Two More Defendants Sentenced to Prison for Multimillion Dollar Schemes Involving Preparation of False Tax Returns for Professional Athletes and PPP Loan Fraud

Source: United States Department of Justice News

Two California men have been sentenced to prison in a conspiracy to defraud the IRS and the Paycheck Protection Program (PPP), a federal loans initiative designed to help businesses pay their employees and meet expenses during the COVID-19 pandemic. Thanh Ngoc Rudin of Rosemead, 58, was sentenced to 34 months in prison on Feb. 10, 2023, and his coconspirator, Seir Havana of North Hollywood, 46, was sentenced today to 42 months in prison. Thanh Rudin’s brother, Quin Rudin, was sentenced in October 2022 to 10 years in prison for his role in the scheme.

According to court documents and statements made in court, Thanh Rudin was a principal of Mana Tax Services, a tax preparation business in the Los Angeles area. Havana was the company’s Vice President/Director and Chief Executive Officer. Quin Rudin was its Secretary, Director, and Chief Financial Officer. They engaged in two fraud schemes using Mana Tax, while Quin Rudin was still on supervised release for a different fraud scheme in California.

The defendants prepared and filed with the IRS a series of false income tax returns on behalf of at least nine professional athletes. The false tax returns reported fictitious business and personal losses to generate refunds the athletes were not entitled to receive. The defendants also filed amended tax returns for most of the athletes for prior years to correct what they falsely characterized as “errors” made by the athletes’ previous accountants. Mana Tax charged the athlete clients 30% of the fraudulent tax refunds. The tax fraud scheme caused a total tax loss of more than $19 million.

The Rudin brothers and Havana also prepared and submitted false applications for PPP loans on behalf of small businesses, shell companies, and other business entities they controlled, and took a fee of 30% of the fraudulent loan. They submitted fabricated tax returns to support the PPP loan applications, and some of the business owners never saw their loan applications before Mana Tax filed them. The loan applications grossly inflated the number of employees and monthly payroll costs. Some of the businesses had no payroll expenses and were not actually eligible for PPP loans.

During the investigation, the government seized more than $11.8 million of the fraudulent PPP loan proceeds from bank accounts controlled by the defendants. In addition, Havana surrendered cashier’s checks totaling approximately $5.6 million, representing a portion of the fees charged to professional athletes for the preparation of their false tax returns and a portion of the fees taken from the fraudulent PPP loans.

In total, the two schemes caused more than $44 million in losses to the United States.

In addition to their respective terms of imprisonment, Senior U.S. District Judge Anthony J. Trenga ordered the defendants to each serve 3 years of supervised release. Thanh Rudin was ordered to pay $38,206,074.98 and Seir Havana was ordered to pay $38,673,403.24 in restitution to the United States.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, U.S. Attorney Jessica D. Aber for the Eastern District of Virginia, Special Agent in Charge Wayne A. Jacobs of the FBI Washington Field Office Criminal Division, and Special Agent in Charge Darrell J. Waldon of the Washington, D.C. Field Office, IRS-Criminal Investigation made the announcement.

The U.S. Attorney’s Office for the Central District of California and the U.S. Small Business Administration provided assistance with the investigation.

Assistant Chief David Zisserson of the Tax Division and Assistant U.S. Attorneys Kimberly M. Shartar and Kimberly R. Pedersen are prosecuting the case.

Readout of Deputy Attorney General Lisa Monaco’s Attendance at the 2023 Munich Security Conference

Source: United States Department of Justice News

Deputy Attorney General (Deputy AG) Lisa Monaco was in Munich this week to participate in both the 2023 Munich Cyber Security Conference and the Munich Security Conference, which brings together leaders from around the world to tackle current and future challenges to our global security. 

On Friday, the Deputy AG delivered the closing keynote at the 2023 Munich Cyber Security Conference and discussed the department’s ongoing efforts to disrupt the ecosystem that fuels malicious cyber activities and to prioritize prevention of cyberattacks and the department’s work with the victims of cybercrime.

As part of the United States delegation to the 2023 Munich Security Conference, a leading global forum on key security policy challenges, Deputy Attorney General Monaco participated in several discussions regarding national security challenges facing the United States and its partners.  The Deputy AG spoke on a panel with European leaders regarding “strategic corruption” when a nation weaponizes corrupt practices for strategic purposes.  

The Deputy AG also held several bilateral meetings with European law enforcement and national security partners, including the European Commissioner for Home Affairs as well as the heads of both INTERPOL and EUROPOL.  In each of those discussions, Deputy Attorney General Monaco reinforced the Justice Department’s commitment to standing with our partners around the world — and the people of Ukraine — in continuing to investigate Russian war crimes and to enforce the global sanctions levied against Russia for its unprovoked and unjustified invasion of Ukraine. She also emphasized the importance of international partnerships to combat transnational threats of terrorism, cybercrime and synthetic opioids, including fentanyl. 

While in Germany, the Deputy AG also traveled to Nuremberg, to visit the Nuremberg Trials Memorial. She had the opportunity to tour the museum and the courtroom in the Palace of Justice where the leaders of the Nazi regime were tried before an International Military Tribunal following World War II. 

She returned to Washington, D.C. on Sunday. 

