NAVAL STATION NORFOLK, Va. — With the close of the Navy’s first “Fat Leonard” court-martial trial, the defendant is going to the brig but he escaped the most serious charges and potentially jeopardized future federal fraud cases against a string of past and present sailors.
Cmdr. David Morales was found guilty of only two of the five charges he faced — conduct unbecoming an officer and failing to report foreign contacts on his security clearance renewal.
After closing arguments on Friday, the Navy trial judge, Capt. Charles N. Purnell, deliberated overnight and delivered a verdict that stripped out the conspiracy, bribery and making a false official statement charges.
On Saturday, Purnell sentenced the fighter pilot to 165 days of confinement, forfeiture of $30,000 in pay over the next five months and an additional $5,000 fine.
Morales faced 17 years behind bars if he was convicted on the original charges. After Purnell gutted the most serious remaining specifications on Saturday he was still staring at a maximum term of two-and-a-half years in the brig.
He ended up with less than six months in prison.
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The Navy has postponed the court martial of Cmdr. David Morales until sometime in August and have vowed there will be no plea deal.
And Purnell also didn’t order a “dismissal,” which is akin to a dishonorable discharge for officers.
That’s because the judge seemed unpersuaded by much of the Navy’s evidence against Morales, which even military prosecutors conceded was mostly circumstantial.
Purnell especially discounted the sworn testimony of Leonard Glenn “Fat Leonard” Francis, the Malaysian tycoon at the heart of the bribery and fraud scandal reverberating across the Japan-based 7th Fleet’s area of operations.
“Someone stood up to Leonard Francis and he was found to be untruthful,” said Frank Spinner, a retired Air Force attorney who represented Morales during his court-martial trial. “There’s now a crack in the prosecution dike for the remaining defendants awaiting trial in San Diego.”
Military prosecutors declined comment but pointed to their closing argument, which portrayed Morales as guilty on all counts.
During nearly a week of testimony in the Norfolk Naval Base courtroom here, Spinner had torn into the their case, even demanding a mistrial because he believed Francis repeatedly lied during his recent videotaped deposition in San Diego, where he’s convalescing from unspecified health problems.
Spinner urged Purnell to find that Francis perjured himself during the deposition, but the judge only indicated that Francis' fibs impeached his testimony.
Arrested in a San Diego sting operation in 2013, Francis pleaded guilty two years later to defrauding the Navy of at least $35 million in bloated invoices and fraudulent fees incurred while servicing American warships.
He has yet to be sentenced.
Disciplinary records show several officers found to have accepted gifts from "Fat Leonard" were recommended to retain command.
Francis secured those dirty deals by bribing Navy officials with “Thai SEAL team” prostitutes, luxury hotel rooms, top shelf booze, opulent feasts and cash tucked into envelopes.
Navy prosecutors tried to make the same allegations stick to Morales, suggesting that he sent Francis' now-defunct Glenn Defense Marine Asia company secret ship movement information and later tried to recruit other officers to join Francis in a conspiracy that connected ports across the western Pacific.
But Purnell didn’t buy it. Instead, he focused on what Morales and his defense team didn’t try to deny, that the pilot let Francis wine and dine him between 2012 and 2013 and never reported the lavish gifts from the contractor to his commanders or on his disclosure forms to keep his security clearance.
Throughout the week, military prosecutors detailed how Francis feted Morales — a sumptuous feast in Hawaii where Morales alone guzzled $2,000 worth of food and champagne; a private party at Bangkok’s exclusive Pegasus Club, where Francis held court; prime seats for a Julio Iglesias concert; even suckling pigs sent to the pilot as housewarming gifts by the corrupt contractor.
“I find an egregious pattern of accepting gifts, almost as bad as as if I had found you guilty of conspiracy and bribery, that thoroughly compromised you as an officer,” Purnell told Morales. “When you play with fire, you get burned.”
How burned federal prosecutors get by Francis' shaky testimony remains to be seen.
The Navy now acknowledges that the bribes-and-hookers scandal is impacting twice as many Navy officials as previously disclosed.
They’ve charged 32 defendants, and 20 have pleaded guilty to public corruption charges. On Aug. 17, a grand jury in San Diego indicted three more retired sailors: Capt. David W. Haas, Master Chief Petty Officer Ricarte Icmat David and Chief Petty Officer Brooks Alonzo Parks.
Those cases will be tried in federal district court, not before a military judge.
The U.S. Attorney in San Diego got first pick on all the cases, ceding to the Navy those prosecutions likely involving only breaches of military law.
Before Morales, military prosecutors had secured plea deals with ex-destroyer squadron commander Capt. John F. Steinberger and Chief Warrant Officer Brian T. Ware for their roles in the public corruption scandal.
Capt. John F. Steinberger and Cmdr. Jason W. Starmer are the latest casualties of the "Fat Leonard" scandal.
Haas maintains his innocence but he helped to scuttle the Morales case.
In a written affidavit, he told Purnell that the reason Francis jetted from Singapore to Bangkok on June 22, 2013, was to meet him. Haas said that he never saw Morales, who had been deposited by Francis' limousine at the posh Conrad Hotel.
That echoed what the defense team for Morales kept insisting — he joined Francis on a lark and neither provided classified ship movement information nor was ever in a position to render favors for the crooked contractor.
Prosecutors had leaned on Francis, who testified in his deposition that he took Morales to Bangkok for a “sex trip." But in reality, cellphone text messages showed the excursion was solely to meet Haas, who could fix a contract to service the aircraft carrier George Washington.
Defense attorneys also seized on evidence uncovered by federal investigators that revealed the hotel staff turned away the prostitutes Francis tried to send Haas.
The lurid scene allegedly included a drunken Francis railing at Conrad staffers while the women retreated from the premises.
Before Morales was taken to the brig, he thanked Spinner and military co-counsel Cmdr. Chris Czaplak and Lt. Travis Jones for “their outstanding job.”