New Details Emerge In Massive Army Financial Scandal

One of the largest fraud investigations in the Army’s history has grown even larger, with lawmakers releasing new evidence that a troubled Army National Guard recruiting program allowed hundreds of troops, including a two-star general and at least 18 colonels, to effectively steal as much as $66 million.

Senator Claire McCaskill (D-Mo.), who has been leading the congressional investigation into the National Guard program, repeatedly asked senior officials who had overseen the Army’s now-defunct Recruiting Assistance Program why the initiative hadn’t been designed with better anti-fraud measures. The program offered cash incentives to all troops who helped nudge other would-be soldiers to join the military. The Army’s actual recruiters weren’t eligible for the money, but an Army audit completed in 2012 concluded that disgruntled recruiters and other troops may have unlawfully cooked the books to collect tens, and in some cases, hundreds of thousands of dollars that they didn’t deserve.

"This is what kills me about this, you guys: This is, like, basic," a clearly exasperated McCaskill said at one point during Tuesday’s hearing in front of her subcommittee on financial and contracting oversight, her voice rising. "You just assumed whoever was typing [recruits’ information] in was telling the truth! And then nobody checked to see if they’re lying! You’re giving out millions of dollars, no questions asked!"

The hearing included two panels of officers: one comprising active-duty generals from the active-duty Army, and one including National Guard officials who previously oversaw the flawed recruiting program. Both groups promised to cooperate with the ongoing investigation, but the National Guard officials also defended the initiative, saying it propped up the force at a time when it was 20,000 soldiers short and strapped by not only war operations, but mobilizations at home to deal with catastrophes like Hurricane Katrina, which devastated a broad swath of the southeastern United States in 2005.

Suspicions about fraud in the National Guard program have swirled around it for years, but the Army always downplayed those concerns and said it had been properly overseen. Their confidence was misplaced: the Army’s Criminal Investigative Service has now initiated 559 investigations into 1,219 people who have skimmed $29 million through the initiative, officials disclosed for the first time Monday. Maj. Gen. David Quantock, the head of Army CID, told Congress on Tuesday that he believes that figure could grow to between $50 million and $66 million as CID agents continue to unravel cases that in some cases involve events that took place years earlier.

That means some soldiers who broke the law may avoid prosecution because the statute of limitations for their crimes will have run out. Other administrative forms of punishment may be possible in those situations, such as reductions in rank, which can affect pensions.

The Guard’s version of the program was commonly known as G-RAP, and remained in place until 2012. It total, it cost $408.7 million, Lt. Gen. William Grisoli, director of Army staff, told McCaskill’s subcommittee on Tuesday. The Army Reserve and active-duty force also used similar programs for shorter periods of time, spending $42.6 million and $7.9 million, respectively.

The program worked by giving soldiers between $2,000 and $7,500 for getting others to meet with recruiters and join the Guard. It has been widely hailed as a success over the years by Army officials, who noted that the Guard was about 20,000 short of its authorized 350,000-man size in 2005 but met its numbers after the program was put in place. G-RAP was canceled in 2012 by Army Secretary John McHugh, who also quietly called at the time for internal reviews because of the fraud allegations.

Lt. Gen. Clyde Vaughn (ret.), who commanded the Army National Guard from June 2005 to June 2009, was among the officials who defended the incentive program on Tuesday, saying its success in finding those additional recruits should not be overlooked. He pushed back against McCaskill’s allegation that he and his staff didn’t do enough to oversee the money, saying he regularly urged the general officers in charge of the National Guard in each state and territory to watch out for fraud. Those other officers were potentially at fault, he implied, for failing to keep a closer eye on the soldiers under their individual commands.

"I told them, ‘We have to catch the first peckerwoods who get out here and mess this thing up. And, we have to prosecute them quickly,’" Vaughn told the subcommittee on Tuesday, using a surprisingly colorful military epithet. "And I did that 18 months in a row."

But McCaskill zeroed in on the oversight issue again. Merely telling the commanders of National Guard branches in each state to watch for fraud isn’t the same as making sure there’s a formalized process in place to catch it, she said. McCaskill added that the National Guard officials overseeing G-RAP and the contractor assisting them, Docupak, should have made sure the money was being spent appropriately.

"What worries me a little bit," McCaskill said, "is that it reminds me what I heard around contracting in Iraq from the generals: ‘Not my problem. Not my command. Not my issue.’"