California Man Charged with Federal Hate Crimes for Allegedly Shooting and Wounding Two Victims Leaving Synagogues

Source: United States Department of Justice News

The Justice Department announced today charges against a former Riverside resident with two counts of hate crimes for allegedly targeting and shooting two Jewish men as they departed religious services outside two Los Angeles synagogues over the past two days.

According to the complaint, Jaime Tran, 28, targeted the two victims because they were Jewish or he believed them to be Jewish. Because the complaint contains allegations that Tran attempted to murder the two victims, the maximum statutory penalty for each of the two hate crimes is life without parole in federal prison. Tran made his first court appearance this afternoon after being arrested Thursday evening and charged this morning.

The complaint alleges that Tran committed the two hate-motivated attacks this week. Both shooting incidents took place in the Pico-Robertson district of Los Angeles.

In the first incident, which took place on Wednesday at approximately 9:45 a.m., Tran allegedly shot a victim at close range as the victim was leaving religious services at a synagogue. This victim survived the shooting, but he suffered a gunshot wound to the lower back.

In the second incident on Thursday at approximately 8 a.m., Tran allegedly shot a second victim at close range soon after he left religious services at a different synagogue in the same neighborhood. This second victim survived, but he sustained a gunshot wound to his upper arm.

Both shootings occurred in the same predominantly Jewish neighborhood of Los Angeles and both victims were dressed in clothing that visibly identified their Jewish faith, including black jackets and head coverings. 

The evidence uncovered during the investigation indicates that Tran located the Jewish neighborhood after searching a popular business-review app for a kosher market in the Pico-Robertson district. After locating the market, Tran allegedly drove to the area, where the first shooting occurred. According to the complaint, Tran returned to the area the following day when the second shooting occurred.

Investigators acted quickly to identify Tran’s vehicle, to collect witness statements, and to obtain background information on Tran that is outlined in the criminal complaint.

Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division, U.S. Attorney Martin Estrada for the Central District of California, Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division and Assistant Director in Charge Donald Alway of the FBI Los Angeles Field Office made the announcement.

The FBI Los Angeles Field Office and the Los Angeles Police Department are investigating the case. The Riverside County Sheriff’s Department, the Cathedral City Police Department and the Fountain Valley Police Department provided substantial assistance.

Assistant U.S. Attorneys Kathrynne Seiden and Maria Jhai of the Terrorism and Export Crimes Section and Frances Lewis of the Public Corruption and Civil Rights Section for the Central District of California and the Justice Department’s Civil Rights Division are prosecuting this case.

A complaint is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Montana Man Convicted of Federal Hate Crimes and Firearms Charges for Shooting Intended to Rid Community of the Lesbian and Gay Members

Source: United States Department of Justice News

A federal jury convicted a Montana man of hate and firearms crimes for firing an AK-style assault rifle at the residence of a woman, who identified as lesbian, and was home at the time.

After a four-day trial that began on Feb. 14, the jury found John Russell Howald, 46, of Basin, Montana, guilty of hate crime acts and discharge of firearm during and in relation to a crime of violence as charged in a superseding indictment.

“This defendant is being held accountable for attempting to violently eliminate the entire LGBTQ community in a small Montana town,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “This hate crime and violent campaign targeting the LGBTQ community is a reminder of the epidemic of hate violence targeting people based on their sexual orientation. All people have the right to feel safe in their homes and communities, regardless of who they love. The Civil Rights Division will continue to work with our federal, state, and local partners to safeguard the civil rights of LGBTQ people affected by hate violence, hold perpetrators accountable, and ensure justice for victims of bias-motivated crimes.”

“The victim in this case was targeted by the defendant for no other reason than her sexual orientation when he fired bullets at her home while she was inside of it. There will be zero tolerance by our office in prosecuting those who commit hate crimes against our fellow Montanans, as no one should have to live in fear of potentially deadly violence simply because of whom they love,” said U.S. Attorney Jess Laslovich for the District of Montana. “I am pleased the jury agreed with us and I sincerely thank Assistant U.S. Attorney Ethan R. Plaut and Trial Attorney Eric N. Peffley, Criminal Section, Civil Rights Division, U.S. Department of Justice, along with the FBI, Bureau of Alcohol, Tobacco, Firearms and Explosives and Jefferson County’s Sheriff’s Office for investigating and prosecuting this case.”

“Hate crimes are especially devastating because a vicious act against one person is an attack on an entire community,” said Acting Special Agent in Charge Cheyvoryea Gibson of the FBI Salt Lake City Field Office. “I want to reassure Montana citizens the FBI is committed to defending and protecting the rights of all persons and encourage the public to report hate crimes to the FBI and local law enforcement.” 

According to court documents and statements in court, on March 22, 2020, Howald went on a self-described mission to rid the town of Basin of its lesbian and gay community. Armed with three rifles and two pistols, and knowing that the victim identified as a lesbian, Howald approached her residence on foot and fired an AK-style assault rifle at her property. Several rounds went through the victim’s fence and rounds hit her yard and porch. One round traveled through a wall of the home, bounced off the kitchen ceiling and lodged in a wall in the room. The victim was at home at the time but was not struck.

After firing at the victim’s house, the government alleged, Howald walked down the street toward other houses occupied by people who identify and are known locally as gay or lesbian. A church service had just finished and individuals leaving church saw Howald walking on street, recognized him and approached. The individuals heard Howald talk about his mission of killing lesbian and gay people in town and saw his weapons. They approached and tried to talk Howald down. One of those people, a pastor, unknowingly had left on a recording device that he used for his sermons. The device recorded about 10 minutes of his interaction with Howald until Howald demanded that the pastor walk away. The recording captured Howald making statements that he might have killed a lesbian and that he hoped he had, and that he was going to get rid of lesbians and queers in Basin. The recording also captured Howald firing off several more rounds during his interaction with these individuals.

