IG: Pentagon failed to act on misuse of travel cards at strip clubs, casinos

Not only is DoD largely unable to detect misuse of the cards on its own, officials responded slowly, inadequately or not at all even after auditors pointed out ...

The Pentagon’s top watchdog raised additional concerns Tuesday about the Defense Department’s ability to police its travel card program. Not only is DoD largely unable to detect misuse of the cards on its own, officials responded slowly, inadequately or not at all even after auditors pointed out thousands of specific, glaring examples of misconduct involving casino gambling and adult entertainment.

The findings came as a followup to a May 2015 report in which the DoD Inspector General said it had found more than 5,000 transactions totaling more than $1 million at gaming establishments and strip clubs between 2013 and 2014. For the new audit, the IG picked a sample of 30 Defense employees who appeared to have been among the worst offenders, concluding commanders and supervisors hadn’t taken nearly enough action to head off more misuse.

Auditors also highlighted national security implications. Even though travel card misuse and problem gambling are specific questions the government asks when deciding whether employees should be allowed security clearances, only two of the 30 employees identified as having abused the cards were reported to DoD clearance adjudicators, despite department regulations that require commanders to make those notifications “in a timely manner.”

“This resulted in the delay or lack of adjudication for cleared DoD cardholders with possible security concerns, including questionable judgment, unwillingness to follow rules and guidance, financial concerns, or gambling addictions,” the IG wrote. “Security officials, including investigators and adjudicators, could not determine whether an applicant for a sensitive national security position was providing honest and trustworthy responses because DoD managers and commanders did not report travel card misuse to [the Joint Personnel Adjudication System] (JPAS).”

In one example, the IG warned commanders in September 2014 that an Army sergeant first class seemed to have used his card at casinos at least 113 times. Even though the soldier received a letter of reprimand in January 2015, the incidents were never reported to JPAS until that August, on the same day the IG asked for an in-person meeting for an update on the case. the sergeant’s security clearance was finally revoked in December 2015.

Other issues appeared to stem from inadequate oversight by agency program coordinators (APCs). In certain DoD offices, one APC might be in charge of monitoring hundreds or thousands of card accounts, making it difficult to ferret-out the relative handful of cards with a pattern of suspicious activity. But in some cases, the coordinators didn’t report abuse to management even when they knew about it.

In others, APCs never deactivated cards when personnel moved to other organizations or left DoD entirely, as was the case with another Army sergeant first class: he retired, then used his government card for gambling chips or casino cash withdrawals at least 21 times over the course of the next two months.

DoD organizations also failed to communicate with one another about known serial charge card abusers.

That seems to be what happened with an Air Force civilian who changed jobs three times between 2014 and 2016 and misused his card at each posting — for a total of more than $35,000. The pattern stopped when he took a fourth job, but only because the bank that issues the government cards noticed that he’d been delinquent on his previous ones and refused to issue another.

“The cardholder was disciplined for misuse twice, but his gaining commands were never notified of the travel card misuse or discipline. As a result, DoD management could not implement additional safeguards,” auditors wrote. “An APC at the new command attempted to reactivate the cardholder’s travel card; however, Citibank stated the cardholder was not eligible at any time for reinstatement.”

In other cases, DoD managers allowed employees to hang onto their travel cards even in the face of evidence that they were abusing them.

At the Defense Threat Reduction Agency in April 2014, officials reprimanded one worker who appeared to have charged $2,523  to his card at casinos. He was warned a year later that his security clearance was in jeopardy for the same reason, but his travel card remained active. He went on to use it for more than $9,000  in gambling expenses after those warnings.

“The cardholder was allowed to maintain his access to classified information and continued to misuse his travel card for over a year after being disciplined by his command and in the months after being warned by the [Defense Intelligence Central Adjudication Facility] about the misuse,” the IG wrote. “DTRA was not aware of the continued misuse of his travel card until we notified it because the APC did not closely monitor the cardholder after he was identified as a holder with prior misuse.”

Not all of the cases directly involve clear evidence of government funds being used for casinos or other improper expenses. That’s partially because, in many instances, employees appear to have eventually paid the “personal use” portions of their government charge card bills out of their own pockets.

But DoD regulations make it painfully clear that the cards are only supposed to be used for official travel expenses, and across the government, any other use of the cards is considered a potential firing offense.

Still, the IG found that 22 of the 30 employees it picked for the sample had gotten government reimbursements for at least some nonofficial spending, including hotels and meals on personal travel days, unsupported mileage claims and convenience fees associated with pulling cash out of ATMs, including at casinos. The IG found at least $8,544 in improper payments within its small sample. The report cited no instances of employees being fired for their transgressions, although several of them retired before investigations were finished.

The Defense Department agreed with all of the audit findings while also highlighting the fact that the misuse the IG identified made up only 0.04 percent of DoD’s $8 billion in annual travel spending.

But auditors suggested the instances they were able to document is probably just a fraction of the true total, since the IG’s prior reports have pointed out DoD’s inability to detect travel card misuse on its own.

“The transactions we referred in the prior audit were selected based on one year of transaction history searched for specific key words, using data analysis tests, to identify the highest-risk transactions,” they wrote. “It was not intended to be a stand-alone list of all potential personal use.”

In response to the report, Anthony Kurta, the deputy assistant secretary of Defense for military personnel policy, said DoD would work with Citibank to create computerized tools that would automatically close accounts when employees leave the department and revise DoD’s regulations so that APCs will have to regularly review a cardholder’s spending when there are indications of misuse.

And Carrie Wibben, DoD’s director for counterintelligence and security said the Department will issue a new manual by the end of this calendar year requiring commanders to report any active investigations of travel card violations to JPAS, even if they haven’t yet been substantiated. The potential violations will also be reported for non-cleared Defense employees, since many of them might apply for clearances one day.

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