U.S. filing on bond for Leonard Francis

U.S. attorneys argue that Leonard Francis, the man known as "Fat Leonard" accused of bribing Navy officers with prostitutes and cash, should be detained as a flight risk.

Case 3:13-cr-03782-JLS Document 62-1 Filed 11/22/13 Page 1 of 15

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LAURA E. DUFFY
United States Attorney
MARK W. PLETCHER (CO Bar No. 34615)
ROBERT S. HUIE (CA Bar No. 237374)
Assistant U.S. Attorneys
880 Front Street, Room 6293
San Diego, CA 92101
Tel: (619) 546-7053

6
7 JEFFREY KNOX
Chief, Fraud Section
8 CATHERINE VOTAW (PA Bar No. 34823)
9 BRIAN YOUNG (OH Bar No. 78395)
Trial Attorneys, Fraud Section
10 Criminal Division
11 Tel: (202) 353-0449
Attorneys for the United States
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA

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15 UNITED STATES OF AMERICA,
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Plaintiff,
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v.
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19 LEONARD FRANCIS (1), and
20 JOHN BELIVEAU (2),
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Case No. 13-CR-3781-JLS, -3782-JLS
MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT OF
UNITED STATES’ MOTION TO
REVOKE RELEASE ORDER AND TO
DETAIN DEFENDANT AS A FLIGHT
RISK

Date: November 25, 2013
Defendants.
22 _______________________________ Time: 2:00 p.m.
UNITED STATES OF AMERICA,
23
Plaintiff,

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25

v.

26
LEONARD FRANCIS (1), and
27 MICHAEL MISIEWICZ (2),
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Defendants.

Case 3:13-cr-03782-JLS Document 62-1 Filed 11/22/13 Page 2 of 15

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I

2

INTRODUCTION

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Defendant Leonard Francis, the CEO and owner of Glenn Defense Marine Asia

4 (“GDMA”), is accused of corrupting senior Navy officials into serving as double
5 agents for him, by bribing them to provide him with classified national defense and
6 law enforcement information, in order to protect Francis’s multi-national, multi-year,
7 multi-million dollar fraud on the United States Navy.
Defendant is a Malaysian national with no meaningful ties to the United States,

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9 other than the fact that he has built a business empire based on defrauding the United
10 States. He faces a sentence – as recommended by the U.S. Sentencing Guidelines – of
11 a minimum term of life in a United States prison.
If given the opportunity, Defendant can – and will – flee this country. He

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13 literally has no reason to remain in the United States for trial. He has tremendous
14 financial resources, estimated in the tens of millions of dollars; owns a fleet of vessels;
15 owns a company with offices in a dozen countries; has family and friends across the
16 globe; and has every means and motivation to flee to Mexico, and from there, shop for
17 a country with no extradition treaty with the United States. If any person in this
18 district should be detained as a risk of flight, it is Defendant.
The United States respectfully seeks review of an order (the “release order”)1 by

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20 the U.S. Magistrate Judge setting the conditions of release proposed by Defendant.
21 The Magistrate Judge held a lengthy and thorough hearing in this case. At the close of
22 that hearing, the Magistrate Judge agreed with the United States on several factors that
23 favor detention, including the very serious nature of the charges against Defendant;
24 the strong weight of the evidence against Defendant; and Defendant’s ties to other
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Technically, as discussed further below, there are two identical release orders,
26 one in each of two related cases.
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Case 3:13-cr-03782-JLS Document 62-1 Filed 11/22/13 Page 3 of 15

1 countries and lack of ties to the United States.