Responding to a 911 call to the scene, a Jefferson County Sheriff’s deputy ordered Howald to put down his guns. Howald refused, pointed a rifle at the deputy and fled on foot, firing at least one more shot as he went. Sheriff’s officers arrested Howald the next day and found that he had a knife and loaded pistol on his person and an AR-style rifle and revolver in his car. During a search of his camper, officers found an AK-style rifle, a hunting rifle and ammunition.

Howald faces a maximum of life imprisonment, a $250,000 fine and five years of supervised release on the hate crime conviction and a mandatory minimum 10 years to life imprisonment, consecutive to any other sentence, a $250,00 fine and five years of supervised release on the firearm conviction.

The court will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Sentencing is set for June 15 before Chief U.S. District Judge Brian M. Morris. Howald was detained pending further proceedings.

The FBI Salt Lake City Field Office, ATF and Jefferson County Sheriff’s Office investigated the case.

Assistant U.S. Attorney Ethan R. Plaut for the District of Montana and Trial Attorney Eric N. Peffley of the Civil Rights Division’s Criminal Section prosecuted the case.

Defense News: CNO delivers remarks at WEST 2023

Source: United States Navy

VICE ADMIRAL PETER H. DALY (RET.):  OK.  Now it’s my honor to introduce our keynote speaker. 

1985 U.S. Naval Academy grad Admiral Gilday is a career surface warfare officer, served in cruisers and destroyers.  He commanded all levels including USS Higgins (DDG 76), Benfold (DDG 65).  He was the commodore of Destroyer Squadron 7, serving as the sea combat commander in the Reagan Carrier Strike Group.   

He was the Carrier Strike Group 8 commander embarked aboard the USS Dwight D. Eisenhower.  He was the commander of U.S. Fleet Cyber and Tenth Fleet, and his joint assignments include executive assistant to the chairman of the Joint Chiefs, naval aide to the president of the United States.   

As a flag officer he served in positions as director of operations for NATO’s Joint Force Command Lisbon, chief of staff for the naval striking and support forces, NATO director of operations, J3 U.S. Cyber Command, director of operations J3 Joint Staff and director Joint Staff. 

Admiral Gilday took office as the thirty-second Chief of Naval Operations in August 2019.  Let’s give our Chief of Naval Operations a warm welcome.   

Thank you, sir.  Welcome. 

ADMIRAL MICHAEL M. GILDAY:  Glad you guys found my music.  

Admiral Daly, General Lawrence, thank you very much for hosting, and for the hundreds of invisible hands that work for both of you that have made this happen a round of applause for them, please.   

To our enlisted superior performers, congratulations.  Thanks for setting the standard.  Stay amazing.   

I’d like to also recognize our international partners who are here today from at least 15 different nations.  If you could please stand.  

And, finally, if we have our [edit: Navy Junior Reserve Officer Training Corps] cadets here with us at the luncheon would they please stand?  Are they here? Maybe they were here for breakfast [laughter]. Anyway, I thank them as well.  They are the future of our Navy.   

This is the thirty-third year of WEST, and if we think back three decades ago this conference – the inaugural conference – was held just months before Iraq crossed the line of departure into Kuwait, which led to the First Gulf War.  We had the no-fly zone enforcement over Iraq for a number of years.  We had Kosovo, Bosnia, Croatia, Somalia.   

We were involved in Haiti with humanitarian assistance operations.  There was 9/11.  Afghanistan.  There was Iraq.  We were involved in counter piracy, counter drug, counter trafficking, and now a resurgent Russia and the pacing threat of the People’s Republic of China (PRC).   

And so the past 30 years for most of that timeframe has been a distinct post-Cold War period.  But things are different now.  The strategic environment has fundamentally changed and we, too, must change with it.   

So what I thought I’d do today for a few minutes before engaging in discussion with you all is to speak a little bit about – really, about the theme of this conference, which has been readiness, modernization, and capacity, and it really has been focused on the future.  But what I’d like to try and do is draw a thread that carries through the next 30 years in terms of where we are and where we think we’re going.   

If there’s any silver lining to the pacing threat that is the PRC, it’s always good to have somebody breathing down your neck.  It puts pressure on you, right?  It gives you focus, real focus.  It keeps you sighted on the things that we need to invest in, first and foremost our people. 

But it really does focus you in a serious kind of way.  And I think that message was loud and clear through each of the forums – each of the panels that we’ve had over the past few days.   

The new strategic environment, as the title of the slide behind me indicates, is not just about adaptation because that past 30 years that I described – we adapted, and some of that turned out well and some of that did not turn out well as a joint force.   

But now we have to leverage adaptation in the near term to effect change.  For a very capital-intensive service like the Navy, revolutionary change is really hard and we’ve learned, sometimes the hard way, when we move too fast we make big mistakes.  And so our path really has been more evolutionary.  It’s been more deliberate, but it has been focused.   

