Watchdog: Follow the Money

Engineer going to prison for leading $18 million fraud scheme against the Navy

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Watchdog,The Pentagon,Michal Conger,Corruption,Waste and Fraud,Follow the Money,Navy,Justice Department

A former engineer for the U.S. Navy’s Naval Sea Systems Command has been sentenced to 10 years in prison as the "mastermind" behind an $18 million kickback scheme.

Ralph M. Mariano coordinated invoices to the Navy for services never performed and then had the money distributed to himself, family members and accomplices.

Between 1999 and 2011, Mariano directed computer software specialist Russell Spencer to submit invoices for work never performed to a now-defunct Navy contractor, according to the Department of Justice.

Advanced Solutions for Tomorrow and its subcontractors used government funds they received from the Navy to pay Spencer, who distributed the money between Mariano, members of Mariano's family, ASFT CEO Anjan Dutta-Gupta and Rhode Island attorney Mary O’Rourke.

Over the course of his scam, Mariano had himself paid approximately $3 million in checks starting in 2003, and arranged a regular bi-weekly payment for himself for $3,500 in cash between 2004 and 2011.

Mariano pleaded guilty in May to conspiracy and theft of $17.9 million in government funds, as well as tax evasion.

He told the court that between 2006 and 2009, he failed to report $1.8 million he received from Spencer, and that he owes $726,650 in taxes.

Spencer pleaded guilty last year to conspiracy to commit bribery and lying to the FBI. He used forms taken from his employer, Electric Boat, to submit the invoices to ASFT, according to the DOJ.

He then billed ASTF more than $200,000 per month for doing nothing more than making cosmetic changes to the paperwork. He is scheduled to be sentenced Dec. 5.

Mariano's 82-year-old father, who pleaded guilty in May to tax evasion, was sentenced in August to four years probation.

Several of Mariano's other co-conspirators have pleaded guilty as well. Dutta-Gupta pleaded guilty to bribery, and is scheduled for sentencing in Dec. 4.

Patrick Nagle, ASFT's chief financial officer, pleaded guilty to conspiracy to commit bribery, and is scheduled to be sentenced Nov. 15; and O’Rourke, who pleaded guilty to theft of government funds, is scheduled to be sentenced Dec. 5.

“Nothing does more to erode trust in government than when a public official acts not in the public’s interest, but in his own," said U.S. Attorney Peter Neronha.

"Mr. Mariano, whose sole obligation was to the United States Navy, and more broadly to the taxpayers, instead served only himself and his associates, committing fraud on a massive scale," Neronha said.

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