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New arrest in ‘Fat Leonard’ Navy scheme

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Discreet handoffs of cash-filled envelopes and classified Navy documents have led to the arrest of a fourth Navy member in the widening bribery investigation centered on Malaysian businessman “Fat” Leonard Francis, according to a complaint unsealed in San Diego federal court Thursday.

Petty Officer 1st Class Dan Layug, 27, pleaded not guilty to one count of conspiracy to commit bribery.

Layug worked as a logistics specialist at a U.S. base in Yokosuka, Japan, under the Navy Fleet Logistics Command, and before that aboard the Blue Ridge, the flagship of the Navy’s 7th Fleet.

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In 2010, according to the complaint, he began to share classified information, including the schedules of Navy warship port visits, with Francis, whose company provides husbanding services — such as fuel, water and security — to visiting ships throughout Southeast Asia. In exchange, Francis showered him with gifts of $1,000 monthly payments, luxury hotel rooms for him and his friends, and gadgets such as iPads and cameras, authorities said.

Navy investigators tracked the relationship in email exchanges and through deposits into a bank account set up in the name of Layug’s baby daughter.

“Need a hotel man!” Layug allegedly wrote in a February 2011 email to Francis’ company, Glenn Defense Marine Asia, based in Singapore.

An employee later wrote, “We can arrange a room for him at the Renaissance.”

In the same email exchange, Layug is accused of sending specific information about the Navy’s fuel situation.

The information was of great benefit to Glenn Defense, the investigator wrote in the complaint, “due to the inflated profit margins GDMA could fraudulently extract from the U.S. Navy.”

In another email, Layug wrote: “(W)hat are the chances of getting the new Ipad3?” according to the documents. Other wish lists included cameras, an iPhone5 and a villa for a visit to Port Klang, Malaysia.

Layug also met with Glenn Defense employees regularly, exchanging insider documents — printed on pink paper to signify their classified status — for envelopes of cash, the court records say.

The email exchanges tried to cover up requests for ship schedules by referring to them as “golfing schedules,” the investigator states.

The arrest is the latest in the ongoing scandal that has already ensnared two Navy commanders and a special agent for the Naval Criminal Investigative Service. Other Navy officials have also come under scrutiny and been reassigned, but not charged.

Navy Cmdrs. Jose Luis Sanchez and Michael Misiewicz are accused of accepting bribes of prostitutes, cash and posh hotel suites in exchange for steering Navy business to Francis. They have pleaded not guilty, along with Francis.

Supervisory Special Agent John Beliveau II has entered a guilty plea for his part in accepting bribes in exchange for slipping information about the criminal investigation to Francis. Francis’ cousin, Alex Wisidagama, who managed business at Glenn Defense, has also pleaded guilty.

Prosecutors say the Navy lost $7 million due to the scheme.

NCIS spokeswoman MaryAnn Cummings said in a statement that the agency, along with the Defense Criminal Investigative Service and Defense Contract Audit Agency, “continue to aggressively pursue all aspects of the investigation and identify those involved.”

In court Thursday, Assistant U.S. Attorney Mark Pletcher told the judge that he worried Layug might flee the country, noting his family ties to both the Philippines, where his parents live, and Japan, where his wife and daughter live. The prosecutor asked that Layug post $100,000 bond, secured by the signatures of two adults, and also be monitored by GPS.

U.S. Magistrate Judge Karen Crawford granted the bond restrictions, which were in line with the conditions given to two of the other Navy members charged in the case.

Layug’s public defender said in court that he had served in the Navy about seven years and had no prior criminal record.

He is expected to be reassigned to one of San Diego’s Navy bases while the case is underway.

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