When I think about the Navigation Plan [2022] that kind of guides our way in terms of what we need to be sighted on, and what we need to invest our money in to provide our sailors with the best capabilities possible, we talk about six trends – I’ll call them six trends or six attributes – and I was struck a number of years ago by reading an article in “Proceedings” by a naval officer named Capt. “Trip” Barber, who for years was involved in assessments in the Navy staff and he was really legendary in terms of the way that he could take a very analytical look at what we were making our investments in.  And Trip talked about a number of themes that should drive where we take our Navy and I, essentially – I didn’t adopt everything that Trip talked about – but it did inform some of the conclusions that I drew in my mind and that the investments that we make not just to deliver a hybrid fleet in the early 2040s, but in order to adapt today to a pacing threat that is evolving very quickly those attributes are distance — and so that means the long-range fires.  It’s deception.  It’s concealment.  It’s stealth.  It’s maneuverability.  That’s very, very important. It’s defense and thinking about ways to defend our fleet that we haven’t before, leveraging technologies like high-powered microwave or directed energy.  It’s about distribution.  It’s about coming at an adversary not by amassing forces, but by spreading those forces out, not just in the physical domain but in all domains from seabed to space in the virtual and in the physical. It’s about delivery.  That’s contested logistics.  In order to fight with a distributed force, that distributed force has to be resupplied.  It has to be repaired.  It has to be sustained.   

And so we’re thinking differently about how we do that not just with a hybrid fleet of manned and unmanned but how we do that today.   

And the last attribute that I would mention would be decision advantage.  So you can have all that stuff but, at the end of the day, you have to be able to decide and to act faster than your opponent.  And so in projects that we have today like Project Overmatch, which is the Navy’s contribution to JADC2, we’re focused on that.  That sets a foundation, we think, for the joint force in order to communicate in command and control in ways that we’ve never conceived before.   

So the point that I’m making is this three-year to 30-year broad future that we’re looking at – we’re trying with a high degree of consistency to stay true to what we really need, to stay true to in order to deliver every single day to field the most capable, lethal, ready force that we can.   

I’m reminded of an Air Force colonel.  Any Air Force folks in the room today, or prior Air Force?   

[someone yelling Air Power, followed by laughter] 

There you go.   

Colonel John Boyd – most people think about Colonel John Boyd and they think about the OODA loop or they think about his energy maneuverability theory that so influenced the design of the F-15 and the F-16.   

But Boyd talked about three key priorities and those priorities were people, ideas, and then things, in that order.  People, ideas, and things.  And so I just want to spend five or 10 minutes kind of drawing that thread out in terms of what we’re doing as a Navy, taking a look at today and into the future, leveraging adaptation today to effect longer-range change. 

In terms of people, we just recognized some phenomenal Sailors, and I believe that people – and not things – are our primary competitive advantage in this potential – in this competition with the PRC. 

The Secretary of the Navy spoke about it this morning when he talked about his budget priorities, and he talked about education and he talked about how important that is because it’s tied to you.  It’s tied to you. 

You know, we can have the best things in the world.  But, at the end of the day, it’s the operators who put their fingers on those buttons.  It’s those SEALs in the water, it’s those aviators in the air that are really going to make a difference.   

I think that the Sailors in our Navy are world-class in operational execution.  When I was the J3 in the Joint Staff I watched a, largely, maritime-driven synchronized attack on [edit: Syrian] chemical weapons facilities.  It was carried out not just from the eastern Mediterranean but from the Red Sea and simultaneously from the northern Arabian Sea by one commander, primarily maritime.   

It was such a thing to watch.  It was such a thing to behold, and that really spoke to me in terms of a naval officer in terms of what we’re capable of.  Day-to-day operational execution by the United States Navy, by the explosive ordnance disposal (EOD) teams that today are just wrapping up their work off the coast of South Carolina, recovering, you know, metric tons [figuratively speaking] of material from the bottom of the ocean after that balloon splashed. 

But it’s happening all over the world every day.  The carrier USS George H.W. Bush in the Mediterranean right now keeping an eye on Russia.  The [edit:  USNS Herschel Woody Williams] is off the coast of Turkey providing humanitarian aid after that earthquake.  We have ships in the High North.  We have ships in the Western Pacific.  We have information warfare operators on keyboards that are doing magnificent work.   

We’re the only service, along with the Marine Corps, that certifies all of our forces for combat before you deploy.  We’re very proud of that, and we continue to make that certification process more and more challenging.   

The United States Navy and the United States Marine Corps are in contact with peer competitors every single day in the north Arabian Sea against the Iranians, in the Western Pacific in the air and on the sea against the PRC, in the eastern Mediterranean and the High North against the Russians, counter-narcotics work in the Southern Command area of responsibility.  Every single day.   

But to keep our advantage we need to adapt and we need to adapt faster.  So in terms of recruiting, and you’ve seen some of this, we turn to the virtual.  We turn to social media, a number of different platforms, and we removed ourselves from TV.  And then we found out that that adaptation created a gap and that gap is that we weren’t connecting to influencers, school administrators, parents.   

We were connecting on social media with the demographic that we wanted to recruit, but we didn’t – we weren’t touching base with all of those people that influence those folks that we wanted to recruit and so we adapted.  We adapted in the media space, I think, and we also tried to adapt in the social media space.   

