New fraud probe nets U.S. Navy officials

Military was charged $1.6 million for silencers that cost $8,000 to make

The Washington Post

Federal authorities are investigating three senior navy intelligence officials as part of a probe into an alleged contracting scheme that charged the military $1.6 million for homemade firearms silencers that cost only $8,000 to make, court records show.

The three civilian officials, who oversee highly classified programs, arranged for a hot-rod auto mechanic in California to build a specially ordered batch of unmarked and untraceable rifle silencers and sell them to the navy at more than 200 times what they cost to manufacture, according to court documents filed by federal prosecutors.

The purpose of the silencers remains a mystery. According to the court papers, one of the intelligence officials told a witness in the case that the silencers were intended for SEAL Team 6, the elite commando unit that killed Osama bin Laden.

The case is the second contract fraud investigation to entangle senior navy intelligence officials in recent weeks.

On Friday, the navy disclosed that Vice Adm. Ted “Twig” Branch, the director of naval intelligence, and Rear Adm. Bruce Loveless, director of intelligence operations, are under investigation as part of an unrelated bribery scandal involving Glenn Defense Marine Asia, a Singapore-based defense contractor.

There is no known connection between the two corruption cases, but the investigations call into question the navy’s ability to prevent fraud. In April 2011, after yet another contracting scandal, U.S. Navy Secretary Ray Mabus pledged a crackdown and appointed a special panel to improve oversight. “We will not accept any impropriety, kickbacks, bribery or fraud,” he promised at the time.

A few months later, however, civilian intelligence officials at navy headquarters began circulating emails that set in motion the scheme to purchase the firearms silencers, according to affidavits from investigators and other documents filed recently by prosecutors in U.S. District Court in Alexandria, Virginia.

None of the three navy civilian intelligence officials has been charged in the investigation, which is ongoing. Their names are redacted in most of the court documents, which refer to them as “Conspirator #1,” “Conspirator #2″ and “Conspirator #3.”

But in one affidavit, federal investigators neglected to black out the name of Conspirator #2, identifying him as Lee Hall of Virginia. Hall is a longtime defense intelligence official who now works for the navy. An attorney for Hall, Danny Onorato, declined to comment.

The same affidavit identifies Conspirator #1 by his first name, David. Three people familiar with the case said that person is David Landersman, the senior director for intelligence in the navy’s directorate for plans, policy, oversight and integration intelligence.

Stephen Ryan, an attorney for Landersman, declined to answer questions about the case but said, “I’m confident that he did nothing wrong and will be fully exonerated.” Ryan said Landersman is a retired marine colonel and decorated combat veteran who served in Somalia as well as multiple tours in Iraq.

Landersman and Hall were placed on administrative leave in the spring after the Naval Criminal Investigative Service opened a probe into the silencer purchases, the sources said.

Court records show that the only person charged has been the auto mechanic: Mark Stuart Landersman, 52, of Temecula, California. He is David Landersman’s brother.

Mark Landersman was arrested Oct. 29 and charged with conspiracy to commit wire fraud and to transport unregistered firearms. He was released on $100,000 bond.

Court records describe Mark Landersman as a down-on-his-luck mechanic who struggled to keep his Temecula repair shop in business. He and his wife declared personal bankruptcy in July 2012. A month later, according to charging documents, Mark Landersman received a series of emails from his brother at the Pentagon about firearms silencers, including a link to a website with do-it-yourself instructions for building a certain model.

The next day, navy finance officials informed David Landersman that they had approved a $2 million budget supplement he had requested for “studies, assessments and research.”

Two days after that, Landersman’s office transferred almost all of the money to a pre-existing navy intelligence contract with CACI, a major contractor. According to court documents, Hall and Conspirator #3 then directed CACI to buy the silencers from a California company newly incorporated by Mark Landersman.

Hall also told CACI to award the business without seeking a lower bid, according to investigators. In emails, Hall said Landersman’s fledgling company was “the only responsible source for the engineering expertise sought” and that “their product is first that incorporates a unique design that significantly reduces the decibel ratings to near background noise levels.”

Soon after CACI paid for the work, the recently bankrupt Landersman went on a shopping spree, according to federal charging documents and affidavits.

He bought stock shares in a microbrewery for $100,000, a restored 1988 Porsche 911 for $49,084, an off-road racing vehicle for $15,000, a Ford Ranger for $40,000, a red 2013 Ford F-150 Raptor pickup truck for $59,294 and a $5,760 welder.

In February, the silencers were delivered to a Naval Research Laboratory warehouse in Chesapeake Beach, Maryland. NCIS agents seized the silencers two months later.

The silencers were unmarked and untraceable, despite a federal law requiring all firearms manufacturers to imprint them with a serial number and the name of the maker.

According to court records, one of the navy intelligence officials under investigation told another navy employee that the silencers were intended for the Naval Special Warfare Development Group, the official name for Navy SEAL Team 6.