Army investigates hundreds for recruiting fraud that cost taxpayers $29m

A 'peer-to-peer' recruiting program that rewarded referrals of new recruits brought in 150,000 soldiers to help fight the wars in Iraq and Afghanistan. A Senate panel held hearings into what went wrong.

In the depths of the US wars in Iraq and Afghanistan – when the US military needed soldiers the most – the Army decided to launch an “innovative” recruiting program.

The idea was to pay a commission, of sorts, for each new recruit that any given soldier referred – a “peer-to-peer” venture, as the Pentagon called it – and it seemed to work: In all, the Army brought in 150,000 new troops for America’s raging wars through the program at a cost of roughly $460 million.

Now, however, hundreds of Army recruiting officers, soldiers, and others are under investigation for racking up fraudulent claims that have cost US taxpayers at least $29 million.

Five soldiers in particular appeared to have racked up roughly $1 million from scams they allegedly hatched using the program as cover.

The program was the subject of a hearing Tuesday on Capitol Hill chaired by Sen. Claire McCaskill (D) of Missouri, who called the fraud investigation “one of the largest that the Army has ever conducted, both in terms of the sheer volume of fraud and the number of participants.”

Currently the Army’s Criminal Investigations Division (CID) has initiated 559 criminal investigations involving 1,219 Army officials and soldiers.

The Senate Homeland Security Subcommittee on Financial and Contracting Oversight called top Army brass to deliver their mea culpas Tuesday to lawmakers.

“I want you to know that the accusations of fraud and other potentially criminal actions surrounding the program are as disturbing to us as I know that it is to you,” Lt. Gen. William Grisoli, director of the Army Staff, said in testimony.

Lawmakers, however, didn’t sound so sure about that.

They seized on testimony from Maj. Gen. David Quantock, the Army’s chief law enforcement officer, who acknowledged that only nine cases were investigated between 2007 and 2009.

“That’s a long time when you’ve got fraud going on,” Sen. Kelly Ayotte (R) of New Hampshire observed.

Although the criminal investigations into fraud have involved hundreds of officials, including two major generals and 18 colonels, none have lost benefits or been forced to resign, Maj. Gen. Quantock added.

So what, exactly, went wrong, lawmakers wanted to know.

“In this case, funds were lost due to systematic weaknesses, a general breakdown in sound business processes, and wrongdoing – none of which we will tolerate,” said Lt. Gen. Grisoli, who assured lawmakers that the Pentagon would punish those who have broken the law.

According to written testimony submitted to the committee, one typical scam involved cooperation between recruiters and soldiers. In return for a kickback, a full-time recruiter (who wouldn't normally get any credit under the program since it's his job to recruit) would arrange for a soldier to earn a commission for recruiting a “buddy” the soldier didn’t even know. The two would then cash in on the reward for someone who was recruited outside the program.

As of last month, just over 100 people had been held accountable through courts or administrative action by the Army. It is slow-going, however. Senior Army officials estimate that even preliminary investigations into more than 12,000 recruiters and 94,000 recruiting assistants won’t be completed until at least the fall of 2016.

Striking a somewhat less optimistic note in light of the millions that have been siphoned off by soldiers who may soon walk away unscathed under statute of limitations restrictions, Grisoli added that the Army would also endeavor to “recoup what we can” of the millions of dollars still owed to the US Treasury.