The idea of “Get Real, Get Better” is something that is more than just a bumper sticker.  “Get Real, get Better” is an effort by all of us to be better at self-assessing and self-correcting, so that we stay ahead of problems instead of lagging them, so that for all the good work that I just described that we’re doing around the globe every day – we don’t stumble with fuel spills at Red Hill, or a fire aboard a ship like the Bonhomme Richard, or other accidents that we’ve had that were completely avoidable.  So we’re asking you to take a round turn on how you think about what you do every single day, and this gets back to really that people are our asymmetric advantage.   

In terms of how we assign people now and into the future, the detailing marketplace is a powerful tool.  It gives all of you much more say in what you’re going to do next, where you’re going to serve, what you’re going to do.   

And over time, from the apprenticeship to the journeyman to the supervisory level, it gives you more leverage, more autonomy, in helping forge your career in a very powerful way along with your family to make you more competitive, to ensure that your family is being looked after – whether it’s geostability or time to have a child – but it gives you more say in terms of how we manage this precious talent that we have.  And I think that that’s adaptation that eventually will effect big change.   

In terms of ideas, the ideas are really driven, at least in the fleet right now, centered around distributed maritime operations, and so that was an idea that was borne a number of years ago.  This was after we made that big shift a couple of administrations ago from a – we made a shift to the Pacific to have a 60/40 mix of assets in the Pacific relative to the rest of the globe.   

And so, you know, that led us to think about as a Navy how we would potentially fight an adversary in a distributed manner, as I described earlier, across all domains, physical and virtual, but to create complex problems for any potential adversary.   

So that idea of distributed maritime operations under which the Marine Corps’ expeditionary advanced basing operations (EABO) and their littoral operations concepts (LOC) are nested as they support the fleet in sea control and in power projection.   

And then, lastly, when we think about things and I think about that 30-year continuum, when I look at what we’re investing in now under the sea with Virginia Block IV and Block V submarines with progressively more lethal and capable torpedoes, putting [an] extra-large underwater unmanned vehicle under the water in the Western Pacific this year with four more to follow with a clandestine mine-laying capability – those are adaptations to a changing threat in the undersea that are going to lead us to change, change in terms of how we do manned and unmanned teaming under the sea. 

On the surface, investments in not just Flight IIA DDGs, but Flight III DDGs.  Maritime Strike Tomahawk – we’re building a new frigate up in Wisconsin.  The first one will hit the water in 2026.  Longer-range weapons, SM-6, weapons with range and lethality. 

When you think about the air and what we’re doing right now with F-35s and Super Hornets in terms of fourth- and fifth-generation fighter integration in our carrier air wings, learning things that we never dreamed of in terms of how to bring to life even more lethal capabilities out of our Super Hornets teamed with those F-35s. 

MQ-25, right – that is the unmanned refueling drone that we have that will go IOC in 2025 that will increase the lethal range of our carrier air wings at sea by 500 miles, that’ll be able to take and return three strike fighters.  Instead of doing refueling missions, they’ll now be doing what we built them for.  They’ll be delivering weapons.  They’ll be delivering ordnance. 

That MQ-25 on our carriers is paving the way for the naval aviation wing of the future.  That will include manned and unmanned teaming at a ratio in the 2030s and early 2040s of probably 60% unmanned to 40% manned.  MQ-25 is blazing the way.  

On the surface I talked a little bit about – actually, I didn’t talk about unmanned at all.  But we’re getting to the point probably within the next four or five years we’ll begin to deploy unmanned platforms with carrier strike groups and amphibious ready groups (ARGs), and the idea is that we need more ships.   

We need more – we need to distribute ourselves across the Pacific Ocean and across the globe, and we can do that faster and, we think, more effectively by having a combination of manned and unmanned with the future fleet that instead of a 60/40 mix of unmanned/manned with the air we would have a mix of 40 [percent] to 60% on the surface.  So 40% would be unmanned and 60% would be manned.   

Think about missile trucks.  Think about, you know, medium unmanned vessels that have C2 capabilities, that have electronic warfare (EW) capabilities, that could, perhaps, even have cyber capabilities.   

That kind of work is happening now when you think about – the Secretary of the Navy this morning talked about Task Force 59 and Fifth Fleet where, based on the current National Defense Strategy, that part of the world is a lower priority than the PRC and Russia.  And so we began taking unmanned, and we began taking AI capabilities, and we began putting them against a real-world problem – and that real-world problem was maritime domain awareness. 

How do we understand what’s moving on the surface of the ocean if it’s illegal arms or people that are being trafficked from Iran to Yemen, if it’s weapons that are going into the Red Sea?  We can’t see that unless we have some type of sensor coverage.   

So it’s leveraging unmanned and then taking that information from those unmanned platforms and pushing that to operation centers, not just in Bahrain but in other countries in the Middle East.  We have six countries now that are invested in this effort.   

We will have a hundred unmanned platforms patrolling the Red Sea, the Arabian Gulf, and the Gulf of Aden by July of this year, and that information gets fed back to a common – what we call a single pane of glass that allows us through artificial intelligence (AI) to get a better understanding of what’s moving on the ocean. 

We’re going to take that same idea and we’re going to scale it to other fleets, and that’s going to be happening relatively soon.  And there’s two really powerful things here when we think about adaptation, we think about learning, we think about change with respect to that effort in the Middle East.   

One is how to command and control these unmanned platforms at scale.  People talk about the Internet of Things.  This is the ocean of things that we’re going to have to manage, and we’re going to have to manage very effectively.   

