Navy workers plead guilty in cash-for-contracts scam
The Navy workers accepted more than $1 million in cash and gifts, including flat-screen TVs, luxury massage chairs, bicycles costing thousands of dollars and home remodeling services, prosecutors said.
Contractors submitted to the Pentagon fraudulent invoices to cover the costs of the items.
In return for the cash and gifts, the Navy employees placed more than $6 million in falsified orders with the defense contractors, prosecutors alleged.
The Navy employees helped maintain the Navy's E-2 and C-2 aircraft at the Navy's Fleet Readiness Center in Coronado, where more than 4,200 people perform maintenance on Navy and Marine Corps aircraft, according to Navy spokesman Michael Furlano.
"It is unfortunate these four people sullied the reputation of the rest of our folks, as well as the good the command has accomplished in the more than 90 years of our existence," Furlano said in a statement.
The E-2 Hawkeye, made by Northrop Grumman Corp., operates like a flying command center capable of simultaneously monitoring communications and incoming threats, as well as search and rescue support.
The Cold War-era turboprop planes have been dubbed the "electronic eyes of the fleet."
The C-2 Greyhound is the cargo variant of the Hawkeye. It hauls mail and supplies to aircraft carriers deployed around the globe.
The Navy employees who pleaded guilty -- Donald Vangundy, 54; Kiet Luc, 53; David Lindsay, 57; and Brian Delaney, 55 -- worked as supervisors or in tool inventory, prosecutors said.
The three contractors who pleaded guilty were Michael Graven, 43, owner and operator of X&D Supply Inc.; John Newman, 51, sales manager and former owner of a Poway company identified only as "Company A" in court documents; and Paul Grubiss, 39, sales manager of a defense contractor identified only as "Company B."
X&D Supply, a contractor in Carlsbad, Calif., was paid at least $2.26 million in connection with the fraud, prosecutors said.
The Navy paid Company A at least $3.31 million in connection with the fraud, while Company B got about $1 million in connection with the fraud, prosecutors said.
Sentencing for all seven of the defendants is scheduled for July 2 before U.S. District Judge Roger T. Benitez.
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