However, the Magistrate Judge

2 ultimately agreed with Defendant’s proposed bond conditions, under which Defendant
3 would be allowed to live at an upper-level apartment that he will rentwith GPS,
4 private video surveillance, and a guard hired by Defendant.
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The fact that the Magistrate Judge concluded that private guards, video

6 surveillance, and an upper-level apartment (to prevent the defendant from escaping
7 from a window) were the least restrictive means available to ensure Mr. Francis’s
8 appearance speaks volumes about his incentive to flee. The United States respectfully
9 submits that these release conditions are inadequate. To the extent that Defendant’s
10 release conditions are designed to rely, in any measure, on Defendant’s goodwill and
11 voluntary compliance, those conditions are mistaken. To the extent that Defendant’s
12 release conditions are instead designed to physically prevent Defendant from reaching
13 the Mexico border, those conditions are insufficient. They establish what is in effect a
14 “home jail” that is designed to be far less effective than a real jail. Both parties
15 essentially agree that nothing short of physical confinement will ensure Mr. Francis’s
16 appearance. The issue for the Court to decide is whether that confinement should
17 occur at the MCC or in a prison of Mr. Francis’s own choosing and design.
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Consideration of the factors outlined in the Bail Reform Act establish that

19 Defendant is in fact a flight risk. The United States urges, in agreement with Pretrial
20 Services, that Defendant be detained.
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II

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STATEMENT OF THE CASE

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A.

Pending Cases

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Francis is charged in three pending cases with engaging in conspiracies to

25 commit bribery. The three cases, and the next court dates in each, are as follows:
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(1)

United States v. Leonard Francis and John Beliveau
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13CR3781-JLS, -3782-JLS

Case 3:13-cr-03782-JLS Document 62-1 Filed 11/22/13 Page 4 of 15

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13-MJ-3456-JMA

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13-CR-3781-JLS
Next date: Motion hearing/trial setting before U.S. District Judge Janis L.

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4 Sammartino, set for February 28, 2014.
(2)

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United States v. Leonard Francis and Michael Misiewicz

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13-MJ-3457-JMA

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13-CR-3782-JLS
Next date: Motion hearing/trial setting before U.S. District Judge Janis L.

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9 Sammartino, set for February 28, 2014.
(3)

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United States v. Leonard Francis and Jose Sanchez
13-MJ-4027-DHB2

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Next date: Arraignment on Indictment or Information before U.S. Magistrate

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13 Judge David H. Bartick, set for December 5, 2013.
Additionally, Francis’s conduct is described in the complaint in a fourth case.

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15 That fourth case charges Alex Wisidagama, Francis’s subordinate and cousin, with
16 conspiring with Francis (identified in the complaint by initials as “LF”) and others to
17 defraud the United States.
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(4)

United States v. Alex Wisidagama

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13-MJ-3783-JMA

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Next date: Motion hearing/trial setting before U.S. District Judge Janis L.

21 Sammartino, set for December 6, 2013.
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//

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//

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No Information or Indictment has been filed yet in this case, but it is anticipated
that the case will be related to 13-CR-3781 and -3782 based on a common defendant,
26 Leonard Francis.
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Case 3:13-cr-03782-JLS Document 62-1 Filed 11/22/13 Page 5 of 15

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B.

Bond Hearing

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Francis was arrested at his hotel suite at the San Diego Marriott Marquis on the

3 evening on September 16, 2013, based on arrest warrants issued in 13-MJ-3456 and 4 3457. [See 13-MJ-3456, Dkt. No. 2.]
At his initial appearance the following day before U.S. Magistrate Judge Karen

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6 Crawford, the United States moved to detain him as a risk of flight. [Dkt. No. 7.]

7 Pretrial Services likewise recommended that Francis be detained as a flight risk. A
8 detention hearing was scheduled for September 20, 2013.
On September 20, 2013, Francis waived the detention hearing and stipulated to

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10 detention, without prejudice. [Dkt. No. 10.] An order of detention was entered. [Dkt.
11 No. 15.]
On November 20, 2013, Francis made an initial appearance on his third

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13 criminal complaint, 13-MJ-4027, before U.S. Magistrate Judge David H. Bartick.
14 [See 13-MJ-4027, Dkt. No. 14.] The United States again moved to detain Francis. A
15 detention was hearing was scheduled before Judge Bartick for Monday, November 25,
16 2013 at 2:00 p.m. (the same date and time as the hearing scheduled before this Court
17 on this Motion).
On November 21, 2013, the parties appeared before U.S. Magistrate Judge Jan

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19 M. Adler, to hear Defendant’s request for bond in connection with two of Defendant’s
20 pending cases: 13-CR-3781, and -3782. [See 13-CR-3781, Dkt. No. 42.]
At the bond hearing, Judge Adler heard argument for approximately two hours.

