Father, son indicted in $10M Navy kickbacks case

AP News
Posted: Apr 26, 2012 6:50 PM
Father, son indicted in $10M Navy kickbacks case

A civilian engineer from Virginia who worked for the Naval Sea Systems Command and his 80-year-old father were indicted on Thursday in Rhode Island in an alleged bribery and fraud plot that prosecutors say cost the U.S. Navy about $10 million over 15 years.

The indictment of Ralph M. Mariano, 54, of South Arlington, Va., and his father, Ralph Mariano Jr., of North Providence, R.I., came after three others accused in the plot pleaded guilty to charges and agreed to cooperate with federal authorities.

Prosecutors allege Ralph Mariano used his authority at the Naval Undersea Warfare Center in Newport, R.I., and his oversight of certain Navy contracts to arrange for naval funds to be funneled back to him directly or through other companies from 1996 until January 2011.

The case dates back to February 2011, when Ralph Mariano and Anjan Dutta-Gupta, 58, of Roswell, Ga., who owned Advanced Solutions for Tomorrow, were arrested. The now-defunct company, which had offices in Roswell and Middletown, R.I., had $120 million in Navy contracts when Dutta-Gupta was arrested. The firm laid off all its employees shortly after Dutta-Gupta's arrest.

The indictment alleges Ralph Mariano used his naval position to assist ASFT by seeking more funding for its naval contracts, directing more work to the firm and assisting it to secure certain contracts. He is also accused of threatening to damage ASFT's business relationship with the Navy if the firm did follow his instructions for making payments to companies established by a co-defendant, Russell E. Spencer, 57, of Portsmouth, R.I. the indictment said.

By December 2010, the money flowing back to Ralph Mariano through Spencer's companies resulted in weekly payments of about $8,000 for Mariano and about $7,000 for his father, the indictment said. Ralph Mariano also received $3,500 in biweekly cash payments, prosecutors said.

Others connected to Ralph Mariano also benefited from the scheme, prosecutors said.

Ralph Mariano faces 33 counts, on charges of conspiracy, bribery, theft of government funds, extortion, wire fraud and tax evasion. His father faces three counts of tax evasion, prosecutors said.

A message was left for Ralph Mariano's lawyer. A woman who answered the phone at his father's home hung up.

The case prompted an internal Navy investigation that resulted in military officials in Washington suspending the contracting authority of Newport's Naval Undersea Warfare Center. The Navy said a host of contracting problems at the facility enabled the scheme. The Naval Sea Systems Command announced in October that it had restored contracting authority to the warfare center, according to a news release.

Authorities say that around 1996 _ shortly after ASFT acquired a company that had an existing naval contract _ Dutta-Gupta was approached by Mariano, who sought payment from him. When Mariano sought more money, prosecutors say Dutta-Gupta boosted the salary of one of his employees and asked the staffer to "take care" of him. That employee proceeded to pay Mariano, prosecutors said.

Over the next 14 years, Dutta-Gupta funneled about $8 million through various subcontractors to Mariano and to accounts and companies owned by his family and associates, prosecutors have said. Prosecutors also allege a separate company that Dutta-Gupta owned received about $1.3 million in naval funds from October 2007 to August 2010 as part of the scheme.

Dutta-Gupta has pleaded guilty to paying $8 million in bribes over more than a decade. He is scheduled to be sentenced on June 21.

Prosecutors allege money was also funneled to Mariano through businesses owned by Spencer. According to court filings, Spencer submitted false and inflated invoices to ASFT for work that, for the most part, was never done and then passed the money along to Mariano.

Spencer took a salary from the payments, according to prosecutors, and as part of his plea agreement he is to forfeit more than $330,000 in proceeds from the scheme. He pleaded guilty last June to conspiracy to commit bribery.

Spencer also pleaded guilty last week to charges that he lied to investigators about an extramarital affair he had with Ralph Mariano's housekeeper. He is scheduled to be sentenced in December.

Another man, Patrick Nagle, 51, of Marietta, Ga., a former senior vice president and director of contracts for ASFT, pleaded guilty in August to charges of conspiracy to commit bribery. Prosecutors say Nagle signed off on false and inflated invoices that were submitted to his firm by subcontractors from 1999 to June 2010, even though he knew the work had largely not been done. His sentencing is scheduled for July. .