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National Guard recruiting fraud could top $50 million, top Army investigator says

Larry Downing / Reuters file

U.S. Sen. Claire McCaskill (D-Mo).

Millions of dollars worth of fraud uncovered in a National Guard recruiting program in which recruiters secretly pocketed referral bonuses is likely far worse than was earlier known, an Army general told a Senate subcommittee on Tuesday.

An Army probe earlier had found that the incentive program to recruit National Guard soldiers was plagued with fraud — totaling at least $29 million.

But on Tuesday a Senate panel heard from Army investigators as well as others involved in the National Guard recruiting program who gave details of the misappropriations.

Maj. Gen. David Quantok, head of Army criminal investigations, told the panel that amount of defrauded federal money may reach $50 million when the investigation is complete.

He said $66 million dollars yet to be examined may also have been fraudulent, but added $50 million is a more reasonable estimate.

The program was designed to pay soldiers bonuses of from $2,000 to $7,500 for persuading recruits to sign up for the National Guard. While recruiters were not eligible for the bonus, they figured out a way to scam the system, Army officials said.

When a volunteer showed up, recruiters would allegedly list the person as a "referral."  The incentive money would then be paid to a third individual and the recruiters would share in the illegal gains, the officials said.

Quantok said the most one individual pocketed was "around $35,000 but I will tell you we have one case with 5 individuals that is nearly $1 million."

The panel chairwoman, Sen. Claire McCaskill, D-Mo., pointed to evidence that "one major general committed fraud, 18 full colonels, 11 lt. colonels and dozens of other mid-level and junior officers."

Quizzed by McCaskill, Quantok said he “could not say” whether any of them had been punished. He said to his knowledge none had gone to prison, lost benefits or been forced to resign.

Two retired National Guard officers, Col. Michael Jones  and Lt. Gen. Clyde Vaughn told senators that the program was highly successful and that the number of bad apples was low.  Of the 300,000 recruiters they say about 1.5 percent were involved in fraud.

McCaskill said the investigations into the program will continue.