WASHINGTON — More than 800 soldiers are under criminal investigation for gaming a National Guard program that paid hundreds of millions in bonuses to soldiers who persuaded friends to sign up during the darkest years of the wars in Iraq and Afghanistan, USA TODAY has learned.
Fraudulent payments total in the "tens of millions," with one soldier allegedly pocketing $275,000 in illegal kickbacks, according to documents obtained by USA TODAY. At least four others made more than $100,000 each.
"This is discouraging and depressing," Sen. Claire McCaskill, D-Mo., said in an interview. "Clearly, we're talking about one of the largest criminal investigations in the history of the Army."
One scheme involved two recruiters who forced a subordinate into registering as a recruiting assistant, according to a congressional memo on the program. The recruiters gave the assistant all the names of the recruits who walked into their office, and the recruiters split the bonuses with the assistant. Other recruiters registered an unwitting person as a recruiting assistant, then substituted their own bank account for direct deposit of the fraudulent bonuses.
McCaskill has scheduled a hearing Tuesday on the scandal before a panel she chairs on financial and contractor oversight. She has called top Army officials to testify.
"No one is more outraged about this than the leadership of the United States Army," Army spokesman George Wright said. "After internal Army investigations identified instances of fraud in Recruiting Assistance Programs, the Secretary of the Army immediately terminated those programs and their funding in February 2012."
Violations discovered by Army investigations, Wright said, will be handled through criminal, military and civil courts.
The Army National Guard launched the Recruiting Assistance Program in 2005 to bolster its ranks, which had thinned during the wars. It was later expanded to the the Army Reserve and active-duty Army. In essence, it paid soldiers for referrals of recruits. After audits turned up evidence of potential fraud, the program was canceled in 2012.
Soldiers serving as recruiters were barred from receiving payments, although there were few measures to prevent that from happening. Cash in payments of $2,000 to $7,500 was deposited through direct deposit into the participating soldier's bank account.
An Army audit found that 1,200 recruiters had received payments that were potentially fraudulent, and another 2,000 recruiting assistants had received questionable payments. More than 200 officers remain under investigation, McCaskill said. As of January, there were 555 active investigations involving 840 people, she said.
In all, the Guard paid more than $300 million for more than 130,000 enlistments. Bonus payments went to 106,364. The Army estimates it will take until 2016 to complete their investigation. Those under scrutiny range from enlisted soldiers to two general officers. The most senior officer is a major general.
"Frankly, a halfway sophisticated high school student could have seen ability to commit fraud here," McCaskill said.
McCaskill has also called on officials from Document and Packaging Broker Inc., the contractor who ran the program for the Army to testify. In 2007, the contractor told the Army about cases of potential fraud, congressional sources say.
The entire program, she said, may have broken federal law from the start. Congress limited the bonuses that could be paid for potential recruits, limits that were disregarded in this case.
"This is just a mess from top to bottom," McCaskill said.
The incentive program helped arrest decline in Guard ranks. In 2005, the National Guard fell 20 percent short of its recruitment goal and was 20,000 soldiers below its overall target of 350,000, Its commander labeled the Guard a "hollow" force. Bonuses and relaxed standards for recruits helped fill the Guard's ranks to 366,880 soldiers, beyond the the total authorized by Congress.