Government Contracts Monitor

Former Navy Engineer Is Sentenced to 10 Years in Prison and Fails to Get Full Credit for Pleading Guilty

January 13, 2014

In a recent case, a former Navy Engineer was sentenced to 10 years in prison, three years of supervised release, $10,000 fine and $17,957,000 in restitution in connection with a guilty plea entered earlier this year to conspiracy to commit theft of government property, theft of government property, and tax evasion.

The case, United States v. Ralph Mariano, 1:12-CR-00061-ML (D.R.I. 2013), involved payments to Mariano, a civilian employee of the Navy for 29 years, who was the Chief Engineer for the Naval Undersea Warfare Center in Newport, Rhode Island. He was one of six people to plead guilty in the case, and Mariano was the only government employee. The scheme involved demands by Mariano for money from a government contractor Advanced Solutions for Tomorrow (“ASFT”) in connection with various Naval contracts. The scheme also involved the creation of fictitious corporate entities that billed ASFT for work that was not performed, with the resulting funds directed to Mariano. The government alleged in its sentencing memorandum that the loss to the government was just under $18 million. The government also alleged that Mariano used the funds for personal items such as over $100,000 for luxury cigars, and hundreds of thousands of dollars for gambling trips. The government also noted that ASFT was forced to close when the case was announced, with 100 employees losing their jobs.

The government also alleged that after Mariano pled guilty, he did not accept responsibility but instead made a series of complaints with the DOJ alleging prosecutorial misconduct. Because of the allegations Mariano made, he did not receive the full sentence reduction available under the Federal Sentencing Guidelines for pleading guilty. Most defendants receive a three-level reduction in the sentencing calculation under the Guidelines, but Mariano received only two levels due to his complaints. That extra level potentially cost Mariano a year in jail (the Guideline range was 97-121 months without the extra level but could have been 87-108 months), and also had the negative effect of giving the Judge the impression that Mariano did not fully take responsibility in the case.

This aspect of the case is potentially troubling because the sentencing memorandum filed by Mariano stated that Mariano did not maintain his innocence in the complaints against the DOJ, but “in essence, he challenges and calls into question the conduct of the attorney(s) responsible for his prosecution, the government’s overall theory of its case against Mr. Mariano, and the process leading up to his indictment and guilty plea.” Mr. Mariano wrote in one of the complaints that “my plea is not the issue, it is the means and the methods of this USAO and its investigators that I seek to address.” Therefore, Mariano may have been punished for making complaints against the government in this matter which may have had merit.

The Judge, Mary Lisi of the United States District Court for the District of Rhode Island, used this case as way to send a message to other government employees when she stated “[t]he next guy that comes along, who has a job that you had, high-paying job, lots of prestige, but wants to game the system . . . That person needs to think twice. Was it all worth it?” The Judge also noted that Mariano brought into the scheme his elderly father, who received two years of home confinement for tax evasion. Finally, Judge Lisi commented on the complaints Mariano made against the DOJ, again showing the potential negative impact of the complaints.

This case demonstrates that defendants in government contract fraud cases are getting sentences that are similar to defendants in Wall Street-style fraud cases. Additionally, this case demonstrates that even if the Defendant has a legitimate claim of misconduct against the DOJ prosecutors, those complaints can be used to challenge the amount of sentence reduction available under the Guidelines. In a system where the vast majority of defendants in federal court pleads guilty and relies on the reductions from a guilty plea to mitigate exposure, this is a significant case.

Brian Stolarz is the attorney responsible for the content of this article.