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 firearm silencers that cost only $8,000 to manufacture, 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 F. Loveless, the director of intelligence operations, are under investigation as part of an unrelated bribery scandal involving Glenn Defense Marine Asia , a Singapore-based defense contractor.
Neither admiral has been charged with a crime. But the Navy suspended their access to classified materials after their names surfaced in an escalating probe into allegations that other officers provided sensitive information to the contractor in exchange for prostitutes and cash.
There is no known connection between the two corruption cases, but both reach high into the Navy hierarchy and, based on prosecutors’ filings, expose how easy it can be for contractors and insiders to defraud the service of millions of dollars.
The investigations also call into question the Navy’s ability to prevent fraud. In April 2011, after yet another contracting scandal, 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 e-mails that set into motion the scheme to purchase the firearm silencers, according to affidavits from investigators and other documents filed recently by prosecutors in U.S. District Court in Alexandria.
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 W. Landersman, the senior director for intelligence in the Navy’s directorate for plans, policy, oversight and integration intelligence.
Stephen M. 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 and did 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 people familiar with the case said.
Rear Adm. John F. Kirby, the Navy’s chief spokesman, declined to comment on the men’s work status, saying he could not discuss the details of ongoing investigations.
“Secretary Mabus has made it clear that he holds senior leaders in the Navy Department accountable to high standards of ethics and conduct,” Kirby said in a statement. “We take seriously all allegations of wrongdoing and investigate them thoroughly.”
Court records show that the only person charged has been the auto mechanic: Mark Stuart Landersman, 52, of Temecula, Calif. 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.
His attorney, John Zwerling, declined to discuss the allegations. “We have been living with this set of facts for months,” he said. “We are convinced that he has committed no crimes.”
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 e-mails from his brother at the Pentagon about firearm silencers, including a link to a Web site with do-it-yourself instructions for building a certain model.
“Wow! Very simple,” Mark Landersman replied in an e-mail on Aug. 14, 2012, according to the charging documents.
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 preexisting 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 e-mails, Hall said that 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.”
To manufacture the silencers, Landersman turned to Carlos C. Robles, a machinist who used to work in his auto repair shop. He gave Robles blueprints for what he called “a small-engine muffler” and asked him to make 349 of them, according to charging documents.
Robles later told agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives that he built the mufflers and that Landersman paid him $8,000 to cover parts and labor. He acknowledged to the agents that the mufflers closely resembled silencers.
ATF firearm examiners tested the devices and concluded they were functioning silencers.
In an interview with The Washington Post, Robles said he was stunned to learn that Landersman had resold the silencers to CACI and the Navy for $1.6 million.
“Are you kidding me?” he said.
A CACI spokesman did not return phone calls or an e-mail seeking comment.
Soon after CACI paid for the work, the recently bankrupt Landersman went on a shopping spree, according to charging documents and affidavits filed by federal investigators.
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, Md. NCIS agents seized the silencers two months later.
The silencers were unmarked and untraceable, despite a federal law requiring all firearm manufacturers to imprint them with a serial number and the name of the maker.
Why the silencers were ordered remains unclear.
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.
The intelligence official said the silencers were designed for the “AK family of firearms,” a reference to Kalashnikov rifles such as the AK-47.
Officials with SEAL Team Six told investigators that they were unaware of any such order for silencers, according to court documents.