Editor’s note: An earlier version of this story incorrectly listed former Rear Adm. Bruce Loveless among those who attended a 2007 dinner in Coronado with Leonard Francis, the military contractor who orchestrated the bribery conspiracy. Loveless was not present at that dinner. An earlier version of this story also incorrectly identified retired Rear Adm. Bruce Loveless’ past leadership role in Navy intelligence. He served as director of naval intelligence with the Office of the Chief of Naval Operations, and as commander of the U.S. Pacific Command’s Joint Intelligence Operations Center.
On Sept. 17, 2013, law enforcement agents pulled up to a house in one of Coronado’s neatly pruned neighborhoods.
As kids played on scooters outside, U.S. Navy Cmdr. Stephen Fletcher Shedd found out he was the subject of a criminal investigation for bribery, fraud and conspiracy.
About the same time, federal investigators were confronting two other Navy officers from Coronado in what would become the Fat Leonard case — the biggest and most damaging corruption scandal in U.S. Navy history.
According to indictments, about three dozen Navy officers had colluded with a Malaysian contractor named Leonard Francis, whose substantial girth led to the case’s nickname. All were accused in a multi-million-dollar bribery conspiracy.
The saga torpedoed careers, wrecked families, compromised national security and tied the Navy and Justice Department in knots.
By the time Shedd was indicted, he had served as commanding officer of the USS Milius, a guided-missile destroyer then based in San Diego. As the case proceeded, he emerged as the government’s star witness, praised by prosecutors and vilified by defense lawyers.
One of Shedd’s co-defendants, Rear Adm. Bruce Franklin Loveless, served as the director of naval intelligence with the Office of the Chief of Naval Operations and as commander of the U.S. Pacific Command’s Joint Intelligence Operations Center prior to his arrest in Coronado.
Another Coronado resident, Capt. David Williams Haas, had once been Navy director of operations along the coast of Asia, responsible for missile defense, ship scheduling and a $1.5 billion fuel budget. When the Fat Leonard case broke, Haas was deputy commander of Coastal Riverine Group 1 (now known as Maritime Expeditionary Security Forces), based at Imperial Beach and North Island.
The Coronado News reached out to all three men.
Loveless declined comment for this story.
Haas could not be reached, and his attorney did not respond to inquiries.
Shedd spoke at length in a Zoom call, offering context for his “personal failure” and describing his quest for atonement.
“If I had a message to Coronado neighbors,” Shedd said, “it would be: Have faith in human regrowth. I seek not necessarily forgiveness, but an opportunity for redemption.”
Bribes, booze and women
The Seventh Fleet includes about 60 ships, 150 aircraft and 27,000 sailors responsible for protecting U.S. interests of the Western Pacific. At ports from Indonesia to Japan, Francis’ company – Glenn Defense Marine — supplied aircraft carriers and other warships with resources that included food, fuel, water, waste removal and anti-terrorism protection. Weekly fees to service an aircraft carrier with escort ships topped $2 million. According to the Washington Post, total contracts at one time exceeded $200 million.
But, in the business known as ship husbanding, Glenn Defense held an advantage over competitors: According to court records, Francis bribed high-level Navy officers to rig contracts and provide classified documents, paying them off with luxury vacations, lavish dinners, sex workers and other perks.
Federal indictments say the corruption began around 2004 and proliferated for nearly a decade before it was exposed. Investigations persisted even longer. Criminal prosecutions still are not completed.
By 2013, Glenn Defense dominated the fleet’s Asian husbanding contracts.
In the book, “Fat Leonard: How One Man Bribed, Bilked and Seduced the U.S. Navy,” Washington Post reporter Craig Whitlock describes the scene at Shedd’s house on the day he was confronted by agents. He also answers the title question with these words:
“He (Francis) treated admirals and ship captains to champagne-drenched feasts at the finest restaurants in Hong Kong, Jakarta, Singapore, Tokyo and other cities, dropping $30,000 or more on a single meal. His most effective bribes were his legendary sex parties. … He recruited a network of moles inside the Navy by targeting officers with personal insecurities, strained marriages, drinking problems or other vices and vulnerabilities.”
