By Todd Beamon
Sen. Kelly Ayotte pressed Army officials on Tuesday on why a massive scheme involving a National Guard recruiting program that has been estimated to cost taxpayers at least $29 million was not spotted earlier.
“Where was the oversight of this?” the New Hampshire Republican asked at meeting of a Senate Homeland Security oversight subcommittee charged with investigating the scandal. “How were we … conducting oversight of these contractors?”
The top Army officials disclosed the massive fraud to legislators on Tuesday. Hundreds of soldiers and civilians are under criminal investigation in the scheme, which involved taking fraudulent payments and kickbacks from a National Guard recruiting program.
The fraud cost the U.S. at least $29 million and possibly tens of millions dollars more, the officials said.
The investigation involves as many as 200 officers, including two two-star generals and 18 colonels, who are suspected of participating in schemes to take advantage of the Army National Guard’s Recruiting Assistance Program, a referral program that paid out cash bonuses of $2,000 to $7,500 per recruit.
None of those top National Guard officers has been been imprisoned, lost benefits or resigned for fraud, said Maj. Gen. David Quantock, head of the Army’s Criminal Investigation and Corrections commands. So far, however, 16 people have been convicted and jailed in the scandal.
Overall, more than 1,200 people — including civilians with military ties and men and women in uniform — are being examined by at least 60 full-time investigators. The program began in 2005 to boost flagging enlistment during the Iraq War.
Only nine cases were investigated from 2007 to 2009, Quantock said. It wasn’t until 2010, when 10 cases indicated “that we have a major problem here,” USA Today reports.
“That’s a long time when you’ve got fraud going on,” Ayotte said.
Sen. Claire McCaskill of Missouri, the subcommittee’s Democratic chairwoman, called the inquiry “one of the largest that the Army has ever conducted, both in terms of the sheer volume of fraud and the number of participants.”
“These are criminals that have dishonored the uniform we are all so proud of,” she said.
Lt. Gen. William Grisoli, director of Army Staff, told the panel of a “fundamental breakdown” in establishing and executing the program, which had relied on contractors.
Officials told legislators that the fraud was believed to be so widespread that they may not complete their inquiry until as late as 2016 because of the number of potential cases.
The Recruiting Assistance Program was created to increase enlistment when wars in Iraq and Afghanistan had left the military below recruitment goals, the officials told the subcommittee. The program offered cash bonuses to civilian recruiting assistants for referrals.
Uniformed recruiters were supposedly prohibited from receiving the cash payments. But investigators have since found recruiters worked around that prohibition by myriad means, and for several years did so virtually undetected.
In addition, some recruiting assistants eligible for the payments were coerced into splitting their bonuses with military recruiters. Other military recruiters did not inform civilian assistants about the bonuses but registered them for the program.
The military recruiters would then substitute their own bank information for that of the civilian assistants.
In one case alone, Quantock told legislators, five people split about $1 million. Investigators have clearly identified $29 million in fraudulent bonus payments and were investigating another $66 million in potential cases.
Officials said the program brought in more recruits, so much so, that they were furious when allegations of fraud threatened that success.
Auditors shut down the program in 2012 after watchdogs found evidence of widespread abuse.
In all, the Army National Guard paid upward of $300 million for roughly 130,000 enlistments, the officials said.
Besides Grisoli and Quantock, Ayotte also questioned Joseph Bentz, the Army’s chief auditor, as to why the fraud was not detected sooner.
“When the money starts going out the door a lot faster, how was it within the command structure that we didn’t pick up on that as a raw indicator, right there, that something wasn’t quite right — as oversight within the system?” she asked, according to a transcript provided by her office.
Bentz acknowledged that “oversight of the contract was insufficient.”
“The contracting officers’ representatives that were responsible for that oversight — they believed that the contractor was responsible for the oversight and control of the program,” he added.
“They thought the contractor [was responsible for oversight and] they didn’t realize that … we had to oversee the program?” Ayotte asked.
“Correct,” Bentz responded.
Grisoli, in his written remarks to the subcommittee, acknowledged that, “funds were lost due to systematic weaknesses, a general breakdown in sound business processes and wrongdoing.”
Ayotte then asked: “How can we have confidence that the Army doesn’t have similar problems in other programs when we’re talking about systematic problems?”
He noted that the Army was investigating whether similar problems existed in other programs.
“The way we prevent something like this happening in the future is we have what we call program management reviews,” Grisoli said. “We had our procurement executive do a program management review on the overall contracting system of the National Guard Bureau.
“We are working very closely with them to implement that now,” he added. “They’ve provided us a corrective action plan. We have accepted that plan and now they are implementing that plan.”
The senator then returned to questioning Quantock about the lax oversight.
“Why is it [that] … when the money started going out the door on a faster rate and that wasn’t flagged … , why wasn’t it that somebody before it got to you all asked the question, ‘Well, why is this money going out the door so much faster than we thought it would last us?'”
He acknowledged that the internal controls regarding the program “and properly providing that oversight to track that … that was another weak area.”
“So, someone just wasn’t tracking that … or was it not flagged?” Ayotte asked.
Quantock said that the Army’s contracting officer’s representative examined the “burn rates” — meaning how quickly the funds were being paid out — but that “they just did not call flags based on what they saw … on the burn rates.”
“That didn’t flag for them?” Ayotte asked.
“That didn’t flag,” Quantock responded.
The Associated Press contributed to this report.
- Navy Rocked by Scandal Involving Prostitutes, Payoffs
- Allen West: Obama NSA Speech Was Designed to Avoid Blame
© 2014 Newsmax. All rights reserved.