A government lawyer told a federal judge in Alexandria yesterday that "virtually 100 percent" of the personnel in certain Army units at Fort Meade have been told they must return expense money to the government and two cases have been referred to the Justice Department for criminal prosecution.
The comments by prosecutor Daniel Fromstein were the first official acknowledgement of a controversial investigation into alleged fraud by members of secret Army units established for covert operations after the humiliating Pentagon attempt to rescue American hostages in Iran in 1980.
The internal Army investigation, disclosed by The Washington Post last month, has been under way for more than two years and has centered on alleged financial irregularities by the units.
Some members of the units are protesting the assessments, saying that the nature of their assignments makes normal accounting impossible and that the Army had not provided for accounting methods that reflected their secret assignments.
Fromstein's comments came as he sought to dissuade U.S. District Judge Albert V. Bryan Jr. from granting requests by a high-ranking intelligence officer accused of criminal wrongdoing. The officer is accused of failing to account properly for expenses of a Northern Virginia front company he ran for the Army.
The prosecutor declined to elaborate on his remarks outside the courtroom, but Bryan said that, from the prosectors' statement about the extent of the problem, it constitutes "an alarming situation."
Fromstein said that units at the Maryland base, the home of the secretive National Security Agency, had been investigated "by a large number of individuals who have been auditing for a long time."
The financial investigation has acquired political overtones within the Defense Department as critics charge that it is being used by some senior officers to undermine the Army's clandestine capabilities.
How many people are in the units was not disclosed. The Army base houses part of Intelligence and Security Command, an organization for Army intelligence gathering, and the NSA, which specializes in electronic intelligence gathering.
The case before Bryan involves Lt. Col. Dale E. Duncan, who ran Business Service International, an Annandale firm that was a cover for some of the Army's covert operations. Duncan was charged last month with filing false claims to justify about $60,000 of the nearly $158,000 that he had been advanced by the service.
Duncan, who faces related court-martial charges, has denied the charges. Two other officers also face courts-martial as a result of the investigation. A master sergeant was acquitted last month after a court-martial on charges stemming from the investigation.
Bryan denied several motions by Duncan's lawyers yesterday, including one asking for dismissal of three of the seven counts. Attorney Thomas Buchanan argued there was no legal basis for the charges that Duncan filed false claims.
Duncan's trial is set for Feb. 10.