A year-long federal criminal investigation into recruiting and retention incentive payments to California Army National Guard members yielded its first results recently when retired Master Sgt. Toni Jaffe pleaded guilty to filing false claims of $15.2 million. She faces up to five years in prison and could be responsible for full restitution of those funds.
That total is far from a complete accounting, according to Guard records and auditor statements. Bonuses and student loan repayments for service members unqualified for the benefits, or who otherwise received them improperly, could have been as high as $100 million, according to a Guard auditor who blew the whistle.
A Bee investigation, published in October, sparked a nationwide audit by federal authorities, which is still pending. The National Guard Bureau, which is conducting the review, did not respond to questions about when it would be completed.
Jaffe managed the Army Guard's incentive programs and processed most of about 32,000 payments now under review.
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The investigation continues, and other pleas or charges could emerge in coming weeks or months, according to Guard and law enforcement officials.
After the U.S. Department of Justice decides whether to charge other suspects, it will return records to the Guard, which will then make its own determinations about administrative penalties or military judicial action against any Guard members, said Adjutant General David S. Baldwin, who was appointed by Gov. Jerry Brown in April.
In the meantime, all pending bonus payments have been suspended until they can be verified as correct.
A new team of investigators – led by Col. David Shaw, who Baldwin said has civilian prosecutorial experience – will handle eventual recoupment. Shaw's group includes Sgts. Ray Douke and Cody Lathrop – incentive managers who replaced Jaffe – whom Baldwin praised for detecting the fraud.
The case of Maj. Jeffrey Nichols, a planning officer in the Guard's Sacramento headquarters, reflects the flavor of disputes that the group will face.
Guard documents showed that Nichols received $45,000 in student loan repayments in 2008 in violation of laws and military policies, as The Bee reported last year.
He was among the highest-ranking officers to get funds improperly and one with an extraordinary relationship to the recruiting process: Shortly after he got his benefits, he temporarily directed Guard incentives nationwide in a program operated by the National Guard Bureau, which provides federal funding and policy guidance.
Nichols recently complained, in an email to The Bee, that his career had been harmed unfairly by the scandal. "I was contacted, notified, and told I was qualified" for the loan repayments by Guard officials, he said, "and put faith in the process."
"I had no knowledge, understanding, or involvement whatsoever in this nightmare," Nichols added.
Baldwin described a three-step process adjudicating such claims.
If simple paperwork errors were made by service members who otherwise would have qualified for benefits, the Guard will assist them in filing correct documents.
Soldiers who received funds improperly – whether from confusion or having been misled by recruiters – would likely be forced to repay the government, although final decisions would be up to federal authorities. In such cases, they would be offered payment plans and other assistance to reduce personal hardship.
Soldiers who knowingly took money improperly or leaders who "didn't take any money but set policies in motion or created a command climate conducive to opportunistic behavior" could be penalized severely.
Under the Uniform Code of Military Justice, the Guard can try its members for "dereliction of duty or conduct unbecoming" as well as other possible crimes related to incentive fraud.
If warranted after appropriate due process, Baldwin added: "I have the authority to put people in jail."