Frank Rafaraci, 70, the chief executive of Multinational Logistics Services (MLS), a major U.S. Navy contractor, was arrested Sept. 27, 2021, on the Mediterranean island of Malta in an operation jointly planned by U.S. and Maltese authorities. An affidavit filed in support of the initial arrest warrant accused Rafaraci of defrauding the Navy of at least $50 million by inflating invoices for port services between 2011 and 2018, and of using a network of shell companies to launder money obtained illicitly so he could evade U.S. income taxes.
But the United States soon backtracked about the alleged scope of the case, and Rafaraci, a dual U.S.-Italy national who split his time between Dubai and Italy, pleaded guilty to a single bribery count in April 2022.
“I take full responsibility for my actions. … I accept the consequences,” Rafaraci told U.S. District Judge Dabney L. Friedrich in D.C., adding that he acted to “help a friend” pay his son’s tuition.
While the bribe was not Rafaraci’s idea, his company did not benefit from it and taxpayers were not harmed, his behavior set the tone as chief of one the Navy’s largest contractors, Friedrich said.
“It doesn’t matter if it goes for a college education or a party in Vegas, it’s a bribe. I don’t think it’s any less of a bribe because it went for a good cause,” the judge had said earlier.
Rafaraci admitted giving Randy Alford the money at hotels in the Persian Gulf kingdom of Bahrain and in Miami in August 2015 and May 2018, saying in a note, “keep up the good work.” Alford worked as a marine liaison officer for the U.S. Navy’s 5th Fleet, which is headquartered in Bahrain, and Rafaraci made the payments “with the intent to induce Alford to take official acts to the benefit” of him and his company, he acknowledged in plea papers.
Rafaraci said that Alford solicited the payments. Friedrich in October 2022 also sentenced Alford to a year and a day in prison after he pleaded guilty to one count of conspiracy to commit bribery. Both men would serve about 10 months under good time credits in the U.S. prison system.
Prosecutors requested less time — eight months — for Rafaraci, crediting his cooperation and personal history. Rafaraci managed one of the largest ship husbanding companies serving the U.S. Navy and navies worldwide, providing essential supplies and services when vessels arrived at foreign ports.
Rafaraci voluntarily returned to the United States rather than flee when a U.S. extradition request was denied in Malta, turned over his electronic devices and provided documents and offered to be interviewed by prosecutors, U.S. prosecutor Lauren Archer said. MLS helped the U.S. Navy respond to the covid-19 pandemic, assisted with the evacuations of refugees from Afghanistan in 2021 and stepped in when no other contractor was willing to save a U.S.-Russia presidential summit near Malta in 1989 that was jeopardized by storms, the defense said.
“This lapse in judgment is not representative of his true character and patriotism,” Rafaraci’s defense attorney, Michael R. Sherwin, said in a sentencing memo. “And it is a far cry from the Government’s initial — very public and completely without merit — portrayal of Mr. Rafaraci as the engine of a systematic, worldwide, criminal fraud scheme.”
Sherwin wrote that investigators were headhunting for the next “Fat Leonard” corruption scandal, an investigation that rocked the Navy for years after 2013 and led to convictions of more than 20 defendants when Malaysian defense contractor Leonard Glenn Francis pleaded guilty to bribing scores of Navy officials so he could overcharge the Navy for port services in Asia.
U.S. prosecutors later conceded some of the initial allegations against Rafaraci were meritless. And Sherwin argued Friday that his client deserved no jail time, saying that he could have been rewarded with greater leniency from prosecutors had the years-long U.S. investigation into the industry not gone “off a cliff.” The lead Defense Criminal Investigative Service agent in both the Fat Leonard and MLS matters, Cordell “Trey” DeLaPena, came under fire in another case in which felony charges were dropped against four former Navy officers because of prosecutorial misconduct.
“We don’t know how or why the government investigation stopped. Was DeLaPena in charge of it?” Sherwin told Friedrich, saying that Rafaraci provided hundreds of pages of documents about corruption and counterintelligence risks posed by foreign nationals working in the industry.
Archer said that while she agreed Rafaraci provided information and the government postponed his sentencing for more than a year since his plea, it did not result in “substantial assistance” resulting in prosecution of another person, which she attributed to statute of limitations and criminal liability concerns, and the availability elsewhere of information that he provided.
Friedrich said she was not swayed by “facts not proven” and in any case had ruled that DeLaPena’s actions were not relevant to Rafaraci’s plea.
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