And, again, it’s not just automation.  This is manned and unmanned teaming.  We’re going to have manned platforms out there as well, whether they’re under the sea, on the sea, and in the air, and we’re going to have to bring that orchestra together. 

Changes that we’re making in our personnel system to have a new rating that actually – to have specialists in this area of unmanned and robotics.   

Well, I guess I’ve covered those areas probably enough.   

One of the things that I think is really important here and I think that the industry – our industry partners in the room realize is that besides building all of these big things – the defense industrial base, if we think about it on a continuum – on the right side of that continuum are those big companies that build ships and that build aircraft.  They build submarines and they build weapons.   

On the left hand side of that continuum are all of those smaller companies, those companies that are cranking out new unmanned platforms.  They’re cranking out AI capabilities, and that change happens really fast.  And most of the time those capabilities are designed for some type of commercial application, maybe for oil rigs down in the Gulf of Mexico.  But we’re taking those and we’re repurposing them to a wartime mission, to a combat mission.   

And so we’re taking capability that’s already been essentially perfected, right.  The technical risk in making that shift from commercial to military is very low and so there’s the opportunity there to go from prototyping to low-rate production in a much shorter period of time.   

When we design and build a new ship from the time we first put pencil to paper and then finally deliver a ship, it’s over a decade, easily.  With this type of technology we can move much quicker than that.  In the course of a year we can have that capability.  The stuff we’ve been doing in Fifth Fleet is testimony.  In a year and a half we’ve gone from nothing to a hundred unmanned platforms.   

And so this iterative process that we have, the investments that we’re making today, Secretary Del Toro talked about the enormous support that we have from the Congress right now.  Our defense budget has risen significantly.  But the investment in the United States Navy and the United States Marine Corps has come up significantly and it needs to.   

For the last 20 years the nation has been focused on ground wars in Iraq and Afghanistan, and during that time strategic investments in the Navy, understandably, have taken a backseat.  No more.  No more.  And so there is consensus on Capitol Hill that the Navy needs to be bigger.  It needs to be stronger.  It needs to be better networked.  It needs to be more capable.  It needs to be more lethal.   

So there are investments – they have been very, very supportive of our investment priorities –which has been, first and foremost, readiness, secondly, modernizing the fleet that we have, and last is capacity because – many have heard me say this before – my view is that we can’t have a navy larger than one that we can sustain.   

If we do, if we’re focused too much on numbers, on just the size of the fleet, we’re going to pay for that with weapons out of magazines.  We’re going to pay for it with more gaps at sea.  We’re going to pay for it with less parts in supply storerooms.   

And so that focus on readiness is fundamentally important, I think.  Why?  It gets back to that friction point that the title of this – the theme of this conference gets at, right.  It’s that tug of war between current readiness and a future fleet and where you’re going to put your next dollar. 

We have to make investments in both and that’s why this path over a course of three decades in the undersea, on the sea, in the air, information warfare – why it’s so important to have consistency across those six – informed by those six Ds that I talked about so that we don’t take our eye off the ball.   

So, with that, hopefully, I tied together things from some of the other speakers, and I’d be happy to take any of your questions.  

[Applause] 

Yes, sir? 

Q:  Admiral Paul Rosbolt (sp?) from systems planning and analysis.  Good to see you after a number of decades.   

ADM. GILDAY:  Good to see you.   

Q:  Truth in advertising here.  The aforementioned Trip Barber and I have been helping N96 and N4 with some of these hard problems.  And I’d like to ask you about two programs or two initiatives in surface Navy and just get your thoughts.   

Where do you think we’re going with DDG(X) and future integrated combat system? 

ADM. GILDAY:  And what’s the second one? 

Q:  Future integrated combat system. 

ADM. GILDAY:  OK.  Let me take the second one first. 

In terms of integrated combat system, full speed ahead.  So I’ve been to Forge up in Maryland.  I’ve seen what we’re doing there in terms of a DevOps environment that really ties together – integrates all of our weapon systems together and allows us to update those systems in a way that’s significantly better than the way we do it now.   

A software change today can take up to six years to get to the fleet.  A hardware change can take up to eight.  Where we’re moving through in integrated combat system is to put us in a place where we can do a software change within three months and a hardware change within six.   

That’s where we need to be.  In fact, we need to do better than that.  That’s a good initial aim point.  But this is more than just aspirational.  We’ll actually be delivering that capability to the fleet.  It’s pretty exciting.   

On the first question, again, was about –  

Q:  DDG(X). 

ADM. GILDAY:  DDG(X).  So we’re at the point right now where our first Flight III DDG is going on Bravo trials this month.  What a capability.  What I’d like to do is to make sure that that Flight III line, that production line, in both Bath Iron Works and HII Ingalls [in Pascagoula] – is humming and we are pumping out these ships on time, within budget, and that line is mature before we transition to DDG(X). 

We’re designing DDG(X) now.  We’ve learned from the past with other ship classes that we produce the best ships in this country when the Navy has the lead and industries in partner with us.  So that’s what we’re doing right now.  The Navy naval architects have the lead.  The ship builders are working with us.  We’re designing that ship.   

In terms of ballpark when we do the transition it’s not yet defined, but it’s probably in the 2032 time frame.  Again, Flight III is a great ship.  Let’s pump them out.  Let’s pump them out in numbers.  Let’s get to three a year, before we run too fast.   

