A Navy officer has become a cooperating witness in a case of alleged bribery involving a contractor and port services in Bahrain resembling the years-long "Fat Leonard" scandal that snared senior sailors and others, according to unsealed court documents.
Military investigators allege that Frank Rafaraci, the chief executive of Multinational Logistics Services, or MLS, defrauded the Navy out of at least $50 million by inflating invoices for ship services between 2011 and 2018, the documents show.
Agents from the Defense Criminal Investigative Service told a U.S. district court that the scheme was made possible by not only a web of shell companies and coded emails but also bribes to the unnamed Navy official, who the documents say is still an officer in the service.
Rafaraci was arrested in Malta after an international manhunt, and the Justice Department is working to extradite him, according to The Washington Post, which first reported the case. He faces four charges in federal court that include bribery, and conspiracy charges for fraud and money laundering, court records show.
The U.S. Navy and other federal agencies have awarded about $1.3 billion in contracts to MLS for port services since 2010.
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The sailor in the case pleaded guilty to "one count of conspiracy to commit bribery and is cooperating with the government's investigation in the hope of obtaining favorable consideration regarding a potential sentence," according to the documents.
The sailor was a Marine Liaison Officer for the Navy in Manama, Bahrain, starting in 2006 until the present, with a several-year break when it appears the unnamed individual went to work for the U.S. Army.
The arrest warrant alleges that Rafaraci paid the sailor two bribes -- one in 2015 and another in 2018.
The first bribe occurred during a meeting at the Diplomat Hotel in Manama when Rafaraci handed over an envelope filled with $20,000 in cash and told the sailor "that he would be in touch, and to 'keep up the good work,'" court documents allege.
Three years later, Rafaraci met that sailor again, this time at a Miami hotel, and gave him an envelope with $13,500, according to the arrest warrant.
The sailor in question has since been arrested and pleaded guilty in June to a bribery charge in the U.S. District Court in Washington, agreeing to become a cooperating witness for the government, the court documents say. The person's identity and his criminal case file, however, remain under seal.
Details cited in Rafaraci's arrest warrant show the scale of the alleged fraud. One example in the court document shows that when MLS was engaged to provide docking services to the aircraft carrier Carl Vinson during a port call in Manama in January 2015, the company billed the Navy for $231,114.
"MLS accounting records, however, reflect that MLS paid only $12,686 to the Manama port authority," the warrant reads.
Another port visit by the aircraft carrier Theodore Roosevelt to Manama in January 2018 cost the Navy $325,276, but MLS paid only $177,922 to port officials, according to court documents.
When asked for comment, spokesman Lt. Cmdr. Andrew DeGarmo told Military.com in an email that the Navy "expects all individuals and companies with whom it conducts business to act with the highest degree of integrity and to have effective standards of conduct" but that the service would not comment further during an ongoing investigation.
The case bears some similarities to the massive and far-reaching corruption scandal involving Leonard Glenn "Fat Leonard" Francis, the owner of Glenn Defense Marine Asia, a defense contracting business.
That ordeal, which goes back more than a decade, has resulted in bribery and fraud charges against several high-ranking officers and senior enlisted sailors, as well as letters of reprimand and censures.
Francis amassed a network of at least 200 Navy personnel that ranged from admirals to Naval Criminal Investigative Service agents to help bilk the service out of at least $35 million from inflated and fraudulent contracts for services while in port. As of 2019, nearly three dozen people had been charged in connection with the affair and 22 pleaded guilty.
Leonard himself pleaded guilty in federal court in January 2015 and began cooperating with investigators, but he has not yet been sentenced.
-- Konstantin Toropin can be reached at konstantin.toropin@military.com. Follow him on Twitter @ktoropin.
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