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22 Pretrial Services, after hearing Defendant’s bond proposal, again joined in the United
23 States’ recommendation that Defendant be detained.
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Cases 13-MJ-3456 and -3457 were initially assigned to Judge Crawford, and
26 after he recusal were ultimately reassigned to U.S. Magistrate Judge Jan M. Adler.
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Case 3:13-cr-03782-JLS Document 62-1 Filed 11/22/13 Page 6 of 15

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At the conclusion of the hearing on Thursday evening, he set conditions of

2 release. [See 13-CR-3781, Dkt. No. 43.] Those conditions included:
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ï‚· A $1 million corporate surety bond

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ï‚· A $100,000 person appearance bond signed by Defendant and his aunt

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ï‚· GPS monitoring with home detention

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ï‚· Defendant will live at a rented apartment in San Diego County, in the
upper floor of a multi-story building (to be rented in the future)

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 Defendant’s residence will be monitored by a security company with

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surveillance cameras and alarms

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ï‚· Defendant will have a 24-hour guard service in his apartment at all times

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11 [Id.] At the request of the United States, Judge Adler stayed his release order, pending
12 review in this Court. [Dkt. No. 42.] This Motion follows.
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III

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ARGUMENT

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A.

Legal Standard

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The Bail Reform Act provides for detention where “the judicial officer finds

17 that no condition or combination of conditions will reasonably assure the appearance
18 of the person as required and the safety of any other person and the community.” 18
19 U.S.C. § 3142(e). “On a motion for pretrial detention, the United States bears the
20 burden of showing by a preponderance of the evidence that the defendant poses a
21 flight risk, or by clear and convincing evidence, that the defendant poses a danger to
22 the community.” United States v. Aitken, 898 F.2d 104, 107 (9th Cir. 1990) (citation
23 omitted and emphasis added).
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Here, the United States has moved to detain Defendant as a risk of flight only,

25 and the preponderance standard applies.
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Case 3:13-cr-03782-JLS Document 62-1 Filed 11/22/13 Page 7 of 15

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Where a magistrate judge has ordered release, “the Government may file, with

2 the court having original jurisdiction over the offense, a motion for revocation of the
3 order or amendment of the conditions of release.” 18 U.S.C. § 3145(a)(1). This Court
4 should apply a de novo standard in reviewing the release order. See United States v.
5 Koenig, 912 F.2d 1190, 1191 (9th Cir. 1990). “[T]he district court is not required to
6 start over in every case, and proceed as if the magistrate’s decision and findings did
7 not exist,” but “[i]t should review the evidence before the magistrate and make its own
8 independent determination whether the magistrate’s findings are correct, with no
9 deference. If the performance of that function makes it necessary or desirable for the
10 district judge to hold additional evidentiary hearings, it may do so.” Id. at 1193.
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At the bond hearing, the parties proceeded by way of proffer. The United

12 States’ proffer included, among other facts, the facts described in the four criminal
13 complaints relating to Defendant. In connection with this Motion, the United States
14 will be delivering to chambers a courtesy copy of these complaints. The United States
15 has also ordered a transcript of yesterday’s bond hearing, and will submit this
16 transcript to chambers as soon as it is received.
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The Bail Reform Act, at 18 U.S.C. § 3142(g), describes the factors to be

18 considered in determining whether a defendant should be detained. Each of these
19 factors is addressed below.
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B.

Nature and Circumstances of the Offense (18 U.S.C. § 3142(g)(1))

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As Judge Adler found, the offenses charged in this case are very serious.

