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Defense Dept. Hoping to Resolve Most of Bonus Repayment Cases by End of Month

An Army crew chief assigned to the South Carolina Army National Guard’s 59th Aviation Troop Command sits on the tail door of a CH-47 Chinook helicopter observing wildfire fighting efforts near Table Rock, S.C., on Nov. 24, 2016. (Army National Guard photo by Staff Sgt. Roberto Di Giovine)

WASHINGTON – The commander of the California National Guard told an angry House subcommittee last week that he had no choice but to force thousands of soldiers and veterans, many of whom served in Iraq and Afghanistan, to return illicitly distributed signing bonuses, a claim that was thoroughly dismissed by lawmakers.

“We betrayed the trust of these troops, and there’s no excuse for that,” Rep. Paul Cook (R-Calif.), a member of the House Armed Service Committee’s Subcommittee on Personnel, told Major General David S. Baldwin, the adjutant general of the California National Guard, who was subjected to a grilling after his testimony.

Rep. Jeff Denham (R-Calif.) joined Cook in condemning the collection effort, asserting it left a “big black mark on our Department of Defense’s record.”

Baldwin, appointed to his post by California Gov. Jerry Brown in 2011, acknowledged that the repayment program he ordered – since suspended by Defense Secretary Ashton Carter — resulted in “severe hardships for them and their families.”

About 9,700 guardsmen, beginning in 2004, received improper Army enlistment and reenlistment incentives, ranging from $15,000 to as much as $50,000, “through no fault of their own,” Baldwin said, adding he had little choice but to recoup the funds.

The California National Guard, Baldwin said, “does not have the authority to adjudicate erroneous or inappropriate bonuses, nor do we have the authority to forgive debt.”

The issue arose as a result of bonuses awarded to thousands of soldiers who enlisted or extended their service commitment during a time of war in Iraq and/or Afghanistan. Inaccuracies were discovered in a number of incentives contracts in 2010, launching an investigation that Baldwin said found “gross mismanagement and fraud.” The review identified thousands of bonuses and student loan repayments to potentially ineligible service members.

About 40 Guard personnel, including senior leaders and general officers, were punished as a result. The Guard also worked with the office of the California Attorney General and the U.S. Attorney to ensure that personnel who committed state and federal crimes were investigated and prosecuted.

Thus far only one individual, former Master Sgt. Toni Jaffe, who admitted submitting false and fictitious claims for incentive payments on behalf of fellow service members who she knew were not eligible to receive such payments, has been convicted and imprisoned as a result of the discovered fraud.

Baldwin told lawmakers his predecessor as adjutant general was dismissed in March 2011 and he was recalled from Afghanistan and appointed “with a mandate to fix the problems that allowed the incentives fraud to take place and implement measures to ensure it never happened again.” At the same time, the U.S. Army directed the California National Guard to audit more than 14,000 cases that were linked to the unethical management of the incentives program between 2004 and 2011.

As a result, Baldwin established the Soldier Incentives Assistance Center to conduct the audits and assist individual soldiers in using the federal adjudication process to resolve their incentive cases. But the system, he said, proved “unnecessarily complex and resource intensive.” While hundreds had their debts forgiven or their records corrected to enable them to comply with the terms of their incentive contracts, thousands of others were left holding the bag.

The Department of Defense, in coordination with Congress, needs to install “a streamlined adjudication process that quickly distinguishes between those soldiers that received an inappropriate incentive through no fault of their own; and those soldiers who failed to meet the conditions of their contracts,” Baldwin told the subcommittee. “Those that deserve debt relief or repayment should get it quickly. Those that should be required to repay their bonuses should be made to do so.”

Under questioning, Baldwin admitted the Guard’s recapturing effort – which at times included wage garnishments, interest penalties and tax liens – carried a negative effect on relations between the service and the thousands of Guardsmen caught in the middle and facing financial hardship.

“I agree wholeheartedly that we do have a problem,” Baldwin said. “We’re going to have to reestablish trust with our soldiers and their families and with recruits.”

Peter Levine, currently performing the duties of undersecretary of Defense for personnel and readiness, who has been charged by Carter to create a streamlined appeals process, told subcommittee members that he intends to offer debt forgiveness to more than 8,000 of the Guard personnel who received the bonuses even though the review showed they should have been ineligible. He said debts reaching back more than 10 years totaling $10,000 or less held by lower-ranking enlisted personnel who didn’t realize the bonuses were improper can be “screened out.”

Under the scenario described by Levine, the cases can hopefully be reduced by 90 percent by the end of this month. Remaining cases will be reviewed by the Army Board for Correction of Military Records.

Levine testified that that those who administered the program were “under tremendous pressure to enlist and retain sufficient numbers of soldiers.”

“However, that pressure in no way excuses criminal conduct or intentional abuse of the system,” he said. “The department believes, as you do, that the vast majority of the California Army National Guard soldiers accepted a bonus and/or student loan repayment in good faith. We also believe that any member of the CA ARNG who received an incentive payment in good faith and served out his or her commitment should not be subject to recoupment.”

Meanwhile, the Senate is slated to consider a defense authorization bill containing a provision already approved by the House intended to expand the Pentagon’s authority to waive repayments if the soldiers did not know they were getting improper bonuses because of poor record-keeping or fraudulent conduct of others.

The legislation authorizes the Pentagon to repay those Guard personnel who returned their bonuses as ordered and contact credit agencies to let them know that the debts incurred by Guard personnel as a result of the repayments are invalid.