When Francis finally got busted — after 27 failed investigations, according to Whitlock — the indictment “triggered panic in the corridors of the Pentagon” because so many senior officers had ties with him.
All told, more than 650 U.S. service members became tangled in the scandal. Some had committed crimes, violated the Uniform Code of Military Justice or breached Navy regulations. Many others were innocent, yet tainted with suspicion and blocked from promotions.
In the end, at least 34 were charged with felonies, including the three from Coronado.
Loveless and Shedd wound up on opposing sides in a San Diego federal courtroom.
Shedd, who pleaded guilty to bribery and conspiracy, testified against his fellow officers. Charges against him were thrown out after prosecutorial misconduct sabotaged much of the case.
Loveless, indicted for the same offenses, claimed innocence. At trial, jurors failed to reach a verdict. A judge then dismissed all charges against him.
Haas pleaded guilty to conspiracy in a separate case, as a co-defendant with Francis. He was sentenced to two years in prison and three years of probation, plus a $30,000 fine and $90,969 in restitution.
A depth charge to the Navy
Coronado military installations are part of the San Diego-based Third Fleet, rather than the Seventh.
But the Fat Leonard case shook U.S. Navy installations worldwide – and reverberated through a small town where sailors comprise roughly one-third of the population.
As details of the calamity spilled onto news pages and into courtrooms, a special authority was convened by the Navy to investigate hundreds of personnel who had possible involvement but were not criminally indicted.
The objective: to determine who should face court martial or administrative sanctions, and who should be cleared.
Because the corruption was not uncovered until 2013 – years after many of the crimes occurred – officers involved were scattered around the globe, including Coronado. Yet inquiries dragged on, blunting the Navy’s ability to fill top leadership posts while effectively blocking promotion for those who had done no wrong.
In a 2018 interview with U.S. Naval Institute News, then-Secretary of the Navy Ray Mabus explained the impact: “If Leonard Francis mentioned somebody’s name, or it seemed to us that if somebody had served in a senior position in the Pacific during this time, which covered a lot of folks, they were caught up in this until their name could be pulled out. It took in a huge percentage of flag officers, and it really hamstrung the Navy in terms of promotions.”
Meanwhile, the Pentagon also went after unscrupulous contractors. During the three years after Francis’ arrest, more than 548 worldwide vendors reportedly were issued debarments from Navy business. The San Diego Union Tribune reported that new protocols and audit standards were imposed at ports globally, including the base at North Island.
Naval Academy graduates
According to Loveless’ online biographies, he spent more than 30 years as an intelligence officer.
Raised in Tennessee, Loveless graduated in 1986 from the U.S. Naval Academy, where core values are honor, courage and commitment. He was a national security fellow at Harvard’s Kennedy School of Government.
Over the course of his career, Loveless served aboard aircraft carriers and amphibious ships. He survived the 9/11 attack while working at the Pentagon. He headed the Navy’s Pacific Command intelligence center in Hawaii, and was a Seventh Fleet leader in cyber and electronic warfare.
In short, Loveless had knowledge of and access to some of America’s most vital and clandestine national security information.
In 2012, Loveless received the Rear Admiral Edwin T. Layton Leadership Award, one of the most prestigious honors for intelligence officers.
One year later, he was being questioned by NCIS agents. The criminal charges, not lodged until 2017, were based in part on statements supplied to investigators by Shedd – also a graduate of the Naval Academy.
According to online biographies, Shedd got an engineering degree at the Naval Academy and a master’s in computer science from the Naval Postgraduate School.
In 1999, he was deployed to the Persian Gulf aboard the USS Kitty Hawk as a Tomahawk mission planner. While on that tour, he wrote an essay on leadership for the Naval Institute, urging colleagues, “Learn from bad examples and don’t make the same mistakes.”
Eight years later, Shedd was a lieutenant commander serving as south Asia policy and planning officer for the Seventh Fleet. His duties aboard the USS Blue Ridge, the fleet’s flagship, included identifying ports where ships could resupply.
