For the foreign defense contractor, stealing U.S. Navy secrets turned out to be a breeze. All it took was a little cash, a few cheap gifts-and a willing sailor.
Daniel Layug, an enlisted sailor with a weakness for electronic bling, was an easy mark. Over a three-year period, he repeatedly downloaded classified documents and other sensitive information about Navy operations in Asia, and handed it over for a low, low price, according to federal court records.
On Thursday, in U.S. District Court in San Diego, Layug became the first person to be sentenced in an epic corruption investigation that has paralyzed the Navy since 2013. He had previously pleaded guilty to accepting bribes from Glenn Defense Marine Asia, a Singapore-based firm that did a rich business with the Pentagon for a quarter century by supplying hundreds of Navy ships during port visits in the Pacific and Indian oceans.
Seven other defendants who have also pleaded guilty will receive their punishment in the coming months. In addition, corruption charges are pending against a Navy commander, a senior Pentagon civilian, and a former Navy contracting official living in Singapore.
U.S. prosecutors have accused Glenn Defense Marine Asia of bilking the Navy out of at least $20 million. They have said their investigation is far from finished and that they are targeting other suspects. Court records show the criminal investigation has spanned eight states and eight Asian countries, with more than 100 law-enforcement agents involved.
In the scheme of things, Layug was a small fish – a petty officer first class assigned to the supply corps at a Navy base in Japan. He hasn’t drawn the same public attention as higher-ranking Navy personnel who have admitted to taking bribes in the form of prostitutes, fancy vacations, extravagant meals and envelopes stuffed with cash.
Nor has he earned the notoriety of Leonard Glenn Francis, the heavyweight boss of Glenn Defense Marine Asia who charmed his way through the ranks of the Navy’s 7th Fleet. Widely known among Navy officers as Fat Leonard, Francis pleaded guilty in January 2015 and is cooperating with federal investigators.
But evidence gathered in Layug’s case exposes the simple and audacious nature of the bribery racket, including how easy it was for him to pilfer secrets, and how nobody noticed for years.
“He put the U.S. Navy at risk of embarrassment, exploitation, attack, or worse; an in doing so he made a fool of every senior sailor who had promoted him to a position of responsibility,” Assistant U.S. Attorney Mark W. Pletcher wrote in a court brief in advance of Layug’s sentencing.
In 2010, Layug was assigned to the USS Blue Ridge, the command flagship for the Navy’s 7th Fleet, based in Japan. The next year, he was transferred to the Navy’s Fleet Logistics Center in Yokosuka, Japan, where he helped to provide logistical support to Navy vessels throughout the Pacific.
In those positions, Layug had easy access to two things Glenn Defense Marine dearly wanted: classified information about Navy ship movements, including which ports they intended to visit; and trade secrets about what the competition was charging to supply those vessels.
According to federal investigators, it didn’t take much to buy off the sailor. First, a Glenn Defense Marine executive gave him an unlocked cell phone.
Over time, as Layug proved cooperative, the defense contractor fed his appetite for consumer electronics, bribing him with an iPad 3, a Wii video game console, a Blackberry phone, a Sony VAIO laptop, and a Nikon D5200 digital camera, documents filed by prosecutors show.
They also indulged his desire for a good time, providing him and his Navy buddies with free luxury hotel rooms during their visits to ports in Hong Kong, Thailand, South Korea, Malaysia, Singapore and Indonesia, according to the documents.
Starting in May 2012, Layug also received an “allowance” of $1,000 per month from Glenn Defense Marine, usually in envelopes of cash, the document show.
In exchange, on at least five occasions, Layug handed over classified information about Navy ship schedules.
To gather the material, the sailor simply entered a secure room aboard the USS Blue Ridge, logged onto a classified computer terminal and printed out the schedules. All documents in the secure room had to be printed on pink paper, to signify that the material was classified. But Layug just added a blank cover sheet, walked off the ship and took the documents home, according to investigators.
Layug’s attorneys did not respond to emails seeking comment. He has pleaded guilty to conspiracy to commit bribery and has not disputed the evidence laid out by prosecutors.
In a court brief filed this month, defense attorneys Ezekiel Cortez and Joshi Valentine said the sailor felt “deep shame” and remorse. They said he came from an impoverished background as a child and succumbed to the bribery temptations out of a “need to prove his success to his family by acquiring the trapping of financial success.”
His attorneys argued that he should be sentenced to probation without any prison time, noting that he is cooperating with investigators and has a family to support. He is still in the Navy, though his lawyers indicated that he faces court martial and that his military “career will soon be over.”
In contrast, prosecutors sought a 27-month prison term for Layug, contending that he put national security at risk by selling the classified ship schedules, which reveal the planned movement of Navy warships up to a year in advance.
“As seems abundantly obvious, in the wrong hands, this information would provide a substantial advantage to those intent on doing our Sailors, our Navy, and our Nation harm, essentially allowing them to know when and where to plan an attack,” wrote Pletcher, the federal prosecutor overseeing the case.
The prosecution’s argument won out. On Thursday, U.S. District Judge Janis Sammartino sentenced Layug to 27 months imprisonment.
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