Navy civilian diverted almost $2M to secret rifle silencers contract, prosecutors say

ALEXANDRIA, Va. — A Navy intelligence officer illegally diverted almost $2 million in government funds to his boss's brother under a secret, illegitimate contract to build hundreds of untraceable rifle silencers, prosecutors said Monday.

In opening trial statements in Alexandria, prosecutors said the defendant, Navy civilian Lee Hall of Sterling, had no authority to buy weapons and that the real reason for the contract was to bail out his boss's brother, Mark Landersman, who prosecutors said had a failing race-car business.

Landersman, of Temecula, Calif., faces trial next week. Both he and Hall are charged with conspiracy and theft of government funds.

Hall's lawyer says the contract was legitimate and needed to support a classified program that remains shrouded in secrecy.

Court records indicate that at one point, Hall told others the silencers were for the Navy's elite SEAL Team Six, the unit known for killing Osama bin Laden. The SEALS say they had nothing to do with the purchase.

It has been difficult to determine exactly why the silencers were ordered. Much of the information in court records leading up to the trial has been under seal, and even during Monday's trial testimony in open court, witnesses were admonished to generally refer only to "the program" in their testimony when referring to how Hall justified the purchase.

Parker, in his opening statement, suggested that the only purpose for the contract was to generate about $1.6 million in profit for Landersman, whose brother, David Landersman, led an intelligence directorate in the office of the Secretary of the Navy.

Parker said that David Landersman and Hall were able to obtain $2 million in funding for unspecified intelligence studies from a budget administrator who was doling out unspent money at the end of the fiscal year. At some point, Landersman and Hall then had the money diverted to the silencer contract, which was awarded on a no-bid, sole-source basis to Mark Landersman. Parker said that within a day of getting approval to spend the $2 million, David Landersman was communicating with his brother about an easy to way to build silencers, using an Internet article as a blueprint.

Mark Landersman was ultimately paid almost $1.7 million to build the 349 silencers, which had no serial numbers or any kind of federal registration. Parker said in his opening statement that the silencers didn't work, and that they only cost $10,000 to build.

"Lee Hall stole $1.6 million of the government's money," Parker said in his opening statement.

U.S. District Judge Leonie Brinkema, who is presiding over the bench trials and will decide the defendants' guilt or innocence, has chastised the government several times for failing to turn over information that could be beneficial to the government's defense.

Before the trial began Monday, she sanctioned the government and said she will automatically assume that the contract was reasonably priced, after prosecutors failed to turn over a report where an expert concluded that the price of the silencers was not unreasonable.

Hall's defense attorney, Danny Onorato, suggested during cross-examination that Hall had permission from his superior, former Acting Undersecretary of the Navy Robert Martinage, to divert the money to the silencer contract in support of "the program." Martinage, who resigned from the Navy, earlier this year, denied knowing anything about the silencers.

David Landersman has not been charged.