According to Whitlock, Shedd soon assumed a second role as “wedding planner” – a title given to those who helped plan Francis’ shindigs while recruiting other Navy officers into the conspiracy.
It started with an invitation to a dinner hosted by the port contractor. As reported by Whitlock, Shedd was so eager for a promotion he signed up to hob-nob with superiors. And, when asked by a colleague (and future co-defendant) to help Glenn Defense, he promptly agreed.
Through a clandestine email account, Shedd began leaking classified documents to Francis, including ship schedules. The indictment listed rewards from “The Boss,” including cash, a pair of Swiss watches valued at $25,000 and a family vacation at a Malaysian resort.
As the Seventh Fleet sailed Asia’s coast that spring, Francis flew ahead for parties at each port of call. And Shedd helped orchestrate events.
A Coronado dinner
It is unclear when Loveless met Francis.
In 2008, he served as intelligence officer aboard the USS Blue Ridge – flagship for the fleet – as it made a series of stops on the Asian coast. According to the indictment, Loveless – then assistant chief of intelligence for the Seventh Fleet – joined Shedd, Francis and other officers in a Bangkok hotel where rooms cost $626 per night. The indictment says Francis provided fictitious receipts putting the tab at $126 each. He also paid for a feast at a total cost of $18,731, with call girls to entertain.
As reported by Whitlock, Shedd became worried that officers were making themselves vulnerable to blackmail: “Their overgrown frat-boy behavior had at first seemed harmless, if boneheaded, but now he realized it posed a national security threat, especially for Loveless. As an intelligence officer, the 40-year-old Loveless was an obvious target for honey traps: the age-old trick of compromising someone with sex.”
Partying continued at the Blue Ridge’s next harbor, Singapore. Whitlock, who obtained copies of Francis’ debriefing with federal agents, reported that the host spent $20,000 on dinners and female escorts.
“Loveless became infatuated with a Mongolian prostitute and tried to impress her by sharing his business card – which identified him as a Navy intelligence officer,” Whitlock wrote.
During the trial, Shedd said revelry continued at the next port, in the Philippines.
The Union Tribune recounted his testimony: “The group was dancing and drinking from a case of Dom Perignon or Cristal champagne that the butler had delivered to the room, Shedd said. Again, Francis paired off women with men, including Loveless and Dolan, who left the party for their own rooms…”
The belated whistleblower
In Whitlock’s book, Shedd is quoted saying the decision to cross a line into bribery “took me only a few seconds.”
But, during his conversation with The Coronado News, the former commander said it wasn’t that simple — and those seconds remain his greatest regret.
Shedd said he was caught at the time in a vortex of ambition and fear, compounded by naivety.
He had studied engineering and computer science in the Navy, yet as an officer, was asked to handle diplomacy and husbanding contracts. Leonard Francis was not just a Malaysian businessman, Shedd added, but “a vetted and bona fide partner of the Navy staff” – someone to be accommodated.
Ethical training with Navy legal officers had not prepared him for dilemmas faced overseas, Shedd said, especially in foreign cultures where gift-giving among business associates is normal — and refusal to accept a gift may be perceived as an insult.
Simultaneously, Shedd admitted, he was desperate to become a ship’s captain, and had been told it would never happen unless he proved himself to Navy brass – senior officers who were already colluding with Francis.
“I had every confidence that this type of behavior didn’t stop with those I knew about first-hand,” he added. “Because of how high, it appeared to me, it went in the Navy … there was not a shot in hell I was going to be a whistleblower. In hindsight, it was a bad decision. But the decision was self-preservation.”
As the level of depravity became apparent, Shedd said, “I was floored on the one hand, and scared shitless on the other hand.”
He acknowledged becoming a part of that decadence, but bridled at being portrayed as a ringleader. He said he organized parties and colluded with Francis as “a conductor or aide-de-camp … a low-level staffer.”
In hindsight, Shedd said he believes Navy officers fell prey to a phenomenon known as the “Bathsheba syndrome.” The term comes from biblical passages recounting how King David allowed success, power and ego to erode his integrity to a point where he took Bathsheba – another man’s wife – leading to his downfall.
