“It is disappointing that people who wore the uniform saw a way to get one over on the government and they did,” said Sen. Claire McCaskill (D-Mo.), head of a contracting panel that will hold a hearing on the case Tuesday morning. (Julie Scheidegger/AP)

Army criminal investigators are probing allegations that hundreds of National Guard recruiters and others with ties to the military abused an enlistment referral program established at the height of the Iraq war, officials disclosed Monday, describing a massive racket that appears to have gone undetected for years.

While cases of wartime contracting fraud from Iraq and Afghanistan are legion, the recruitment bonus scandal appears to mark the first instance of systemic fraud by military personnel committed at home.

Army criminal investigators are probing the actions of more than 1,200 individuals who collected suspect payouts totaling more than $29 million, according to officials who were briefed on the preliminary findings of the investigation and would discuss them only on the condition of anonymity. More than 200 officers are suspected of involvement, including two generals and dozens of colonels.

The alleged fraud drew in recruiters, soldiers and civilians with ties to the military who submitted, or profited from, false referrals registered on a Web site run by a marketing firm the Army hired to run the program. Suspects often obtained the names of people who had enlisted from recruiters, claimed them as their referrals, and then kicked back some of the bonus money to the recruiters.

The abuse is feared to be so widespread that Army investigators do not expect to conclude all audits and investigations before the fall of 2016.

“It is disappointing that people who wore the uniform saw a way to get one over on the government and they did,” said Sen. Claire McCaskill (D-Mo.), who chairs a contracting panel that will hold a hearing on the case Tuesday morning. “It does such a disservice to the majority of people who have served honorably.”

The case stems from a recruitment incentive system called the Recruiting Assistance Program, which the Army National Guard launched in 2005 when the Pentagon was struggling to meet its recruitment goals amid two wars and a strong economy.

Under the program, National Guard soldiers who signed up to be “recruiting assistants” could earn between $2,000 to $7,500 for each person they got to enlist. The program was open to guardsmen who were not on active duty, retirees, relatives and some other civilians. The informal recruiters were paid as contractors of Docupak, a company the Army hired to run the program. A representative of the company did not respond to a phone call seeking comment on Monday.

The Guard promoted the program as an easy way to make money, urging prospective recruitment assistants in a flier to sign up online in “two easy steps” that took just minutes.

Formal Army recruiters were barred from collecting the referral bonus, but many soon realized they could profit from the program undetected, according to documents and officials familiar with the investigation, which was first reported by USA Today.

The bonuses helped the Army meet its recruitment goals during a crucial period, paying out more than $300 million for roughly 130,000 enlistees.

The first sign of trouble came in 2007 when officials at Docupak, a marketing firm based in Alabaster, Ala., reported a few cases of suspected fraud to the Army’s Criminal Investigation Command. Army officials substantiated those suspicions and over the years became concerned that the lapses were widespread. In 2011, the Army’s audit agency launched an audit of the entire program.

The Army terminated the program in February 2012 and assigned its main investigative agencies to carry out a wholesale review “to determine the scope of the problem and identify those personnel potentially involved,” Army spokesman George Wright said in an e-mailed statement.

Federal prosecutors have indicted several former recruiters and soldiers accused of abusing the referral bonus program. The most brazen case to have come to light yet involved Spec. Xavier Aves, 42, of San Antonio, who was sentenced last summer to serve 57 months in prison after pleading guilty to abusing the program. Prosecutors said Aves and others paid Army recruiters for the names and Social Security numbers of people who had recently enlisted and claimed them as referrals, fraudulently obtaining $244,000 in bonuses.