Legislators question National Guard officials in Sacramento on fraud allegations

State legislators questioned top officers of the California National Guard on Thursday about allegations of fraud reported by The Bee last month, involving up to $100 million in student loan repayments and cash bonuses dispensed as recruitment incentives.

"We are committed to getting this right," the state Guard's top officer, Brig. Gen. Mary J. Kight, said at a joint oversight hearing of the Senate and Assembly veterans affairs committees.

Since the fraud allegations came to light the Guard has improved the incentives system, assisted federal auditors and cooperated with criminal investigators, Kight said, adding: "Those who may have abused the system (will be) made to account for their actions."

Still, some legislators expressed frustration with the response.

"I am not being given the level of security I need that we have fixed the program of the past and that the money we are prioritizing as a state is going to be used properly," said Sen. Jeff Denham, a Merced Republican who chairs the Senate Veterans Affairs Committee.

The incentives program is designed to tempt new recruits and encourage others to commit to future service. The Bee reported that federal funds allegedly were paid illegally or improperly to hundreds of soldiers, many of them officers.

Guard officials alleged in interviews or internal documents obtained by The Bee that incentives were frequently awarded based on false or absent paperwork, with little regard for the law. For years, documents show, senior Guard officials had reason to know about problems in the program and failed to intervene.

Millions of dollars targeted for combat veterans allegedly went to soldiers who had never been mobilized to a war zone. "If this occurred, it's absolutely wrong, insulting and unacceptable," Denham said.

The U.S. Dept. of Justice, IRS and other federal agencies are conducting a joint criminal investigation into California's incentives program. The legislative hearing was limited to examining systems for detecting fraud, to avoid interference with that investigation.

Earlier this week, Gen. Craig R. McKinley, chief of the National Guard Bureau, the federal agency that oversees funding for state Guard organizations, initiated a review of alleged mismanagement of incentive funds in several other states.

"No stone will be left unturned," McKinley said, "to ensure the Guard's personnel and processes abide by established legal and ethical standards."

Col. Robert Porter, who oversees incentive programs for the National Guard Bureau, said at the Sacramento hearing that substantial improvements had been made in Guard records systems, which he called "adequate to try to eliminate the potential for fraud."

He declined to describe the systems in detail out of concern that open discussion "deteriorates the effectiveness of those checks and balances."

In an interview after the hearing, Denham, who was elected to Congress this week representing California's 19th District, pledged to "demand a greater level of accountability" from Guard officials and to coordinate from Congress with state legislators.