After leaving the Seventh Fleet in 2008, Shedd said, the experience left a terrible taste in his mouth. He turned to faith and self-reflection, trying to forgive himself and avoid ever again falling into such a trap.
Nearly a decade elapsed before agents finally arrested him in 2017. At that point, Shedd said, “the path was very clear to me. It was atone and cooperate.”
He spoke with pride of having “the courage to be a whistleblower in the face of daunting seniority,” and said in retrospect the Seventh Fleet corruption “was more widespread than I comprehended.”
A ‘Cinderella Liberty’ bash
Haas and others – including Francis — were charged separately from Loveless and Shedd, but their indictment spins a similar tale.
In 2009, Haas garnered national attention as an Ironman competitor. According to foreignpolicy.com, he deflected praise “in an aw-shucks fashion,” telling interviewers, “I race for my family. I want them to know that they can dream, work hard, and make their dreams come true. I want my kids to look up to their dad.”
By 2011, Haas was director of maritime operations for the Seventh Fleet. For two years, according to the indictment and a plea, he helped Francis win corrupt contracts.
At least 10 times, he took part in extravagant parties where Glenn Defense covered the cost.
A four-day celebration in May of 2012 became known as the “Cinderella Liberty” bash. Francis paid for rooms at Shangri-La Hotel, a posh resort in Jakarta, including dinners, booze, entertainment and women. A month later, a two-day gig in Tokyo cost Francis another $75,000.
But the investments paid off. One example, cited in the indictment and plea: Haas helped Glenn Defense secure a contract servicing the nuclear-powered carrier USS John C. Stennis in Malaysia. The Navy’s bill was $3 million.
Afterward, according to the indictment, Francis congratulated Haas for his guile with the Navy, noting, “We ambushed them ha ha. By IED.”
The big bust
Eventually, Navy investigators got wind of the corruption.
In fact, repeated inquiries were launched against Glenn Defense, only to fizzle. Besides the backing of senior officers, it turned out, Francis had at least one spy within NCIS. So, he was able to detect and deflect each probe.
In court testimony, Shedd said the conspirators felt safe because they knew that breaking the Navy “code of silence” would bring “mutually assured destruction.”
According to Whitlock, that insulation broke down only after the wife of an officer became a whistleblower. When investigators realized their case records were being leaked, they secured the true files and set up dummies to mislead Francis’ mole.
The initial crackdown came in mid-September of 2013. Francis was lured to San Diego by a fictitious invitation to glad-hand with military brass and advise them how the Navy could save U.S. tax dollars by dealing with port contractors like Glenn Defense.
On Sept. 15, 2013, Francis hosted a dinner for seven at a Japanese restaurant in the Gasl Lamp district. Shedd was among those present. Francis covered the tab of $2,200, including tip.
This time, federal investigators were watching. Francis was placed in cuffs two days later in his room at a San Diego hotel. All over the world, NCIS and FBI agents began rounding up additional suspects.
When agents confronted Shedd, the commander initially proclaimed innocence. “I will say this officially and under oath – that I accepted no money or gifts at all,” he told them, according to Whitlock’s book.
Investigators responded by showing Shedd emails about his family vacation in Malaysia.
Because agents had not secured an arrest warrant, Shedd was not immediately taken into custody.
Neither was Loveless, whose initial interview with federal agents was recorded. According to Whitlock, Loveless denied knowing there were prostitutes at events he attended with Francis. He also said he had reimbursed Francis for meals.
“Loveless tied himself into knots with his evasive answers,” Whitlock wrote of the interrogation. “Yes, he had drinks with the Mongolian woman, but not sex. And he only gave her his card as a way of identifying himself.”
At that point, Loveless terminated the interview. (At trial years later, jurors failed to reach a verdict on Loveless, and all charges were dismissed.)
The trial
Instead of clamming up, Francis cut a deal shortly after being handcuffed. He began spewing allegations against his co-conspirators while supplying reams of evidence to investigators.
