The Pentagon said Tuesday that it expects to reach final decisions by July on each of the more than 17,000 cases in which soldiers were paid large bonuses to re-enlist during the heights of the wars in Iraq and Afghanistan only to be told years later that they must give the money back.
But officials expect to entirely dismiss the vast majority of the cases — which mostly involve California National Guardsmen — and most of the troops who’ve already returned their bonuses to government debt collectors will be reimbursed under a streamlined review process Defense Secretary Ash Carter ordered the Defense Department to establish by Jan. 1.
Peter Levine, the acting undersecretary of Defense for personnel and readiness, said the government ultimately expects to continue investigating the cases of no more than 1,700 former troops, mostly because they did not, in fact, fulfill the military service commitments they promised as a condition of the payments or they knowingly took bonuses to which they weren’t entitled.
But over the next month, the Pentagon will begin notifying all of the others that their alleged debts have been canceled.
“Many of these service members fulfilled their obligation, and the error was an error on the part of the government as to whether they were eligible,” Levine told reporters. “They may have also been misled as to whether they were eligible. And because the California National Guard went back and looked at these cases several years removed from when the error was made, they were in many cases recouping from members who had fulfilled their service commitment.”
DoD made most of the payments, which were as high as $15,000, between 2004 and 2011. A state audit later deemed more than 17,500 of the payments improper because of issues such as missing paperwork, but the scope of the problem escaped the attention of the National Guard Bureau and other Pentagon leaders for years until the Los Angeles Times reported last fall that thousands of soldiers were suddenly facing large collection demands from the government through no fault of their own.
“There was a lack of internal controls in the bonus system nationwide,” Levine said. “There was an ability for a single person to sign off on the bonus — to be the approval authority and the review authority. There were not automated checks built into the system. So we’ve since automated it, we’ve required separate review cycles so that you don’t have a one-person sign-off.”
While the bonus system was prone to errors across the country, DoD’s new review process has only uncovered a few dozen cases outside California in which the National Guard saw the need to claw back payments that servicemembers believed they were entitled to.
Officials say California had a staggering 91 percent error rate, partially because unscrupulous recruiters there knew of the weak oversight mechanisms and took advantage of them by convincing soldiers to apply for bonuses they weren’t entitled to or failing to supply the proper documentation. In response, the Justice Department has brought fraud charges against 41 former Guard officials; at least 26 have been convicted thus far.
“The internal control problems weren’t unique to California, what was unique to California was that we had people who exploited the vulnerability,” Levine said. “It was systematically exploited, that’s why we had the problem there that we didn’t have elsewhere.”
The California cases fall into two separate categories under DoD’s new review process: those who the government has already formally accused of owing a debt and those whose cases were still being processed when Carter ordered a moratorium on collections activities last October.
Levine said the department’s legal options were more limited in the first category, made up of about 1,400 soldiers.
DoD plans to automatically waive the debts in about half of those cases either because troops lived up to the service obligations that made them eligible for the payments or because they had no reasonable way of knowing that they got the payments improperly. Within that group, soldiers who’ve already returned the bonuses will be fully reimbursed, at a total cost to the government of about $10 million.
The remaining 700 cases where debts already have been established are less clear-cut, and will have to be dealt with on an individual basis by an Army Board for the Correction of Military Records (BCMR). Levine said DoD has assigned additional personnel to staff the boards and allow service members to argue that they should be allowed to hang onto their payments.
DoD has more latitude over the much larger category of 16,000 soldiers who haven’t yet been subject to the Defense Finance and Accounting Service’s debt collection procedures, and expects to cancel about 15,000 of those pending cases, Levine said.
“Older debts, smaller debts, cases with people who are junior in rank who wouldn’t necessarily be expected to know about eligibility, things like that, we’re not pursuing those cases at all,” he said.
But up to 1,000 soldiers who haven’t yet faced debt collection will also have to appeal to a record corrections board.
“In each of those cases, the soldier will have an opportunity to present their case and argue that even though there’s enough to put it before a BCMR, there isn’t enough to justify debt collection and the debt should be forgiven,” Levine said. “They have sufficient staffing to hear all the cases that we’ll be presenting to them and to do that by the July deadline established by the secretary. We think that the number of cases in which we’ll be recouping will be a few hundred, as opposed to the many thousands of cases that are under the Sword of Damocles right now. There will be some cases in which we have fraud or evidence of fraud, but for most of the cases in which we’ll be recouping, it will be because the soldier didn’t fulfill their commitment.”