By Daniel Trotta
(Reuters) - Four former U.S. Navy officers charged in a massive bribery scandal linked to the man known as Fat Leonard were cleared of felony charges on Wednesday by a judge citing prosecutor misconduct.
U.S. District Judge Janis Sammartino said in a sentencing hearing that prosecutors' conduct "can only be described as outrageous," the San Diego Union-Tribune reported from the courthouse. After the felony charges were cleared, the four former officers each pleaded guilty to a misdemeanor with only a $100 fine as punishment, court documents show.
One of the defense attorneys told the judge that prosecutors used their "tremendous power" to get witnesses to say what they wanted to hear, the Union-Tribune reported.
Their cases were tied to the largest corruption case in U.S. Navy history, which the U.S. Department of Justice has said cost the Navy tens of millions of dollars.
More than 30 other defendants have been charged, resulting in sentences of up to 6-1/2 years, fines of up to $100,000, and multimillion-dollar restitution penalties.
But the misconduct finding and the vacating of previous felony convictions marked a rare and significant setback for the Justice Department.
Acting U.S. Attorney Andrew Haden said in a statement that the Justice Department disagreed with some of the allegations and characterizations raised in court.
"We recognize and regret, however, that errors were made, and we have an obligation to ensure fairness and justice," Haden said, while noting that the four former officers admitted they were "guilty of crimes related to their official duties."
Three of the four former officers - David Newland, James Dolan and Mario Herrera - each admitted to disclosing Navy information to the Malaysian businessman at the center the scandal, Leonard Glenn Francis, known as "Fat Leonard."
A third officer, Mario Herrera, admitted to destroying a hard drive belonging to the United States.
A year ago, Francis escaped house arrest ahead of sentencing by cutting off his monitoring anklet. He was detained later in Venezuela, where he faced extradition proceedings. He had been cooperating with U.S. investigators before fleeing the country.
Prosecutors said that in exchange for contracts, Francis gave Navy officers cash, gourmet food, expensive cigars, rare cognac and hotel sex parties.
In 2015 Leonard pleaded guilty to bribing Navy officials through his Singapore-based company, Glenn Defense Marine Asia, which serviced ships in the Navy's Pacific Fleet.