Military News

Tuesday, May 23, 2017

Defense Contractor Employee Pleads Guilty to Selling Satellite Secrets to Undercover Agent Posing as Russian Spy



Today, Gregory Allen Justice, 49, of Culver City, California, pleaded guilty to federal charges of one count of attempting to commit economic espionage and one count of attempting to violate the Arms Export Control Act. The charges are related to Justice’s selling sensitive satellite information to a person he believed to be an agent of a Russian intelligence service. Justice was an engineer who worked for a cleared defense contractor. Specifically, he worked on military and commercial satellite programs.

The announcement was made by Acting Assistant Attorney General for National Security Dana J. Boente and Acting U.S. Attorney Sandra R. Brown for the Central District of California.

According to a plea agreement filed in this case, Justice stole proprietary trade secrets from his employer and provided them to a person he believed to be a Russian agent – but who in fact was an undercover FBI employee.

In addition to their proprietary nature, the documents contained technical data covered by the U.S. Munitions List and therefore were subject to controls restricting export from the U.S. under the International Traffic in Arms Regulations.

In exchange for providing these materials during a series of meeting between February and July of 2016, Justice sought and received thousands of dollars in cash payments. During one meeting, Justice and the undercover agent discussed developing a relationship like one depicted on the television show “The Americans,” and during their final meeting, Justice offered to take the undercover agent on a tour of his employer’s production facilities where Justice said all military spacecraft were built, according to the plea agreement.

Justice faces a maximum sentence of 35 years in prison. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes. If convicted of any offense, the sentencing of the defendant will be determined by the court based on the advisory Sentencing Guidelines and other statutory factors.

Justice pleaded guilty before U.S. District Judge George Wu, who scheduled a sentencing hearing for September 18. Justice has been in custody since his arrest in July 2016.

This case was investigated by the FBI and the Air Force Office of Special Investigations.

Attorneys from the Terrorism and Export Crimes Section of the U.S. Attorney’s Office and the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.

Monday, March 13, 2017

Israeli Executive Pleads Guilty to Defrauding the Foreign Military Financing Program



A former executive of an Israel-based defense contractor pleaded guilty for his role in multiple schemes to defraud a multi-billion dollar United States foreign aid program, the Department of Justice announced today. 

Yuval Marshak pleaded guilty to one count of mail fraud, two counts of wire fraud and one count of major fraud against the United States in U.S. District Court for the District of Connecticut today.  He was previously charged in an indictment returned by a federal grand jury in the District of Connecticut on Jan. 21, 2016, and then extradited from Bulgaria in October. 

According to court documents, Marshak carried out three separate schemes between 2009 and 2013 to defraud the Foreign Military Financing program (FMF).  Marshak and others falsified bid documents to make it appear that certain FMF contracts had been competitively bid when they had not.  Marshak further caused false certifications to be made to the U.S. Department of Defense (DoD) stating that no commissions were being paid and no non-U.S. content was used in these contracts, when, in fact, Marshak had arranged to receive commissions and to have services performed outside the United States, all in violation of the DoD’s rules and regulations.  Marshak arranged for these undisclosed commission payments to be made to a Connecticut-based company that was owned by a close relative to disguise the true nature and destination of these payments.

“Today’s guilty plea marks the successful culmination of a complex investigation that required us to work closely with the Israeli government, the DoD and the Office of International Affairs to gather foreign-located evidence and to secure Marshak’s extradition,” said Acting Assistant Attorney General Brent Snyder of the Department of Justice’s Antitrust Division.  “This result reflects the division’s deep commitment to identifying and prosecuting schemes to defraud American taxpayers.”   

“This conviction is the result of the Defense Criminal Investigative Service's (DCIS) ongoing effort to identify and investigate fraudulent activity targeting the U.S. Department of Defense (DoD) and its programs that support America's national security and foreign policy objectives,” said Acting Special Agent in Charge Leigh-Alistair Barzey of the DCIS Northeast Field Office.  “DCIS will continue to aggressively investigate allegations of fraud and abuse threatening the DoD and the Foreign Military Sales Program.”

The United States spends billions of dollars each year through the FMF program to provide foreign governments, including Israel, with money which must be used to purchase American-made military goods and services.  The rules and regulations of the FMF program require the disclosure of and approval for any FMF-funded commissions and require that all goods and services be of United States origin to qualify for FMF funding.  These same rules also strongly encourage the use of competitive bidding in the award of all FMF contracts.  American vendors who receive FMF funded contracts are required to certify their compliance with these regulations to the DoD. 

Friday, February 17, 2017

U.S. Navy Commander Charged as Part of Expanding Navy Bribery Scandal



A current U.S. Navy Commander was charged in a complaint unsealed today with accepting luxury travel, elaborate dinners and services of prostitutes from foreign defense contractor Leonard Francis in exchange for classified and internal U.S. Navy information.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Alana Robinson of the Southern District of California, Director Andrew L. Traver of the Naval Criminal Investigative Service (NCIS) and Director Dermot F. O’Reilly of the Defense Criminal Investigative Service (DCIS) made the announcement.

Mario Herrera, 48, of Helotes, Texas, was charged with one count of conspiracy to commit bribery in connection with interactions with Leonard Francis, the former CEO of Glenn Defense Marine Asia (GDMA), a defense contracting firm based in Singapore.  Herrera was arrested in San Antonio, Texas, this morning and is scheduled to make his initial appearance in federal court in the Western District of Texas.  The United States will seek removal of Herrera to San Diego to face charges.

According to the complaint, Herrera participated in a bribery scheme with Francis in which he accepted luxury travel and entertainment expenses and the services of prostitutes in exchange for helping to steer lucrative U.S. Navy contracts to Francis and GDMA.  Herrera provided Francis with internal, proprietary U.S. Navy information and intervened on GDMA’s behalf in contract disputes.  According the complaint, Herrera directed ships to take alternative routes that benefitted GDMA on two separate occasions, costing the U.S. Navy $3.6 million.   

To date, a total of 17 individuals have been charged in connection with the scheme; of those, 13 have pleaded guilty, including: Admiral Robert Gilbeau, Captain Michael Brooks, Commander Bobby Pitts, Captain Daniel Dusek, Commander Michael Misiewicz, Lt. Commander Todd Malaki, Commander Jose Luis Sanchez, former NCIS Special Agent John Beliveau and U.S. Petty Officer First Class Daniel Layug.

Brooks, Gilbeau and Sanchez await sentencing.  In May 2016, Pitts was charged and his case is currently pending.  On Jan. 21, 2016, Layug was sentenced to 27 months in prison and to pay a $15,000 fine.   On Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine.  On March 25, 2016, Dusek was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine.  On April 29, 2016, Misiewicz was sentenced to 78 months in prison and to pay  $95,000 in restitution to the Navy and a $100,000 fine.  On Oct. 14, 2016, Beliveau was sentenced to 12 years in prison and to pay $20 million in restitution.  On Dec. 2, 2016, Simpkins was sentenced to 72 months in prison, to pay $450,000 in restitution, to forfeit $150,000 and pay a $50,000 fine. 

A criminal complaint is merely an accusation, and the accused is presumed innocent unless proven guilty in a court of law.

DCIS, NCIS and the Defense Contract Audit Agency are investigating the case.  Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California are prosecuting the case.