National Security

Defense contractor accused of bilking Navy out of $50 million

Federal agents are investigating a corruption case in which a defense contractor is accused of cheating the U.S. Navy out of at least $50 million.

Between 2011 and 2018, federal agents say, Frank Rafaraci, the contractor and CEO of Multinational Logistics Services (MLS), reportedly overcharged the Navy for port services and cheated them of at least $50 million, according to The Washington Post.

The Department of Justice is working to extradite the contractor after his arrest last week in Malta, according to court documents obtained by the Post. 

Since 2010, the Navy and other federal organizations have provided MLS with $1.3 billion in contracts to service U.S. warships in the Middle East, Asia and other foreign places, the Post said.

In one of the instances of corruption, MLS charged the Navy for more than $231,000 in “port authority fees,” but court documents showed that the port authority in Manama only required $12,686, according to the Post. 

“The Department of the Navy expects all individuals and companies with whom it conducts business to act with the highest degree of integrity and to have effective standards of conduct,” Lt. Andrew DeGarmo, a Navy spokesman, said in a statement to The Hill. 
 
“Agents with NCIS and Defense Criminal Investigative Services (DCIS) first uncovered the alleged wrongdoing. They have been actively coordinating with other law enforcement authorities around the globe,” DeGarmo added.
 
Rafaraci’s extradition is also based on suspicion of money laundering and bribery.  The contractor allegedly met with a U.S. Navy official in 2015 at the Diplomat Hotel in Manama and again at a Miami hotel in 2018.

He gave the official $20,000 in cash and told that person to “keep up the good work” at the 2015 meeting and provided the same official with $13,500 at their 2018 encounter, the Post reported.

Though that official remains anonymous, the Post said that court papers showed he pleaded guilty to charges of bribery in U.S. District Court in June and has since become a witness for the government. 
 
The incident is reminiscent of the 2013 “Fat Leonard” scandal in which Leonard Glenn Francis, a defense contractor, pleaded guilty to overcharging the Navy for port services in Asia and bribing officials with money, prostitutes, meals and favors, according to the Post.
 
The Hill has reached out to MLS, Rafaraci’s attorney and the Department of Justice for comment.