Recruiting scams and kickback schemes: Prosecutors troubled by frequency of military fraud

Industrials Associated Press

Fabian Barrera found a way to make fast cash in the Texas National Guard, earning roughly $181,000 for claiming to have steered 119 potential recruits to join the military. But the bonuses were ill-gotten because the former captain never actually referred any of them.

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Barrera's case, which ended last month with a prison sentence of at least three years, is part of what Justice Department lawyers describe as a recurring pattern of corruption that spans a broad cross section of the military.

In a period when the nation has spent freely to support wars on multiple fronts, prosecutors have found plentiful targets: defendants who bill for services they do not provide, those who steer lucrative contracts to select business partners and those who use bribes to game a vast military enterprise.

Despite numerous cases that have produced long prison sentences, the problems have continued abroad and at home with a frequency that law enforcement officials consider troubling.

"The schemes we see really run the gamut from relatively small bribes paid to somebody in Afghanistan to hundreds of millions of dollars' worth of contracts being steered in the direction of a favored company who's paying bribes," Assistant Attorney General Leslie Caldwell, head of the Justice Department's criminal division, said in an interview.

In the past few months alone, four retired and one active-duty Army National Guard officials were charged in a complex bribery and kickback scheme involving the awarding of contracts for marketing and promotional material, and a trucking company driver pleaded guilty to bribing military base employees in Georgia to obtain freight shipments — often weapons which required satellite tracking — to transport to the West Coast.

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More recently, a former contractor for the Navy's Military Sealift Command, which provides transportation for the service, was sentenced to prison along with a businessman in a bribery case in which cash, a wine refrigerator and other gifts traded hands in exchange for favorable treatment on telecommunications work. Also, three men, including two retired Marine Corps officers, were charged with cheating on a bid proposal for maintenance work involving a helicopter squadron that serves the White House.

Justice Department lawyers say they don't consider the military more vulnerable to corruption than any other large organization, but that the same elements that can set the stage for malfeasance — including relatively low-paid workers administering lucrative contracts, and heavy reliance on contractor-provided services — also exist in the military.

Jack Smith heads the department's Public Integrity section, which is best known for prosecuting politicians but has also brought multiple cases against service members. He said there are obvious parallels between corruption in politics and in the military.

"When an American taxpayer is not getting the deal that they should get, someone is inserting costs that the taxpayers ultimately have to bear, I think anybody would be offended by that," Smith said.

Some cases have stood out.

Defense contractor Leonard Francis was arrested in San Diego last year on charges that he offered luxury travel, prostitutes and other bribes to Navy officers in exchange for confidential information, including ship routes. Prosecutors say he used that information to overbill the Navy for port services in Asia in one of the biggest Navy bribery schemes in years. Ethan Posner, a lawyer for Francis, declined comment.

Yet many others involve more mundane cases of contracting or procurement fraud. Consider the trucking company contractor in Afghanistan who bribed an Army serviceman to falsify records to show fuel shipments that were never delivered, or the former Army contractor who demanded bribes before issuing orders for bottled water at a military camp in Kuwait.

The Commission on Wartime Contracting in Iraq and Afghanistan estimated that between $31 billion and $60 billion was lost to waste and fraud during U.S. operations in those countries. The Justice Department says it brought 237 criminal cases from November 2005 to September 2014 arising from war-zone misconduct — often contracting and procurement fraud.

"We just were not equipped to do sufficient oversight and monitoring on the front end, and we didn't have sufficient accountability mechanisms on the back end, which led to enormous problems," said Laura Dickinson, a national security law professor at George Washington University.

The Defense Department has acknowledged the problems and taken steps in the past decade to tighten controls and improve training.

Domestically, more than two dozen individuals, including Barrera, the Texas National Guard captain, have been charged with abusing a National Guard recruiting incentive program in which soldiers could claim bonuses of a few thousand dollars for each person they said they had recruited. But prosecutors said soldiers repeatedly cheated the system by claiming bonuses for bogus referrals.

Army National Guard spokesman Rick Breitenfeldt said the military takes the matter seriously and two years ago suspended the problematic recruiting program, known as G-RAP.

"We acknowledge that fraudulent activity took place with this program and continue to work with law enforcement agencies to identify the accountable individuals and take appropriate action," he said in a statement.

Caldwell said the Justice Department must have a zero-tolerance policy as a deterrent. "It's really not worth risking your military career and your reputation — not to mention your freedom — for this kind of thing," she said.

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Follow Eric Tucker at https://twitter.com/etuckerAP