The wheels of justice churned slowly, however. For reasons that remain unclear, Shedd, Loveless and seven co-defendants were not indicted until 2017 — four years after the takedown of Francis.
Their trial did not take place for yet another five years.
By then, Shedd and three others also had taken plea deals. In January of 2022, Shedd admitted to conspiracy and bribery, with a combined maximum prison sentence of 20 years. He also agreed to serve as a witness for the government.
The trial, which began two months later at the U.S. District Court in San Diego, was fraught with controversy.
Even before opening arguments, defense attorneys complained that Justice Department lawyers were withholding exculpatory information. As the case proceeded, they added allegations of prosecutorial misconduct.
Although Francis loomed as the government’s star witness, his credibility had become so toxic that prosecutors decided not to put him on the stand. Instead, Shedd and federal agents unraveled the Fat Leonard conspiracy for jurors.
As Shedd testified, he admitted providing Glenn Defense with classified documents, collecting $105,000 worth of bribes and helping Francis draw other officers into the conspiracy.
At one point during cross examination, according to the Washington Post, a defense attorney asked Shedd: “You’re a traitor to the United States, aren’t you?”
His answer: “Yes, sir.”
Convictions — and a hung jury
In June of 2022, Loveless’ co-defendants were found guilty while he got a hung jury.
A motion by Loveless’ defense team accused prosecutors of smearing the former intelligence officer with “sensationalized claims of ‘secrets for sex’ despite a complete lack of evidence to support those allegations.”
Not one witness had provided a first-hand account of Loveless accepting prostitution services, they contended, and the government failed to prove that Loveless participated in – or even knew about – a bribery scheme.
While Loveless received things of value from Francis, the defense concluded, prosecutors lacked a quid pro quo. Amid 14 million documents in the case, they asserted that Loveless appeared in just six emails – none of which reflected criminal conduct.
The motion argued that an acquittal was warranted.
Judge Janis Sammartino dismissed charges against Loveless in September 2022, prompting defense attorneys to declare he was “completely vindicated.” Still, convictions had piled up… And then the Fat Leonard criminal case crumbled further.
‘Outrageous’ misconduct
In multiple court filings, defense attorneys alleged that Assistant U.S. Attorney Mark Pletcher – the lead prosecutor – had withheld crucial information from defendants.
Among other things, they said, the lead investigator had submitted a false affidavit in a related case, and had urged fellow agents to offer a $5,000 bribe to a prospective witness.
A special hearing was convened with a finding by Judge Sammartino that government lawyers committed “outrageous” misconduct.
The Justice Department replaced Pletcher. A slew of motions followed, seeking to dismiss charges not just against officers who were tried alongside Loveless, but for others who already had pleaded guilty.
Instead of felony records and prison, those defendants eventually got misdemeanor convictions. Their punishment: fines of $100 each.
But Shedd was different. Because he had shown remorse and cooperated with prosecutors, government lawyers argued he should go completely unpunished.
Meanwhile, defense attorneys dropped another bombshell — alleging that Shedd committed perjury during the trial, and that the move to dismiss charges against him was orchestrated to cover up the magnitude of government misconduct.
In a letter to Sammartino late last year, Todd Burns, counsel for one of the convicted officers, referred to Shedd as a “snitch” and defended the pejorative by saying “the government’s preferred, sterile term – ‘cooperator’ – doesn’t do justice to Shedd’s rampant dishonesty and trial perjury.”
Burns alleged that Shedd “was coached” to lie under oath. He suggested that government attorneys sought to dismiss all charges out of fear that Shedd might “reveal the trial prosecutors’ scheme to suborn perjury.” Instead of leniency, Burns argued, Shedd should receive additional punishment for dishonesty.
In response, Assistant U.S. Attorney Tara McGrath told Sammartino the allegation was a falsehood based on “distorting and omitting facts.”
Shedd’s attorney, David S. Wilson, was more forceful. His brief said defense lawyers had launched “an inexcusably vicious attack” on his client, who was so credible that jurors convicted all co-defendants who stood trial, except Loveless. Wilson said the claim of a cover-up was “exquisitely far-fetched,” adding, “Had Mr. Shedd perjured himself, the defense cross-examination would have exposed it.”