I talked a little bit earlier about, you know, running too fast with scissors and, you know, we’ve learned from that.  Let’s be deliberate.  Let’s not have our eyes become bigger than our stomach and get too far ahead of ourselves.   

Q:  All right.  Thank you.   

ADM. GILDAY:  You’re welcome  

Q:  Good afternoon, Sir.  Gunnery Sergeant Owen, U.S. Marine Corps.  Thank you for being here.   

ADM. GILDAY:  Good to be here. 

Q:  With regards to the Marine Corps and the EABO stand-in forces concept in littorals, how do you see us tackling expeditionary logistics with the possibility of completely broken supply chains due to possible attacks similar to those seen in the second Nagorno-Karabakh war?  

ADM. GILDAY:  Yeah.  So the commandant talks about this, right. 

So [edit: Medium Landing Ship (LSM)] is a part of that – is a part of the answer to that.  For those that haven’t heard about [edit: LSM] is the new concept for what was LAW, or the light amphibious warship.  And so the idea is to be able to move Marines around quickly in the archipelago to put them in a place where they can deliver effects very quickly and then to move them again. 

It’s going to be sporty and I think the commandant describes it like that.  There is no perfect answer.  I go back to – you’re not going to be satisfied with this answer – but I go back to the people piece of this.  That’s going to be fundamental in terms of how we’re going to get innovative and creative.   

There are, certainly, going to be concepts – warfighting concepts – that are going to underpin the sustainment of the littoral maritime regiments out there on those islands.  But I think, fundamentally, it’s going to come down to Marines like you, Gunnery Sergeant, to figure this out while they’re out there because it’s not going to be textbook.  It’s going to be ugly, it’s going to be fast, and you’re going to have to think better than the other guy.   

Q:  Thank you, Sir.   

ADM. GILDAY:  You’re welcome.   

Q:  Bill Hamblet from the Naval Institute “Proceedings.”   

ADM. GILDAY:  Sir. 

Q:  Some major themes that have been in “Proceedings” and also here at WEST – speed to fleet, distributed lethality, partnership, commonality, interoperability, shipbuilding capacity – one idea that keeps coming up in some discussion groups with the Naval Institute is that – that would seem to scratch some of those itches, at least, if not all of them is for the Navy to take advantage of the hot production lines that the Coast Guard has running with national security cutter, offshore patrol cutter, fast response cutter.   

My question is if the Marines can put naval strike missile on a JLTV would it make sense for the Navy to buy and up-gun – put [naval strike missiles] on some of those cutters that are already coming off the production lines for the Coast Guard?  

ADM. GILDAY:  Yeah.  I appreciate that question.   

I think the answer is right now is nothing is off the table.  And so the recent National Defense Authorization Act (NDAA) gave the Commandant of the Marine Corps the lead in deciding amphibious requirements, and so I don’t want to speak for him.  We do have an awesome partnership and that will continue.  But he’s the one that, in the end, decides requirements.   

Right now I know that the Marine Corps, in collaboration with the Navy, is looking at a number of different platforms and will be testing a number of different platforms.  Your point about using an existing hull in order to accelerate, you know, from the production line to the fleet is well taken and I think that there’s a lot of interest.   

I think that speed has to be a variable that factors in in an important way as we determine which one of those hulls we’re going to sink our money in.   

Q:  Good afternoon, sir.  Captain Lau (sp?), Marine Corps.   

Given the multitude of new technologies coming out, it seems somewhat similar to when the battleship was replaced by the carrier as the core of the fleet.  Do you see any of these new technologies threatening to replace our carriers as the core of the fleet?  

ADM. GILDAY:  Not at this time.  So there’s a lot of things that we do.  One of the Ds I talked about was deception.  One of the really important attributes of our carrier force – of our Navy and Marine Corps – is the fact that we’re highly maneuverable.   

So if National Airport in Washington were an aircraft carrier, tomorrow at this time it could be off the coast of Nova Scotia or it could be off the coast of the Florida Keys, or if it could go west it’d be west of the Missouri River – west of the Mississippi River in Missouri.   

And so we are highly mobile.  We also leverage some classified capabilities to help us better conceal where we’re moving.  But that is becoming increasingly more difficult, right? And distributed maritime operations really talks about how we pulse in and how we pulse out of the weapons engagement zone. 

Part of this – part of the ability to do that rests on counter C5ISRT.  And so, in other words, giving us the ability to poke the adversary in the eye to give us the time, particularly in the fog and friction early in a fight, to put ourselves in a position of advantage, again, with weapons with longer range, right, and more capable, with air wings that have longer range and more capability.   

Let me just mention something about ARGs real quick because I don’t think we’ve talked about them enough at this conference.  But when you think about – we tend to talk about the PRC and we tend to talk about things through the lens of an attack on Taiwan, because PRC is the pacing threat and Taiwan is the most difficult scenario under the pacing threat. 

But there’s a lot of things that naval forces do across the spectrum of conflict that you can’t ignore.  So the far right is a hot war.  But there’s a lot of stuff, and you all know because you’ve been to sea or most of you have been to sea – you all know the stuff we’re doing day in and day out with Allies and partners – you look at the investments in our big deck amphibs as an example – 53K helicopters, MV-22s, F-35B, right, weapons in range in speed and a bunch of angry Marines.   

