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Prosecutors want 10 years for Navy kickback scheme

Thursday - 10/24/2013, 5:40pm  ET

MICHELLE R. SMITH
Associated Press

PROVIDENCE, R.I. (AP) -- A man who masterminded a kickback scheme that cost the U.S. Navy millions of dollars and lasted 15 years should be sentenced to more than 10 years in prison, the maximum allowed, federal prosecutors told a judge in a court filing Thursday.

The U.S. attorney's office in Providence asked U.S. District Judge Mary Lisi to sentence Ralph M. Mariano to 10 years and one month for the $18 million scheme, saying he has failed to take responsibility for his crimes, tarnished the Navy's reputation and ruined lives.

Mariano, a civilian employee of the Navy for more than 38 years, pleaded guilty in May to conspiracy, theft of government property and tax evasion and is one of six people to plead guilty in the case. He is scheduled to be sentenced next week.

He worked for the Naval Undersea Warfare Center in Newport and was most recently assigned to the Naval Sea Systems Command headquarters in Washington, living in South Arlington, Va.

Prosecutors say his job gave him the ability to authorize or refuse payments to contractors, and he used that power to approve payments to Georgia-based contractor Advanced Solutions for Tomorrow, or ASFT. In return, the now-defunct contractor, which also had an office in Middletown, R.I., funneled kickbacks to him and others.

The scheme began in 1996, when Mariano demanded and received a $6,000 payment from ASFT's founder, Anjan Dutta-Gupta, of Roswell, Ga., prosecutors said in their filing Thursday. Over the years, others were pulled into the scheme, including several ASFT employees and people close to Mariano.

The others who pleaded guilty in the case were Dutta-Gupta; Mariano's girlfriend, Mary O'Rourke, who was also an ASFT executive; ASFT executive Patrick Nagle, of Marietta, Ga.; ASFT subcontractor Russell Spencer; and Mariano's father, Ralph Mariano Jr. Mariano's father, who is 82, was previously sentenced to 2 years of home confinement for tax evasion. The others have yet to be sentenced.

Prosecutors said Mariano was motivated purely by greed. His annual salary was more than $150,000 when he was charged in 2011, but they said he would go on lavish gambling vacations to such places as Aruba and Las Vegas. When the cash ran out, he'd call his middleman, Spencer, to deposit more into his bank account, prosecutors said. They said a review of his financial records showed he spent $100,000 on luxury cigars.

"Mariano took the taxpayers' hard-earned money and burnt it," prosecutors wrote.

Among the reasons they recommended Mariano be sentenced to the maximum allowed is that even though he has pleaded guilty, prosecutors say he has since denied the charges to court officials, telling them the money he received from Spencer was a "personal loan" rather than a kickback and that the others involved in the scheme falsely pleaded guilty.

They also said he abused his position of public trust and that his actions had a devastating impact on lives. While prosecutors say ASFT did legitimate contracting work for the Navy, more than 100 ASFT employees lost their jobs after the scheme came to light and the company went under.

Three dozen former ASFT employees appealed to the judge in a letter, asking her to impose the maximum punishment on everyone involved, saying they were "left in the cold," suffered financially and that some employers would not hire them because of their association with ASFT.

In his own letter, Navy Vice Admiral William Hilarides, commander of the Naval Sea Systems Command, told the judge the deceit harmed the Navy's reputation and cost its staff tens of thousands of hours as it investigated what went wrong and tried to clean up the mess. He said the $18 million the scheme cost would have paid for outfitting 82 submarines with spare parts.


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