Another Officer Relieved in Navy Bribery Scandal

The alleged Pacific fleet swindler known as "Fat Leonard" made his first court appearance in San Diego on Thursday to hear formal charges against him that include conspiring with Navy officers on port contracts worth more than $200 million and bribing them with cash, prostitutes and Lady Gaga tickets.

A U.S. magistrate judge issued a conditional ruling Thursday that would allow Leonard Glenn "Fat Leonard" Francis to be released on $1 million bail.

Judge Jan Adler attached to his ruling a list of stringent restrictions, including that Francis not only be monitored by GPS but must rent a San Diego apartment with surveillance cameras and alarms on the windows, and hire an independent, 24-hour security guard who would alert authorities if he tried to flee.

Adler also stayed his decision pending a review from a U.S. district judge. It was unclear when that would happen.

Francis, 49, head of the Glenn Defense Marine Asia ship servicing firm operating out of Singapore, was arrested in September in San Diego in a sting operation by San Diego authorities and the Naval Criminal Investigative Service.

While Francis was in court, another Navy officer was caught up in the widening contracting scandal involving connections to GDMA. The Navy announced Thursday that Capt. David Haas, 45, deputy commander of Coastal Riverine Group 1 in Imperial Beach, Calif., had been suspended while his alleged connections to Francis were being investigated.

"The decision to re-assign Haas was made based upon allegations in connection with an ongoing NCIS (NCIS) investigation into Glenn Defense Marine," the Navy said in a statement. Coastal Riverine Group 1 is in charge of port and harbor security in San Diego.

In addition to Haas, two admirals, a captain, two commanders and an NCIS agent are also under investigation in the scandal that allegedly involved Francis paying for information on the movements of Navy ships that could be serviced by his firm, which has won contracts from the Navy worth more than $200 million since 2009.

"According to the allegations in this case, a number of officials were willing to sacrifice their integrity and millions of taxpayer dollars for personal gratification," Laura Duffy, U.S. Attorney for the Southern District of California, said in court papers.

One of the officers allegedly involved, Cmdr. Jose Luis Sanchez, 41, appeared in court Wednesday and was allowed to remain free on $100,000 bond by Magistrate Judge David Bartick pending arraignment on Dec. 5 on charges of taking bribes and call girl service from Francis.

Court records allege that Sanchez regularly communicated by email and Facebook with Francis about internal Navy discussions and made recommendations in GDMA's favor about port visits and Navy personnel assignments. In return, Francis allegedly gave Sanchez more than $100,000 in cash, together with travel expenses and visits from prostitutes.

The conspiracy allegedly began in 2009, when Sanchez was the deputy logistics officer for the commander of the Navy's 7th Fleet in Yokohama, Japan, and continued when he was transferred to serve as director of operations for Fleet Logistics Command in Singapore. In the course of the conspiracy, Francis allegedly gave Sanchez more than $100,000 in cash.

Sanchez referred to Francis as "Lion King" and "Boss" in the emails, while Francis called Sanchez "brudda," according to court papers.

In an email exchange, Sanchez and Francis allegedly discussed a trip Sanchez planned to take to Kuala Lumpur and Singapore with Navy friends he called his "Wolf Pack." They discussed the number of rooms the "Wolf Pack" needed, and Sanchez asked Francis for pictures of prostitutes for "motivation," the court papers said.

Francis replied: "Got it we will hook up after the FLAG dinner, will arrange a nest for you guys and some birds [women]." A few days later, Sanchez sent a Facebook message to Francis saying, "Yummy ... daddy like," the court records said.

GDMA, which has operations in Japan, Singapore, Thailand, Malaysia, Korea, India, Hong Kong, Indonesia, Australia, the Philippines, Sri Lanka and the U.S., allegedly overcharged the Navy and submitted bogus invoices for millions of dollars in services, according to the U.S. Attorney's office.

Navy Secretary Ray Mabus has ordered a review of similar supply contracts in other parts of the world. The Navy has canceled all of its contracts with GDMA and suspended it from future bidding.

Prosecutors argued that Francis should remain in custody, given the gravity of the case. They said the Malaysian businessman is a wealthy world traveler who owns a fleet of vessels and can go wherever he wants. Prosecutors said Francis also has no strong ties to the United States, unlike the Navy officers who have been released on bonds.

"He has tremendous resources to buy whatever travel documents he needs south of the border," Assistant U.S. Attorney Robert S. Huie told Adler, noting that San Diego is only 16 miles from Tijuana, Mexico.

Francis also has a criminal record, Huie said, pointing to his conviction for illegal arms possession in Malaysia when he was 24.

Defense attorney Pat Swan called Francis "a loving and doting parent" who has suffered undue hardship being away from his three children, ages 5, 6 and 7. His 70-year-old mother has taken over the care of the children in Singapore while Francis has been in custody, but she is in poor health, Swan said.

Swan told the judge that Francis knew he was under investigation and could be arrested when he chose to go to San Diego to meet with Navy officials, who invited him to give a presentation on his business as part of a sting operation. Francis was arrested at his hotel after arriving.

"Mr. Francis wants to face the charges," Swan said.

Huie, the prosecutor, said Francis knew of the investigation because he had bribed a Navy investigator who has been arrested. He said Francis came to San Diego after investigator placed a fake document in his file saying the prosecution had declined the case.

Adler said in making his ruling that "I will not minimize the seriousness of this case," but the law also requires him to release a defendant if he can fashion conditions that will reasonably ensure he will not flee, which he believes the restrictions do.

-- The Associated Press contributed to this article.