U.S. Navy Caught in Another International Corruption Scandal with Contractor

Frank Rafaraci, the chief executive officer (CEO) of Multinational Logistics Services (MLS) – a large ship husbanding company – pleaded not guilty to a charge of bribery in federal court on October 18, 2021, following a grand jury’s indictment of one count of bribery on September 30, 2021.

Rafaraci, a dual U.S.-Italian citizen, resided in Europe. He was arrested on September 27, 2021, in the Mediterranean island country of Malta, and voluntarily returned to the U.S. on October 18, 2021, after efforts to extradite him failed.

According to the criminal complaint affidavit and warrant filed in September, Rafaraci allegedly orchestrated wide-ranging bribery schemes including offering envelopes with more than $30,000 to a Navy official. The DOJ states Rafaraci falsely inflated invoices and laundered the proceeds through shell companies in the United Arab Emirates to benefit MLS.

The Department of Defense (DOD) and the Department of the Navy (Navy) awarded MLS with approximately $1.3 billion in contracts for ports in Africa, the Mediterranean, Central America, and the Pacific, since 2010.

“Frank Rafaraci allegedly defrauded the Navy, bribed a Navy official, and laundered money through foreign bank accounts for years,” said Assistant Attorney General Kenneth A. Polite Jr. of the Department of Justice’s Criminal Division. “The Criminal Division remains committed to combating fraud and corruption in defense contracting around the world.”

The DOD’s Defense Criminal Investigative Service (DCIS) alleges Rafaraci defrauded at least $50 million between 2011 and 2018. Court records suggest MLS has been on federal law enforcement’s radar for at least five years. As early as 2013, the DOJ was investigating MLS Senior Executive Akbar Khan for contract mishandling. Earlier this year, an unnamed Navy official pleaded guilty to a bribery charge following dealings with Rafaraci between 2015 and 2018 – the identify and case against the official are sealed.

The DOJ’s allegations against Rafaraci echo the events of the “Fat Leonard” scandal, which FEDagent previously reported on – defense contractor and Glenn Defense Marine Asia (GDMA) CEO Leonard Francis too bribed Navy officials with cash, prostitutes, extravagant meals, and overcharged Navy vessels for port services in Malaysia.

The senior agent in the ongoing investigation of the “Fat Leonard” scandal, DCIS Special Agent Cordell “Trey” DeLaPena, is also the lead investigator into Rafaraci’s dealings.

“Rafaraci’s alleged long-running criminal scheme to defraud the Federal government through bribery, falsified invoices, and money laundering cheated the U.S. taxpayer and wasted tremendously valuable resources,” said Special Agent in Charge Eric Maddox of the Naval Criminal Investigative Service (NCIS) Economic Crimes Field Office. “NCIS and our law enforcement partners remain steadfast in our commitment to root out bribery and corruption that threaten to diminish the operational readiness… of the Navy and Marine Corps.”

If convicted of that charge, Rafaraci faces a maximum penalty of 15 years in prison.