PROVIDENCE, R.I. — A Rhode Island subcontractor who has already admitted to his role in a kickback scheme that prosecutors say cost the U.S. Navy millions pleaded guilty on Thursday to accusations that he lied about an affair while talking to investigators probing the plot.
Prosecutors say Russell E. Spencer, 57, of Portsmouth, lied three times about an extramarital affair he carried on with the housekeeper of another man implicated in the case.
Authorities say Spencer misstated his relationship with the housekeeper and lied about giving her money and gifts while talking to the Federal Bureau of Investigation as part of a promise to cooperate with authorities. Spencer made that promise in a plea agreement he signed last year, prosecutors said. They say the alleged kickbacks plot cost the Navy between $7 and $20 million.
The housekeeper worked for Ralph M. Mariano, 53, a civilian engineer for the Navy’s Naval Sea Systems command, said Assistant U.S. Attorney Lee H. Vilker. Spencer faces up to five years in prison for making false statements, according to a plea agreement. He will be sentenced on Dec. 6. Spencer’s defense attorney did not immediately return a message Thursday.
Spencer also pleaded guilty in June to being a conduit for alleged kickbacks of naval funds from a now-defunct company to Mariano.
Spencer admitted to the affair in January, Vilker said. The money he gave to the housekeeper came from naval funds that were filtered through Spencer’s computer consulting business, C&S Technology, Inc., as part of the kickback plot, Vilker said. He said the amount given to the housekeeper is “very small” in comparison to the millions stolen from the Navy. Vilker declined to specify how much money the housekeeper was given.
The alleged kickbacks case prompted an internal Navy investigation that resulted in military officials in Washington suspending the contracting authority of Newport’s Naval Undersea Warfare Center. The Navy said a host of contracting problems at the facility enabled the scheme. The Naval Sea Systems Command announced in October that it had restored contracting authority to the Naval Undersea Warfare Center, according to a press release.
According to the government, Mariano, 53, of Arlington, Va., who worked at the warfare center, initiated the scheme by threatening to use his position to reduce funding for contracts held by Advanced Solutions for Tomorrow if company owner Anjan Dutta-Gupta didn’t kick back money to Mariano.
Dutta-Gupta, 59, of Roswell, Ga., has pleaded guilty to paying $8 million in bribes over more than a decade. He is also scheduled to be sentenced on June 21. Mariano has been charged, but not indicted. He remains free on bond.
According to court filings, Spencer submitted false and inflated invoices to ASFT for work that, for the most part, was never done. Prosecutors say he then passed the money on to Mariano, as well as Mariano’s relatives and girlfriend, among others.
Spencer took a salary from the payments, according to prosecutors, and as part of his plea agreement he is to forfeit more than $330,000 in proceeds from the scheme.
Patrick Nagle, 51, of Marietta, GA, a former senior vice president and director of contracts for ASFT, pleaded guilty in August to charges of conspiracy to commit bribery. Prosecutors say Nagle signed off on false and inflated invoices that were submitted to his firm by subcontractors from 1999 to June 2010 even though he knew the work had largely not been done.
He is scheduled to be sentenced on July 9, 2012.
ASFT, based in Roswell, laid off all its employees shortly after Dutta-Gupta and Mariano were arrested in February 2011. At the time, the company held $120 million in Navy contracts. Its largest office was in Rhode Island.
In addition to the bribes, prosecutors say, ASFT paid $1.2 million through Spencer’s businesses to a separate company owned by Dutta-Gupta.