The Complex

Pentagon Investigates Thousands of Soldiers in Massive Fraud Case

When a retired Army colonel and an enlisted soldier from Albuquerque, N.M., were charged last year with defrauding the National Guard Bureau out of about $12,000, the case drew little public attention. But it's now become clear that the two men are among the roughly 800 soldiers accused of bilking American taxpayers out of tens of millions of dollars in what a U.S. senator is calling "one of the biggest fraud investigations in Army history."

The wide-ranging criminal probe centers around an Army recruiting program that had been designed to help the Pentagon find new soldiers during some of the bloodiest days of the Iraq and Afghanistan wars. The program went off the rails, investigators believe, after hundreds of soldiers engaged in a kickback scheme that allowed them to potentially embezzle huge quantities of money without anyone in the government noticing. In one case, a single soldier may have collected as much as $275,000 for making "referrals" to help the Army meet its recruiting goals, according to USA Today, which first reported the story Monday. 

The military's failure to spot, or stop, the wrongdoing will be the focus of what is expected to be a highly contentious hearing Tuesday before the Senate's Subcommittee on Financial and Contracting Oversight. The committee's chairwoman, Sen. Claire McCaskill, D-Mo., has summoned several of the National Guard officials who were in power at the time the alleged wrongdoing was taking place.

The numbers of soldiers and money involved are staggering.

An Army internal audit has discovered that 1,200 recruiters had received payments that were potentially fraudulent. Another 2,000 recruiting assistants had received payments that were suspicious. More than 200 officers remain under investigation, according to McCaskill's office. There are currently 555 active investigations involving 840 people. 

Trouble in the recruiting program has been acknowledged previously, but the full scope and the results of the service's own internal investigation of the program have not previously been disclosed. In the past, Army officials overseeing the program and a contractor who worked with the service on it, Docupak, insisted that accounts of potential fraud in it were greatly exaggerated, congressional officials said in a memo distributed to the media Monday. About 200 agents with the service's Criminal Investigative Command are now examining the program's records, and will review the actions of more than 106,000 people who received money through the program. That work will likely take until 2016, officials said.

A Defense Department official acknowledged that a lack of proper military oversight contributed to the problems. 

"I think it was human greed, and I think it's the cascading effects of contractors' lack of supervision, as well as the Defense Department's lack of supervision," the official told Foreign Policy, speaking on condition of anonymity because of the sensitive nature of the probe.

The scandal comes amid a new wave of scrutiny of senior officers across the military as well as a cheating and drug scandal within the Air Force's nuclear officer corps. The new probe is different because it involves hundreds of rank-and-file troops, including relatively low-ranking officers and enlisted personnel. Military experts have long said the military is a reflection of society and "bad apples" exist in every organization, but theburgeoning scandal threatens to tarnish the reputation of the Army recruiters who in many communities are the public face of the military. 

The Army National Guard Recruiting Assistance Program, the initiative at the heart of the new probe, was created in 2005 to find new recruits during some of the most challenging periods of the Iraq and Afghan wars. Soldiers received between $2,000 and $7,500 per referral. The program was deemed a success because it helped to bolster recruiting numbers despite heavy combat in the two warzones and deep public doubts about the two conflicts.

The program was wildly successful in terms of garnering recruits - and wildly expensive. The National Guard paid out more than $300 million for just over 130,000 enlistments, and began meeting its recruiting goals even as sectarian violence continued to roil Iraq. Almost 40 percent of all recruits in the guard enlisted through G-RAP while it existed, congressional officials said. The Army's active and reserve forces, meanwhile, started similar programs in 2007 and 2008. 

"The program worked," the official told Foreign Policy. "It definitely pulled up our numbers and we've never had a problem since."

But evidence of fraud later emerged as recruiters, who are forbidden from receiving payments under such a program, were found to have gotten money anyway. It was suspended in 2012. Officials suspect that recruiters, who already receive incentives based on the numbers of would-be troops they bring in, may have grown resentful as they saw non-recruiters receive thousands of dollars for serving as "recruiter assistants." Schemes formed in which soldiers assigned to recruiting duty essentially double-dipped, either posing as average soldiers or using others' names to fraudulently collect the millions of dollars of taxpayer money out of the program. Most of the soldiers under investigation are recruiters.

In one example, the Justice Department announced in December that it had charged retired Col. Isaac Alvarado, 74, of Albuquerque, N.M., and Sgt. 1st Class Travis Nau, 40, with a variety of crimes in connection with the program. Alvarado was charged with one count of conspiracy to commit wire fraud, four counts of wire fraud, and four counts of aggravated theft identity in an indictment that was filed in the U.S. District Court in New Mexico. Nau, also of Albuquerque, was charged with one count of conspiracy to commit wire fraud, three counts of wire fraud, and three counts of aggravated theft identity.

