The scheme was as simple as the system was porous.
Army National Guard soldiers signed up as assistants to help recruiters, getting paid a referral fee each time someone enlisted and another bonus if they went to basic training. If someone joined as an officer, the payment jumped as high as $8,500.
But the assistants didn’t wait that long. According to federal court documents, they simply entered the potential recruit’s name, date of birth and Social Security number into an online account, then told the company under contract with the National Guard that they had signed up another soldier when they had not. When the bonuses was wired to their bank account, they gave half the money to the recruiters, who were barred from getting payments themselves.
These fraudulent bounties were collected for seven years by recruiters and “recruiters assistants” for the Puerto Rico National Guard. The arrangement was laid out in federal indictments Thursday of 25 current and former guardsmen on charges of conspiracy to defraud the government, wire fraud and aggravated identity theft. Officials said close to $1 million was stolen.
The charges, in 14 separate indictments, are the largest at one time in a probe by the Justice Department and Army into a national scheme that went undetected for years. Investigators have said the fraud spread across several states could cost taxpayers up to $100 million.
A criminal enterprise in every state that military officials say included hundreds of officers and enlisted soldiers has led so far to 108 prosecutions in civilian courts; another 70 soldiers and officers have been fired, reprimanded or demoted, Army officials said Thursday.
The National Guard Recruiting Assistance Program, established at the height of the Iraq war to boost enlistment in the guard, was shut down by the Army in 2012 when the scale of the fraud was discovered. The indictments returned this week by a federal grand jury in Puerto Rico are unlikely to be the last, an Army official said.
“The Army is participating in a multi-agency task force to investigate and resolve fraudulent actions associated with the Recruiting Assistance Program and has had a sizable task force investigating other instances of fraud [in the program] for more than three years,” Lt. Col. Joe Buccino, an Army spokesman, said in an e-mail.
The recruiting program was open to guardsmen who were not on active duty, retirees, relatives and some other civilians. These informal recruiters were paid as contractors of Docupak, an Alabama-based company the Army hired to run the program. The bonuses helped the Army meet its recruitment goals during a crucial period when the military needed to boost its ranks, paying out more than $300 million for roughly 130,000 enlistees.
The first sign of trouble came in 2007 when officials at Docupak reported a few cases of suspected fraud to the Army’s Criminal Investigation Command. Army officials substantiated those suspicions. By 2011, the Army’s audit agency had begun investigating the entire program.
Those indicted this week in Puerto Rico were almost all active National Guard soldiers.
“It was the object of the conspiracy for defendants and their co-conspirators to unlawfully enrich themselves by stealing and obtaining …. program bonuses under the false and fraudulent pretense that they were responsible for referring and recruiting soldiers into the Puerto Rico National Guard, when in fact they did not refer or recruit these potential soldiers,” one of the indictments said.
At a Senate hearing last year, military investigators said the fraud came to at least $29 million and went as high as $100 million. As of last spring, civilian courts had ordered $1.4 million in restitution, official said, and the Army has identified approximately $3.9 million in actual fraudulent payments.