Middleman in $18M Navy scheme sentenced to 3 years
PROVIDENCE, R.I. (AP) -- A former U.S. Navy subcontractor who acted as a middleman in a kickback scheme that cost the Navy $18 million was sentenced Thursday to three years in prison by a federal judge, who said the man's extraordinary cooperation with investigators saved him from a much stiffer term.
The judge ordered Russell Spencer, 59, of Portsmouth, along with some of the five other people convicted in the 15-year scheme, to pay $18 million in restitution. She told him to report to prison on Jan. 7.
Spencer acknowledged he set up a company that was used to funnel money from Georgia-based Navy contractor Advanced Solutions for Tomorrow, or ASFT, to Ralph Mariano, a civilian employee of the Navy who worked for the Naval Undersea Warfare Center in Newport. Mariano was last stationed at the Navy Yard in Washington.
Spencer would submit invoices to ASFT for work that was never performed, then he'd give cash to Mariano, his family members and others.
Assistant U.S. Attorney Lee Vilker said Thursday that Spencer ultimately kept $2.5 million for himself. But Vilker told the judge that Spencer also became a key government informant after investigators hit a wall.
Federal agents approached Spencer on June 22, 2010, and he immediately told them the full scope of the scheme, made the first of many recorded phone calls to Mariano that very day and became what Vilker called the "quintessential government cooperator." During the next eight months, he recorded a number of incriminating conversations with Mariano, turned over emails and text messages, made controlled deliveries of cash and took other steps to help as the government built its case, Vilker said.
Mariano and ASFT's founder, Anjan Dutta-Gupta, were charged in February 2011. Spencer pleaded guilty in 2011 to conspiring to commit bribery.
Later, as the investigation continued, he lied to the FBI several times about an extramarital affair, and he pleaded guilty to that in 2012. His lawyer, Terence Livingston, said in court papers that Spencer's wife was sick at the time and he wanted to save her from embarrassment.
Livingston asked that Spencer be sentenced at least in part to home confinement, but the judge went with prosecutors' recommendation that he spend three years in prison. U.S. District Judge Mary Lisi said Spencer had enjoyed the riches and never in the many years the scheme went on did he alert authorities about it.
"At some point, you've got to say no," Lisi said. "Once you realize you're in, you walk away."
Dutta-Gupta was sentenced Wednesday to a three-year prison term, and Mariano began serving a 10-year term last week. Former ASFT executive Patrick Barry Nagle received three years of probation and Mariano's father received a two-year home confinement sentence for tax evasion.
Awaiting sentencing on Friday is Mariano's girlfriend, Mary O'Rourke, who was an executive at ASFT.