From about November 2007 to February 2012, Alvarado served a recruiting assistant, while Nau, Alvarado's son-in-law, worked as a recruiter for the guard. Nau allegedly provided Alvarado with the names and Social Security numbers of potential soldiers, allowing Alvarado to cash in if they enlisted, authorities said. Nau also advised at least two potential soldiers to lie in their paperwork to say that Alvarado had assisted in their recruitment, authorities said. In total, the retired colonel is accused of collecting some $12,000 in fraudulent bonuses. 

In another case, Fabian Barrera, 46, an Army National Guard captain in Texas, stands accused of personally obtaining more than $185,000 in fraudulent recruiting bonuses.

At least 25 additional personnel were charged in District Court in southern Texas last summer with similar acts, authorities there announced in August. Those soldiers, based in the San Antonio and Houston areas, face charges ranging from wire fraud, to identity theft, to witness tampering. At least 11 had pleaded guilty as of last summer. 

The hearing Tuesday is expected to have two panels, one of active-duty Army officials and one of the National Guard officials who helped run the service at the time of the alleged wrongdoing.

The witnesses will include Clyde Vaughn, a retired Army three-star general and former director of the Army National Guard who was in office during part of the time the program was in effect Michael Jones, a retired colonel who was the division chief for the Army National Guard Strength Maintenance Division, which oversaw the program; Philip Crane, president of Docupak, the company that managed the program; and Kay Hensen, a retired lieutenant colonel who served as the corporate compliance officer for Docupak with the National Guard Bureau.

Photo by Spc. Anita VanderMolen / Army

National Security

Exclusive: New Investigator Probes Alleged Marine Corps Cover-up

An investigation into whether senior Marine Corps officers attempted to cover up their own misconduct while prosecuting war crimes in Afghanistan has suddenly roared back to life, with a top civilian official now looking into whether the Marine brass unlawfully concealed crucial evidence in the cases, Foreign Policy has learned.

The investigation stems from the Marine Corps' handling of legal cases tied to an embarrassing, widely distributed video depicting Marine snipers urinating on dead Taliban insurgents in Afghanistan on July 27, 2011. It was posted online in January 2012, creating an international uproar and drawing condemnations from then-Secretary of State Hillary Clinton, then-Defense Secretary Leon Panetta, and other top U.S. officials. Three snipers who appeared in the video pleaded guilty to a variety of charges, including wrongful possession of unauthorized photos of casualties. At least five other Marines received non-judicial punishments.

While the criminal cases played out, top Marine officials abruptly classified the videos and other information collected despite protestations that it wasn't legal to do so from classification experts in the military. Marine officials argued that releasing the videos and other information in the case could lead to new attacks American troops in Afghanistan.

That move outraged Maj. James Weirick, a Marine lawyer at Quantico, VA, who alleged that Gen. James Amos -- the top officer in the Marine Corps and a member of the Joint Chiefs - or others acting on his behalf deliberately and unlawfully meddled in the prosecution of the Marines caught in the video to ensure that they received stiff punishments. Weirick also accused senior Marine Corps leadership of unlawfully classifying evidence in the case in an attempt to cover up their involvement in the case.

Weirick's whistle-blower complaint received widespread media coverage last year. It did not, however, appear to get much traction with the Defense Department's inspector general, and it seemed like Amos and other top Marines were out of the woods. In the last few days, however, Weirick's charges have received new attention from a powerful civilian official, John Fitzgerald, the director of the U.S. Information Security Oversight Office in Washington. Fitzgerald's interest in the case, which hasn't previously been reported, means that the probe is far from complete and could yet ensnare top Marine brass.

Weirick, according to letters obtained by FP, met with Fitzgerald on Jan. 22. Fitzgerald and his office aren't widely known among the general public, but he is the top authority on whether evidence like the urination videos should have been classified. In the letter, Weirick thanked Fitzpatrick for the meeting and urged him to hold Amos and other Marine officials accountable for their actions.

Weirick, in his letter to Fitzgerald, compared the handling of the Afghanistan urination videos to the way the military responded when the gossip Web site TMZ obtained photographs that appeared to depict Marines burning insurgent corpses in Fallujah, Iraq, in 2004.

TMZ published a handful of those images on Jan. 15, and the Pentagon promised to investigate. It did not, however, appear to move to classify any of the images. In his letter, Weirick pointed out that the Marines did classify the Afghanistan urination videos. The core of Weirick's complaint is that the Marines took that step to cover up their own unlawful meddling in the Afghanistan case.

"According to the TMZ story, the photographs were ‘turned over to the Pentagon' before publication," Weirick wrote. "An inquiry by your office into the decision to classify the burning photos, or the decision that this material did not qualify for classification, should provide some insight into the proprietary of the previous decision to classify the urination videos."

In a follow-up letter sent Friday to Fitzgerald, U.S. Rep. Walter Jones, R-N.C., expressed dismay at the actions of senior Marine Corps leaders.