The court apparently took no action on the perjury allegations.
Pletcher did not respond to inquiries. A spokeswoman for the U.S. Attorney’s Office in San Diego failed to answer questions or provide comment.
In May of this year, although Shedd already had signed a guilty plea, Sammartino dismissed all charges against him.
A run for the border
Amid the legal wrangling, Francis seemingly manipulated the justice system just as he had the military.
Instead of biding his time in jail, he obtained a doctor’s diagnosis of terminal cancer and secured a medical release from incarceration. By September of 2022, Francis was living under “house arrest” in a $7,000-per-month Carmel Valley mansion with his girlfriend, children and servants, according to the Union Tribune.
That’s when Francis, with lax oversight, cut a tracking device off his ankle, caught an Uber to the Mexican border, flew to Cuba and wound up in Venezuela. Two weeks later, as reported in a frenzy of media coverage, Venezuelan authorities took custody of Francis and, after negotiations with the United States, returned him to San Diego in a prisoner swap.
Fat Leonard’s legacy
More than a decade after the initial takedown, Fat Leonard’s saga refuses to die.
Francis, whose terminal cancer somehow vanished, is still awaiting sentencing. His physician sent a letter to the court congratulating Francis for a “clean bill of health.” Francis is secured in San Diego’s Metropolitan Correctional Center as Register Number 45415-298.
From Jakarta to Coronado, the corruption and flawed investigations damaged countless officers and families caught in the maelstrom.
Meanwhile, for the Navy, the whole affair wreaked. Betrayal and enforcement failures were magnified by the service’s questionable accountability and transparency.
“… As an institution,” Whitlock wrote, “the Navy did everything it could after Francis pleaded guilty in 2015 to hide the extent of the rot in its ranks and avoid a full public accounting.”
Of 685 service members referred for possible military discipline, he reported, outcomes were disclosed for only 19 — and just five were convicted in court martial proceedings.
According to Whitlock, a fallback position was deployed to rationalize and obfuscate: “In most instances, the Navy excused misconduct on the dubious grounds that its personnel didn’t know any better. In case after case, the Navy let people off the hook … because they were following the lead of an admiral or senior officer who did the same thing.”
Epilogue
In 2021, before charges were dropped against Loveless, he obtained a PhD in leadership from the University of San Diego.
A LinkedIn page identifies him as a director at All American Leadership LLC, an Irvine company that “inspires, empowers, and challenges leaders to create and sustain high performing cultures.” Core values include character and trust.
The page also lists Loveless as a senior advisor at Hayes Group International, a Washington, D.C., consulting enterprise that specializes in intelligence, analytics software and customized technology. His name does not appear in the company’s list of employees.
Neither the Hayes Group nor All American Leadership responded to inquiries.
The San Diego Union Tribune profiled Haas last year, after he was sentenced to prison. “For more than two decades,” the story noted, “Haas charted an upward career path … facing combat in Iraq and Afghanistan as he ascended the Navy’s ranks, at one point coordinating the operations of some 100 ships and submarines, 200 aircraft and 40,000 sailors and Marines. But his illustrious career came crashing down…”
According to a federal Bureau of Prisons website, Haas served his time and was released from custody in July.
Shedd, during his interview with The Coronado News, declined to talk about the impact on his career, or to discuss what he’s doing today.
Prior to his arrest, Shedd was overseeing a United States Strategic Command operations center in Colorado with $25 billion in military assets, according to his LinkedIn page. Currently, that page lists him as a “global operations manager” and a “turnaround leader” in San Diego County, but it does not identify an employer.
Now living in Riverside County, Shedd recalls Coronado as a close-knit community full of drama, where most locals shunned him after the Fat Leonard scandal. He describes himself as “radioactive” to the Navy, and won’t even visit the island because it would be so painful.
“From my experience, the impact was termination of many friendships,” Shedd said. “It’s expected, but very tragic.”
