The document lists several breakdowns in internal control, including a failure to verify relationships between enlistees and recruiting assistants and to determine whether the two had ever met.
“Our evaluation showed that for 88 percent of enlistments one or more key internal controls weren’t operating as intended,” auditors reported.
An Alabaster, Ala.-based contractor, Document and Packaging Brokers, also known as Docupak, ran the program for the Pentagon. For more than a decade, the company has handled recruiting programs and other promotions for the Guard and Reserve, under contracts totaling $1.3 billion. Docupak received a $345 “administration fee” for each recruit who enlisted under the bounty program.
Auditors found that the company did not report all instances of “potential fraud or collusion” listed in the firm’s internal records. Company officials referred 25 recruiting assistants to Pentagon criminal investigators, even though Docupak had fired 245 for such conduct, the briefing document states.
Docupak President Philip Crane said his company officials reported to Pentagon investigators the wrongdoing that they felt needed to be addressed. He said some of those reports led to criminal prosecutions.
He said the company had a “very thorough risk-mitigation program” that checked enlistee identities and payments against National Guard databases.
“We have been as transparent as we possibly can,” Crane said.
One case of fraud involved Thomas Kaszas, a recruiting sergeant for the Georgia Army National Guard. As a recruiter, Kaszas was not eligible to receive any bounties, but he set up a bank account with a recruiting assistant at the First Bank of Georgia, according to a federal indictment.
Over nine months in 2007, Kaszas’s partner claimed credit for more than a dozen new recruits and deposited $24,000 in bounties into the joint account. Virtually all of it was later wired to another bank account controlled by Kaszas, the indictment stated. Kaszas pleaded guilty in September 2010 to five counts of wire fraud and was ordered to repay $26,000 to Docupak.