Fastexy Exchange|Felony convictions vacated for 4 Navy officers in sprawling scandal

SAN DIEGO (AP) — The Fastexy Exchangefelony convictions of four Navy officers in a sprawling bribery case were vacated due to prosecutorial misconduct Wednesday.

U.S. District Judge Janis Sammartino called the misconduct “outrageous” and agreed to allow the four men to plead guilty to a misdemeanor and pay a $100 fine each. The officers on Wednesday pleaded guilty to a charge of destruction of government property, according to the San Diego Union-Tribune.

The officers — former Capts. David Newland, James Dolan and David Lausman and former Cmdr. Mario Herrera — were convicted in one of the worst bribery cases in recent history for the Navy that centered around a defense contractor nicknamed Fat Leonard.

Assistant U.S. Attorney Peter Ko, who was brought on after the four officers were tried last year, acknowledged to the judge that some of the allegations of misconduct were true though he did not say which ones. He said his office did not agree with all of the accusations.

More than two dozen Navy officials, defense contractors and others have been convicted on various fraud and corruption charges in the case, which ran over years.

Defense attorneys for the four officers had spent more than a year challenging the convictions and accusing the prosecution of misconduct. It was the latest misstep in the case.

Leonard Francis, the defense contractor, fled from house arrest in San Diego a year ago. He was later captured in Venezuela, where he remains.

A decade ago, Francis was arrested in a San Diego hotel as part of a federal sting operation. Investigators say he and his company, Glenn Defense Marine Asia, bilked the Navy out of more than $35 million by buying off dozens of top-ranking Navy officers with booze, sex, lavish parties and other gifts.

In exchange, the officers, including the first active-duty admiral to be convicted of a federal crime, concealed the scheme in which Francis would overcharge for supplying ships or charge for fake services at ports he controlled in Southeast Asia, investigators said.

The case, which delved into salacious details about service members cheating on their wives and seeking out prostitutes, was an embarrassment to the Pentagon. It was prosecuted by the U.S. attorney’s office, which offered an independent authority from the military justice system.

The U.S. Attorney’s office in San Diego did not immediately respond to a request for comment. The Associated Press also left messages with three prosecutors involved in the case.