said Mr. Ganapathy, who represented him in the case. But before long, Mr. Francis was running his father's company, supplying Navy ships involved in international military exercises. As the demand for security barriers and patrol boats increased after the 2001 terrorist attacks, he won contracts with the Navy one port at a time, and bought enough equipment to handle most of the Navy's needs.