PROVIDENCE, R.I. – A Navy subcontractor pleaded guilty Friday in Rhode Island for his part in what federal prosecutors say was a kickback scheme that cost the Navy millions of dollars.
Russell Spencer's plea was part of an agreement with prosecutors in which he promised to cooperate with authorities as he has been since investigators approached him in June 2010.
Spencer, 56, pleaded guilty to conspiring to commit bribery in helping funnel money, through his businesses, from a Navy contractor to a civilian Navy employee who prosecutors say then bumped up funding to the contractor. Prosecutors say the scheme cost the Navy between $7 million and $20 million.
The 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.
According to the government, Ralph M. Mariano 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, of Roswell, Ga., has pleaded guilty to paying $8 million in bribes over more than a decade. Mariano has been charged, but not indicted. He has declined to comment on the allegations, and 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.
ASFT, based in Roswell, laid off all its employees shortly after Dutta-Gupta and Mariano were arrested in February. 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.
Spencer and his attorney declined to comment Friday. He and Dutta-Gupta, who also agreed to cooperate with prosecutors after his arrest, are scheduled for sentencing in December.