22 Defendant is alleged to have bribed and corrupted three senior Navy officials:
23 Commander Michael Misiewicz, Commander Jose Sanchez, and NCIS Supervisory
24 Special Agent John Beliveau. In exchange for Defendant’s bribes – in the form of
25 cash, luxury travel, and the services of prostitutes – the Navy officials gave Defendant
26 the information he wanted: classified defense information (including information
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Case 3:13-cr-03782-JLS Document 62-1 Filed 11/22/13 Page 8 of 15

1 classified as “confidential” and “secret”) about ship schedules; internal and
2 proprietary Navy communications, including defense procurement information
3 concerning Defendant and his competitors; and sensitive law enforcement information
4 about the open investigations into Defendant. Defendant cultivated and maintained
5 these bribery relationships with each co-defendant over a period of several years.
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In addition to bribery, Defendant defrauded the United States Navy for years,

7 using a variety of schemes, including submitting false bids from competing sub8 contractors; submitting false, inflated invoices from subcontractors, and the obtaining
9 kickbacks from those subcontractors; and creating invoices for phony companies and
10 phone foreign port authorities.
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The complaint in United States v. Alex Wisidagama, 13-MJ-3783-JMA,

12 provides some concrete examples of the fraud. Based on those examples, in one
13 country alone (Thailand) during an approximate one-year period, Defendant defrauded
14 the United States Navy of over $10 million.
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Defendant’s bribery and fraud schemes were interrelated.

He bribed

16 Commander Misiewicz and Commander Sanchez in order to obtain information that
17 would allow him to maximize the profit on his fraud; he bribed Special Agent
18 Beliveau to pass him NCIS investigative reports on GDMA, and to coach him on how
19 to evade the law enforcement techniques of NCIS.
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At the bond hearing, the United States discussed the sentencing guidelines

21 applicable to Defendant, beginning with USSG § 2C1.1, the bribery guideline:
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 Base offense level [§ 2C1.1(a)(1)]

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 More than one bribe [§ 2C1.1(b)(1)]

+2

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 Losses exceeding $20m [§ 2C1.1(b)(2)]

+22

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 Public official in sensitive position [§ 2C1.1(b)(3)]

+4

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 Leader of 5 or more in criminal activity [§ 3B1.1(a)]

+4

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Case 3:13-cr-03782-JLS Document 62-1 Filed 11/22/13 Page 9 of 15

 Obstruction of justice [§ 3C1.1]

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Total

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+2
46

With no criminal history, the guidelines recommend a sentencing range of

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4 “life.” That is, the guidelines recommend a minimum (and a maximum) lifetime
5 custodial term of imprisonment.
Defendant’s counsel likewise addressed the guidelines at the bond hearing.

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7 Defendant did take issue with the applicability of any of these guidelines, except to
8 argue that, in Defendant’s view, the loss amount should be lower.
The United States’ estimate of loss exceeding $20 million is its current estimate

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10 of the total losses caused by Defendant. However, if this loss amount were limited to

11 the $10 million caused during one year in Thailand (as described in the Wisidagama
12 complaint), the applicable enhancement would be +20, for a loss exceeding $7 million
13 but no greater than $20 million. The resulting offense level would be 44. At that
14 offense level, the guidelines still prescribe a sentence of “life.”
At present, Defendant has only been charged in three one-count complaints,

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16 each count alleging a violation of 18 U.S.C. § 371, which carries a five-year statutory
17 maximum.

He therefore faces a 15-year statutory maximum sentence under the

18 current charges. However, the three complaints described numerous individual acts of
19 bribery – each of which could easily be added as a substantive count under 18 U.S.C.
20 § 201. Each such count would increase the total statutory maximum by an additional
21 15 years. Practically speaking, therefore, the statutory maximum prescribed sentences
22 do not impose a limit on the custodial time Defendant faces in this case. The United
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Although the United States does intend to charge Defendant with fraud, the
25 guidelines calculations set forth above – including the loss amount – apply even under
the bribery guidelines, which specifically direct a court to consider the losses
26 occasioned by a defendant’s acts of bribery.
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Case 3:13-cr-03782-JLS Document 62-1 Filed 11/22/13 Page 10 of 15