"I have been working with Maj. Weirick on some of these cases and I can tell you that this corruption, at the highest level of the USMC, is unlike anything I have witnessed in my 20 years in Congress," Jones wrote in his letter, obtained by FP. "This matter has languished with the Department of Navy and the Department of Defense for six months, so I appreciate your attention to the issue. I am confident you will come to the conclusion that the wrongful classification did take place, as well as several attempts to cover it up by those in the commandant's office."

The involvement of Amos and other senior Marine officials in the Afghanistan cases has been under the microscope ever since Weirick, a Marine Corps attorney who had worked on them, filed an explosive complaint with the Defense Department inspector general in March 2012. Among his accusations, Weirick alleged in his IG complaint that Amos' top legal advisers pushed to classify evidence gathered in the investigation to "prevent or delay the disclosure of information before court-martial, to conceal violations of law, and prevent embarrassment to the United States Marine Corps."

The whistle-blower also filed a report around the same time with the Department of Navy Central Adjudication Facility, an arm of the Naval Criminal Investigative Service that determines eligibility for security clearances. Weirick asked the agency to determine whether three of the commandant's lawyers -- Col. Joseph Bowe and civilians Robert Hogue and Peter Delorier -- deserved to keep their security clearances for defying the recommendations of Marine attorneys overseeing the case and four classification experts working for the Corps.

It is this second report to NCIS' classification authorities that appears to have made its way to Fitzgerald. As Marine Corps Times first reported in May, Weirick alleged that the officer overseeing the urination video cases, Lt. Gen. Richard Mills, was directed to classify the urination video on Feb. 27, 2012, along with several videos depicting Marine malfeasance in Afghanistan the same day. Weirick and other attorneys working for Mills balked, saying the general lacked the proper authority to do so. Weirick alleged that another senior officer working at the Pentagon, Lt. Gen. Richard Tryon, did so instead, signing a memorandum classifying the videos and investigation, even though he wasn't considered a classification authority, either.

Weirick alleges that he went to U.S. Central Command - which oversees operations in Afghanistan and across the Middle East - afterward to ask for Tryon's classification decision to be reviewed. Army Maj. Gen. Karl Horst, CENTCOM's chief of staff, reviewed the investigation and declassified it in June 2012, providing legal teams representing the Marines facing courts-martial with information they needed to defend them.

"This was, in no way, an unintentional misclassification or simple mistake," Weirick alleged in his report to NCIS' classification authorities. "This was a coordinated effort to circumvent the proper classification procedures.... These individuals purposely avoided any input or advice from security personnel in order to wrongfully classify this information."

Marine Corps officials maintain that the videos were classified due to concerns that they would lead to violence against U.S. service members, and that the prosecution of Marines involved was done fairly and impartially. A Marine spokesman, Col. Chris Hughes, reiterated those points on Friday to FP, saying the accidental burning of the Quran, Islam's holy book, by deployed U.S. soldiers around the same time had heightened sensitivities and led to violent protests in Afghanistan.

"The genuine concern was that these products would be used to incite violence against U.S. soldiers and Marines and other service members," Hughes told FP.

Hughes declined to comment on Jones' accusations, but said the Marine Corps considers the congressman a friend of the service.

Weirick declined to comment on Friday. However, the classification issue may be the whistle-blower's last, best chance for vindication. His allegations had three major components: He said top Marine officials had unlawfully meddled in the cases, illegally classified information to cover up their actions, and apparently showed favoritism to one officer, then-Maj. James B. Conway, whose father, James T. Conway, retired as Amos' predecessor in October 2010.

As FP reported in November, the IG found no wrongdoing in regard to the younger Conway's situation, but declined to look into the other two parts of the major's accusations. The allegations that "legal advisers to the Commandant...sought to classify evidence to delay disclosure in a court-martial, conceal violations of law, and prevent embarrassment to the Marine Corps ... is not under investigation by this office," according to a July 23 letter sent from the inspector general's office sent to Congressman Jones, who has shown an interest in the case for months.

A spokeswoman for the IG's office, Bridget Serchak, declined to comment on the issue at the time. That left unanswered why the IG took a pass on examining several other aspects of Weirick's complaint, including the revelation last summer that Amos removed the first three-star general he put in charge of the cases, Lt. Gen. Thomas Waldhauser, after the two men disagreed on how severely the Marines involved in the video should punished.

In a signed declaration first reported by Marine Corps Times, Waldhauser said last summer that he was removed by Amos in February 2012 as the convening authority in the cases after Amos said he wanted the Marines involved "crushed" and tossed from the Marine Corps. Waldhauser favored a lighter administrative punishment for some of the Marines that likely would have led to a demotion in rank, but allowed them to stay in the service. Lawyers for the Marines who faced charges in the cases said the commandant's actions amounted to unlawful command influence that made the legal proceedings unfair.

ISOO doc by Dan Lamothe



Jones Letter by Dan Lamothe

Photo by Sgt. Mallory S. VanderSchans/ Marine Corps