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Navy bribery scandal: 'The Hangover' on the high seas

Federal officials say U.S. Navy Cmdr. Jose Luis Sanchez was arrested on charges of accepting prostitutes, luxury travel and cash from a foreign defense contractor, the latest development in a Navy scandal that is reaching high into the officer corps. NBC News' Jim Miklaszewski reports.

Allegations that top officials fed classified information to a foreign defense contractor in exchange for hookers, cash and other kickbacks has ensnared the U.S. Navy in a lurid scandal that splits the difference between a Tom Clancy novel and "The Hangover."

A third senior official, U.S. Navy Cmdr. Jose Luiz Sanchez, 41, was arrested in Tampa, Fla., on Wednesday and charged with accepting escorts, high-end hotels, pricey plane tickets, $100,000 cash and a bevy of other payoffs from Leonard Francis — a Malaysian contractor known in military circles by the blunt sobriquet "Fat Leonard."

Federal prosecutors allege Leonard used luxury goodies and graft to lure Sanchez and other Navy officials into a scheme that overcharged the Pentagon by millions.

Glenn Defense Marine Asia (GDMA), Francis' Singapore-based company, allegedly submitted "bogus invoices for millions of dollars in services," according to the criminal complaint cited by a release from prosecutors from the U.S. attorney's office in San Diego.

The arrest Wednesday is just the latest twist in a massive fraud case that has rocked the Navy and could expose far-reaching national security violations.

Two other senior Navy officials — Cmdr. Michael Vannak Kem Misiewicz, 46, and Naval Criminal Investigative Service Supervisory Special Agent John Bertrand Beliveau II, 44 — have been charged separately in connection with bribery allegations.

“According to the allegations in this case, a number of officials were willing to sacrifice their integrity and millions of taxpayer dollars for personal gratification,” U.S. Attorney Laura Duffy said.

In private communications revealed in court documents cited by the U.S. attorney's office, Francis and Sanchez appear to banter and brag like two rowdy fraternity brothers.

Charging documents show one 2009 email exchange in which Sanchez and Francis, 49, talked over a trip Sanchez planned to take to Kuala Lumpur with Navy buddies  he described as his "Wolf Pack."

The two men discussed the number of rooms the group needed. Sanchez allegedly asked for photos of prostitutes for "motivation."

"Fat Leonard" replied: "J, got it we will hook up after the FLAG dinner, will arrange a nest for you guys and some birds [women]."

A few days later, Sanchez sent a Facebook message to Francis saying: "Yummy... daddy like," according to the complaint.

Sanchez called Francis "Lion King" and "Boss" in his email messages, while Francis called Sanchez "brudda," the complaint said.

In turn, Francis later asked Sanchez over email to help "swing" business his way regarding a U.S. Navy ship's need to refuel at a port in Thailand.

Court records allege Sanchez regularly sent Francis internal Navy discussions about GDMA, including legal opinions, and made recommendations in GDMA's favor about port visits and Navy personnel assignments.

Misiewicz is accused of delivering sensitive Navy information to Francis, who weighs roughly 350 pounds, according to court documents. Francis, for his part, plied him with gifts — like five tickets to a Lady Gaga concert in Thailand in 2012 and a production of "The Lion King" in Tokyo.

In one exchange, Francis wrote: "Don't chicken out bro we need u with us on the front lines," according to court documents cited by the Associated Press.

Beliveau is charged with sending Francis reports of investigations by NCIS into possible fraud committed by GDMA, among other sensitive documents. And in return, he was rewarded with lavish entertainment, prostitutes and other premium perks.

Prosecutors charge GDMA overcharged the Navy millions of dollars for fuel, food and other services it provided. Francis, all the while, burnished his reputation among some Navy officials as a big kahuna of the high seas, a former naval officer told the Associated Press.

"He's a larger-than-life figure," said retired Rear Adm. Terry McKnight, who has no direct knowledge of the investigation. "You talk to any captain on any ship that has sailed in the Pacific and they will know exactly who he is."

Beliveau, Misiewicz  and Francis were all arrested — in Virginia, Colorado and San Diego, respectively — on Sept. 16. They have all pleaded not guilty.

Authorities said they would seek to have Sanchez moved to San Diego to face the charges.

Acting Assistant Attorney General Raman said GDMA executives profitted from trading "on the influence that they illegally bought."

"Day by day, this massive Navy fraud and bribery investigation continues to widen, and as the charges announced today show, we will follow the evidence wherever it takes us,” Raman added. 

NBC News' Jim Miklaszewski and Courtney Kube, as well as the Associated Press, contributed to this report.