That’s a pretty good option for a combatant commander out there in terms of how he wants to use the amphibious force left of that red-hot battle, right, in order to, perhaps, deter an adversary from doing something in order to hold a sea lane of communication (SLOC) open so we can move – continue to move commerce through a SLOC, let’s say, in the Middle East like the Bab al-Mandab of the Red Sea.   

So I think that there is great promise in the future of the ARG MEU in terms of what we’re going to do.  I think, again, we have to be really creative and we have to continue to talk about all the different things that the United States Navy and the United States Marine Corps bring to bear.   

And we’re an instrument of national policy that doesn’t operate solely in the military lane.  But, historically, we’ve also operated in the diplomatic and we’ve also operated in the economic and have had great effect there.  It’s why, in fact, you know, the economic is why we have a Navy, right, and a Marine Corps – so that the prosperity of this country can continue.  Thanks for the question.   

Q:  Thank you, Sir.   

Q:  Good afternoon, Admiral. 

ADM. GILDAY:  Are we out of time? 

[Laughter] 

Q:  We know each other.  It’s only going to be very short.  We had a great discussion last night and I’d like to follow through with that in a positive way to end this conference. 

ADM. GILDAY:  There’s more? 

Q:  It’s positive.   

ADM. GILDAY:  All right.   

Q:  We spoke this morning to the Secretary of the Navy in regards to enlistees’ applications and so forth, and if those secretaries can all do their jobs then you will have and your other armed services will have enough enlistees to move forward.   

And I understand your concern and problem with manning ships.  I also understand that you temporarily had to take and reduce your qualifications to man those ships.  So I want to leave this on a positive note by saying that I believe that if the Navy and the other armed services go out into the hinterland of the United States – Arizona, New Mexico, Nevada, Kansas, Nebraska, Wyoming, Montana, and Idaho – and get out there and put a word out, that there are plenty of youth in this country that will flock to the area of going into the armed services.   

But these secretaries are going to have to do something about those obstacles that now are there.  So I will leave that with a positive.  Thank you.   

ADM. GILDAY:  Yeah.  Let me address one thing that you mentioned in terms of qualifications.  So one of the things that we’ve done in the Navy is we’ve taken a look at – so any service member that joins is going to – they’re going to take the Armed Forces Qualification Test (AFQT) and that’s a test that actually looks at your aptitude to serve in the military, right. 

And so on a scale of zero or one to a hundred, you get a score, and typically we have not been accepting candidates that have been in the zero to 30 percentile.  OK.  We decided to open it up and take a look at them.   

Why?  Because in order to be a Sailor in the Navy you still have to have an ASVAB score high enough in order to put you in a rating, right?  And so even if you scored a 40 on the AFQT, but you didn’t score well enough in the ASVAB, we couldn’t take you in the Navy.   

So what we try to do here is open up that – you know, to give us more candidates.  The other thing – you know, as somebody who didn’t get into the college I wanted to go to the first time primarily because of test scores, you know, tests don’t measure somebody’s passion, somebody’s desire.   

You talked a little bit about this this morning with the physical challenges that you had, and you plowed right through them.  A test can’t measure that.  So having an understanding of somebody that really wants to join – and I’m telling you, we are considering waivers on a case by case basis in a number of areas including medical.   

We’re trying to put a much more personalized – take a much more personalized approach to every single candidate because we are competing against each other and competing against industry for that talent pool.   

Q:  And I am sure that those recruiters for the Sailors, the Navy, can go out there and harvest that land and we can have really robust enlistments for all the armed services.  And thank you very much, Admiral. 

ADM. GILDAY:  Thank you very much.   

Q:  Admiral Gilday, Brent Sadler of the Heritage Foundation.  Thank you for your time again.   

ADM. GILDAY:  Good to see you. 

Q:  My question – you mentioned empty vertical launch systems (VLS) cells or empty armies if you don’t grow the fleet in a smart, mature way.  But the question that I’ve got is what we’re seeing right now in Ukraine is that we don’t have the industrial base – the production – to keep up with use.  

ADM. GILDAY:  Yeah. 

Q:  Notably, that’s in artillery rounds – but it could be a lot worse if a war happens in the Pacific.  I was wondering if you could spend a little bit of time talking about your thoughts on making sure that we do have that capacity to fill up our armories when we do get into a fight in the Pacific.   

ADM. GILDAY:  Yeah.  Thanks.   

So a few years ago as we shifted our priorities to readiness, modernization, and capacity, in that order – I spoke a little bit about this earlier – but supply parts and munitions.  So we, essentially, use those as trade space in order to pay for platforms. 

We’re no longer doing that, and so even in the unfunded list – an unfunded list is something that we present to Congress every year because stuff that we feel that we need didn’t make it into the budget – if you take a look at our unfunded list for last year, most of that is weapons and spare parts. And what we’re trying to do with respect to weapons is to maximize the output of our munitions companies but to give them – at the same time to give them a clear set of headlights on what our demand signal is, so that they can make investments in their infrastructure and their workforce with a high degree of confidence that we’re going to want to keep those production lines going.   

This morning there was a question about, you know, opening up those high-end weapons in larger numbers to our Allies and partners.  I think that’s also – I think that was a very important comment and that’s also something we’re looking at, as well as buying weapons, doing block buys, multiyear procurements, bundling, like we do when we buy ships to get them at a better price.   

Q:  Thank you very much.  

ADM. GILDAY:  You’re welcome.   

ANNOUNCER:  Unfortunately, that was our last question.