California National Guard fraud report sparks probe | The Sacramento Bee

The federal agency that oversees funding for the California National Guard said Tuesday it has launched an examination of its nationwide procedures for detecting fraud in recruiting-incentive payments.

The move was in response to a Bee report Sunday that the Guard gave as much as $100 million to soldiers who didn't qualify for the incentives, according to federal auditor documents. The program is the subject of a criminal investigation led by the U.S. Department of Justice.

"We take this very seriously, we are going to take a look at the broader processes across the entire National Guard," said Jack Harrison, spokesman for the National Guard Bureau, which oversees federal funds given to state Guard organizations.

The Guard is a state agency funded primarily by federal taxpayers.

The commanding officer of the National Guard Bureau, Gen. Craig R. McKinley, assigned "his closest advisers," Harrison said, "to take a look at the policies and procedures surrounding this (incentives) program." He declined to comment about the California allegations due to the ongoing criminal investigation.

The Bee report, based in part on a review of thousands of documents created or discovered by federal auditors, described allegations that incentive funds were dispensed like a slush fund to hundreds of soldiers – many of them officers, including Guard recruiters – with fabricated paperwork, scant supervision and little regard for the law.

Gov. Arnold Schwarzenegger's office referred questions to the California National Guard spokesman, Maj. Thomas Keegan, who said only that "we're fully cooperating with the U.S. attorney on the active investigation."

On Tuesday, state and federal lawmakers expressed outrage about the revelations and support for corrective actions.

"These allegations are shocking and I support a swift and thorough investigation by federal officials," said Sen. Barbara Boxer, D-Calif.

Nearly all funds to repay service members' student loans, Guard documents show, were drawn from money designated for combat veterans. Yet such benefits often went to Guard members who had not served in a war zone.

If unqualified soldiers "are enriching themselves" at the expense of combat vets, said state Sen. Jeff Denham, "heaven help them."

The Atwater Republican, who chairs the Veterans Affairs Committee, said he hoped that "prosecutions of these actions are swift and harsh. If even half of what the auditor says is true, the penalties should be severe."

Denham said he was conferring with Senate leaders and sorting through problems of dual state and federal jurisdiction.

Paul Cook, R-Yucca Valley, chairman of the Assembly Committee on Veterans Affairs, said he was discussing a possible public hearing with Assembly Speaker John A. Peréz's office.

"It's not just the dollars placed in peril," Cook said through a spokesman. "There are ramifications on morale, and concerning recruitment."

The Bee report cited documents showing that improper payments appeared to occur from 2001 until late last year, even though Guard officials up the chain of command had warnings about the problems dating to 2005.

In a statement, U.S. Rep. Loretta Sanchez, D-Anaheim, a member of the House Armed Services Committee, said the public has a right to learn how the apparent problems went on so long.

She called for "a further investigation into how fraud of this magnitude could have escaped notice."

Rep. Vic Snyder, D-Ark., who chairs the oversight subcommittee for the Armed Services Committee, called for Congress to examine Guard systems designed to detect such problems.

"If the investigation turns out that the basic thrust of the (Bee) story is correct, that's very concerning," he said. "Any time you have a story in which the word 'grifters' is used in the context of the military, it's heartbreaking," he said, referring to a quote from an auditor in the Sunday story.

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