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    Stew Milne
    Ralph M. Mariano exits federal court after his sentencing in a Navy kickback scheme, Friday, Nov. 1, 2013, in Providence, R.I. Mariano pleaded guilty in May to conspiracy, theft of government property and tax evasion and was sentenced Friday to 10 years in prison. (AP Photo/Stew Milne)

    ‘Mastermind’ of $18M NUWC scheme gets 10 years

    PROVIDENCE — Ralph M. Mariano, a former Navy civilian chief engineer federal prosecutors say was the mastermind behind a scheme that defrauded the Navy of almost $18 million, was sentenced Friday to 10 years in federal prison and ordered to pay back — in conjunction with three of his co-conspirators — all the money.

    “The next guy that comes along, who has a job like you had, a high-paying job with lots of prestige, but wants to game the system, that person needs to think twice,” U.S. District Court Judge Mary Lisi said. “Is it worth it?”

    Mariano was employed by the Naval Undersea Warfare Center in Middletown but assigned to the Naval Sea Systems Command in Washington, D.C., and was paid $155,000 a year. Federal prosecutors said he used his knowledge of Navy contracting and auditing practices to mastermind a scheme that operated from 1996 to 2011.

    The judge ordered him to report by Nov. 26 to the federal prison the U.S. Bureau of Prisons will assign him. If he cannot get there by that date, he is to surrender to federal marshals in Providence. Mariano will be on supervised probation for three years after his release from prison.

    His sentence is one month less than the maximum allowed under sentencing guidelines. Assistant U.S. Attorney Lee Vilker asked the judge for the maximum because Mariano “failed to accept any responsibility for his actions and show any remorse.”

    Mariano’s own words illustrate that best, Vilker said. In extensive paperwork Mariano filed with the Office of Professional Responsibility in the U.S. Department of Justice, he claimed there was “prosecutorial misconduct.”

    Mariano claimed “the scheme never happened” and “the millions of dollars he stole from the government was money he borrowed from a friend,” Vilker said.

    Lisi noted that Mariano claimed in a document he sent to the court that he “now faces jail time until wiser minds prevail and this case is dismissed.”

    “There is a lot more to Mr. Mariano than a convicted felon,” defense attorney John Calcagni said of his client. “He is 55 years old and has never been in trouble before. He’s done many good things in his life. He is a son, a brother, an uncle and a friend. He is a human being. Everyone is prone to making a mistake.”

    “A mistake, Mr. Calcagni?” the judge said. “He didn’t know what he was doing?”

    “Everyone in life makes mistakes, some greater than others,” Calcagni responded.

    Mariano spoke briefly.

    “I want to extend my sincere apologies to my family, friends, co-workers, employees of the Navy and employees of Navy contractors,” he said. “I loved NUWC. I loved working with the Navy.”

    He said he regrets those people being hurt “by my foolish, stupid actions.”

    “That rings hollow, when I consider the devastation you left in your wake,” Lisi said later in the hearing.

    “Over the course of the conspiracy, Mariano took numerous expensive vacations to gambling meccas such as Las Vegas, Aruba, Puerto Rico and Cancun,” according to the prosecution’s pre-sentencing memorandum.

    Prosecutors say Russell Spencer, 59, a Portsmouth resident, set up three subcontracting companies — ADQ Associates Inc., C&S Technology Inc. and S.I. Technology Inc. — solely to receive fraudulent payments from Advanced Solutions for Tomorrow of Middletown and to redirect most of the money to Mariano and his girlfriend, Mary O’Rourke, as well as Mariano’s family members, including his father, Ralph Mariano Jr., 82, of North Providence.

    The elder Mariano has pleaded guilty to four counts of tax evasion and was sentenced Aug. 16 to four years probation.

    In his plea for leniency, Calcagni had argued that Mariano, now destitute, needs to take care of his elderly parents.

    But Lisi responded it was Mariano’s “avarice and arrogance” that made his father a “convicted felon.”

    Vilker told the judge Friday that fraudulent invoices processed by Patrick Nagle, 52, formerly of Newport and chief financial officer of ASFT, totaled approximately $17,957,000. Of that amount, $2,567,028 was paid to Mariano’s father; $1,692,650 was paid to Mariano’s brother, Joseph Mariano, and to his companies; $207,900 was paid to a veterinary laboratory company controlled by his sister, Michelle Mariano; $2,446,445 was paid to private entities controlled by Anjan Dutta-Gupta, 60, founder and CEO of ASFT; and $478,880 was paid to a company owned by O’Rourke.

    Mariano admitted to receiving about $3 million in checks beginning in 2003, and biweekly cash payments of $3,500 from 2004 to 2011, Vilker said.

    The full distribution of all the missing money was not accounted for in Vilker’s summary.

    Nagle is scheduled to be sentenced on Nov. 15 after pleading guilty to conspiracy to commit bribery.

    Dutta-Gupta is scheduled for sentencing on Dec. 4 after pleading guilty to bribery.

    Spencer, who became a cooperating witness in 2010 and wore a wire so federal investigators could listen to his conversations with Mariano and Dutta-Gupta, is scheduled to be sentenced on Dec. 5. Spencer has pleaded guilty to charges of conspiring to commit bribery and lying to the FBI.

    Dutta-Gupta, Spencer and Nagle will be jointly liable with Mariano for paying back the $18 million they defrauded the Navy of, the judge said.

    O’Rourke, 50, was among those in the courtroom for her boyfriend’s sentencing Friday. She has pleaded guilty to a charge of stealing government property and is scheduled to be sentenced Dec. 5.

    The judge noted that when AFST closed its offices in Middletown and Virginia after Mariano and Dutta-Gupta were arrested in February 2011, more than 100 honest employees lost their jobs. Some of those people filed victims’ statements with the court.

    “Mr. Mariano violated the trust both to the American people as well as to the people that he served with, all while working a job where lives depend on people like Mr. Mariano doing competent and honest work,” Rear Adm. David Duryea, commander of NUWC, wrote in a victim’s impact statement he read to the court Friday. “And his actions eroded the trust that all Americans place in the Navy to be a good steward of their money and to protect our sailors.”

    Duryea was the only victim to speak.

    U.S. Attorney Peter F. Neronha was in court Friday and released a written statement later.

    “Nothing does more to erode trust in government than when a public official acts not in the public’s interest, but in his own,” Neronha wrote. “Mr. Mariano, whose sole obligation was to the United States Navy, and more broadly to the taxpayers, instead served only himself and his associates, committing fraud on a massive scale. He spent millions of dollars of taxpayer money in every conceivable way, money that otherwise would have been used to protect the people of this nation. His actions are indefensible, and he deserves every minute of the lengthy sentence he received today.”

    Flynn@NewportRI.com



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