1 States submits that the Court, in determining whether Defendant is a flight risk, should
2 consider (as Defendant himself presumably would) the total penalty he potentially
3 faces, rather than limiting that penalty to the maximum prescribed by the pending
4 counts.
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Finally, it is worth noting that the guidelines as described above would be

6 applicable if Defendant is convicted in any one of the three criminal cases. Even if
7 Defendant were to persuade a sentencing court to apply downward departures or
8 variances (none of which were mentioned at the bond hearing, and none of which
9 readily come to mind), the United States would have a valid basis for seeking an
10 upward variance based on the fact that Defendant engaged in his bribery scheme many
11 times over.
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This factor – the nature and circumstances of the offense – strongly favors

13 detention. Facing a life sentence, Defendant literally has nothing to lose by fleeing.
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C.

Weight of the Evidence (18 U.S.C. § 3142(g)(2))

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Judge Adler found that the weight of the evidence is strong. Indeed, it is. The

16 four complaints, together, constitute over eighty pages describing details of
17 Defendant’s malfeasance – including details described in Defendant’s own words as
18 contained in his emails.
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At the bond hearing, Defendant did not dispute that this factor favors detention.

20 Instead, the defense expressly stated that it was declining to discuss the merits of the
21 case.
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This factor – the weight of the evidence – strongly favors detention.

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D.

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The Bail Reform Act directs courts to consider, under the heading “history and

History and Characteristics (18 U.S.C. § 3142(g)(3))

25 characteristics of the person,” a wide range of factors. Among those are many factors
26 designed to bear upon whether a defendant is a flight risk, including “family ties,”
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Case 3:13-cr-03782-JLS Document 62-1 Filed 11/22/13 Page 11 of 15

1 “employment,” “length of residence in the community,” and “community ties.” See
2 18 U.S.C. § 3142(g)(3). These factors could not favor detention more strongly.
Defendant is a Malaysian citizen who lives and works in Singapore.

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His

4 mother and children currently live in Malaysia.
Defendant is not a U.S. citizen. He does not have resident status. He has never

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6 had resident status. Instead, he is present on a B-1/B-2 Visa, which allows him to
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7 remain in the United States for a maximum stay of 6 months.

As for Defendant’s ties to the community – this community – he has absolutely

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9 none whatsoever. He has no family ties here. He has no employment here. He has no
10 length of residence here. He has no ties here.
Even considering Defendant’s ties to the United States as a whole, rather than

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12 simply his ties to the community, he has none, except for an aunt who lives with her
13 son in the Baltimore area.
Finally, it bears noting that Defendant is not a first-time offender. As explained

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15 by his counsel at the bond hearing, Defendant was previously convicted in Malaysia
16 for unlawful possession of a firearm, and unlawful possession of ammunition.
17 Although committed long ago, this was a serious offense under the Malaysian law.
18 He was sentenced to 18 months concurrently on each of two counts, and was also
19 sentenced to corporal punishment.
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Defendant’s history and characteristics strongly favor detention.

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//

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//

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The next motion hearing in this case is February 28, 2014, at which point he
25 will have been in the United States for 5 and one-half months. Absent renewal of his
visa, he will have no lawful permission to continue to remain in the United States
26 before trial, and will be subject to arrest and deportation by immigration authorities.
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E.

Nature and Seriousness of Danger Posed (18 U.S.C. § 3142(g)(4))

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The United States has not moved to detain Defendant as a danger to the

3 community. This factor, therefore, does not bear on the United States’ Motion.
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F.

Defendant’s Bond Proposal

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Based on the statutory factors described above, Defendant should be ordered

6 detained pending trial. Defendant’s bond proposal, as adopted in the release order, is
7 inadequate.
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The release conditions, as proposed by Defendant and as adopted in the release

9 order, seem to tacitly acknowledge the obvious: that Defendant has no reason to stay
10 here, and has powerful incentives to flee; and that he will do so, if not physically
11 prevented from doing so. The release conditions therefore include what amounts to a
12 home jail, with what defense counsel described at the bond hearing as having “three
13 layers” of protection: (1) GPS, (2) video monitoring and alarms, and (3) a 24-hour
14 guard paid for by Defendant.
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These “three layers,” taken along or together, are not effective here. By way of

16 illustration, the distance between downtown San Diego and the Tijuana border is
17 approximately 16 miles. Travelling the speed limit, Defendant could cross the border
18 in about 15 minutes.

Once in Mexico, with Defendant’s tremendous financial

19 resources, he can purchase whatever travel documents he needs to go to a country of
20 his choice, including a country that does not have an extradition treaty with the United
21 States or a country whose officials can be bribed not to enforce its treaty. Clearly, a
22 GPS unit will not physically prevent Defendant from fleeing the country. Neither will
23 a video camera, or an alarm. The only thing standing between Defendant and his
24 freedom – as opposed to the prospect of life in prison – is therefore a security guard in
25 Defendant’s apartment, on Defendant’s payroll. For Defendant, who was able to
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Case 3:13-cr-03782-JLS Document 62-1 Filed 11/22/13 Page 13 of 15

1 corrupt high-ranking Navy officials into violating their sworn duties, finding a way to
2 buy 15 minutes would be child’s play.
3

The United States respectfully submits that this Court should reject Defendant’s

4 ineffectual “three layers” in favor of “one layer” – a pretrial detention facility run by
5 the Bureau of Prisons. Based on the severe risk of flight he presents, the Bail Reform
6 Act simply does not entitle Defendant to a private home jail.
7

IV

8

CONCLUSION

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Defendant is differently situated that many foreign nationals who appear before

10 this Court seeking bond. He not only has no ties to this community, but he did not
11 come here to build any ties. Instead, he came to the United States for a meeting on
12 September 16, 2013 with Navy officials to discuss his contracts, and was arrested after
13 the meeting. That meeting was six months in the planning. To coincide with that
14 meeting, the investigative team executed a plan that involved near-simultaneous law
15 enforcement operations in approximately eight countries in Asia, and eight states
16 within the U.S. The operation involved over 100 law enforcement agents. The result
17 of that operation is that Defendant is here, and in custody. If given the slightest
18 opportunity, Defendant will flee and not return.
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20

For the reasons stated herein, the United States’ motion should be granted.
DATED: November 22, 2013

Respectfully submitted,

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LAURA E. DUFFY
United States Attorney

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By:

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/s Robert S. Huie
MARK W. PLETCHER
ROBERT S. HUIE
Assistant U.S. Attorneys
13CR3781-JLS, -3782-JLS

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JEFFREY H. KNOX
Chief, Fraud Section
Criminal Division

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By:

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/s Brian Young
CATHERINE VOTAW
BRIAN YOUNG
Trial Attorneys
Fraud Section
U.S. Department of Justice

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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UNITED STATES OF AMERICA,

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Plaintiff,

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Case No. 13-CR-3781-JLS, -3782-JLS
CERTIFICATE OF SERVICE

v.
LEONARD FRANCIS ET AL.,
Defendants.

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IT IS HEREBY CERTIFIED that:

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I am a citizen of the United States and am at least eighteen years of age. My
16 business address is 880 Front Street, Room 6293, San Diego, California 92101-8893.
17
I am not a party to the above-entitled action. I have caused service of the
18 MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF
19 UNITED STATES’ MOTION TO REVOKE RELEASE ORDER AND TO
DETAIN DEFENDANT AS A FLIGHT RISK on the parties by electronically filing
20 the foregoing with the Clerk of the District Court using its ECF System, which
electronically notifies their counsel.
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I declare under penalty of perjury that the foregoing is true and correct.
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Executed on November 22, 2013.

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/s Robert S. Huie
ROBERT S. HUIE
Assistant United States Attorney

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