Thousands forgiven in CA National Guard bonus recoupment effort

Thousands forgiven in CA National Guard bonus recoupment effort

By Loree Lewis   
Published
Pentagon Press Secretary Peter Cook (left) and acting Undersecretary of Defense for Personnel and Readiness Peter Levine (right) update reporters on the California National Guard bonus repayments at the Pentagon in Washington D.C., Jan. 3, 2017. (DOD photo by U.S. Army Sgt. Amber I. Smith)

WASHINGTON  – About 17,500 California National Guard troops were paid improper retention and recruitment bonuses during the height of the wars in Iraq and Afghanistan, but only several hundred will have to repay their debts, the Pentagon said Tuesday.

The Pentagon said $10 million in bonuses was paid erroneously between 2004 and 2010, both as a result of mistakes, including missing paperwork and paperwork errors, and criminal activities. Upon learning of the mistaken payments after a recent audit, the Defense Department launched a recoupment effort.

Los Angeles Times report in October first revealed that the Pentagon was trying to claw back the improper bonuses, leading to an outcry in Congress.

Soldiers who wouldn’t, or couldn’t, pay back the bonuses faced wage garnishments, tax liens and interest charges.

In forgiving the majority of the debts, the Pentagon acknowledged Tuesday that many of the soldiers did not know that they didn’t qualify for the bonuses.

“They’d gotten a bonus in exchange for a service commitment, then they fulfilled the service commitment, they served, they may even have been deployed, and then we came back and said, ‘By the way, you were ineligible, we’re taking your money back,'” said Peter Levine, acting undersecretary for personnel and readiness. “That’s what makes those cases unfair, not the fact that it’s recoupment.”

In about 16,000 of the 17,500 flagged cases, a debt had not yet been officially established. In these cases, the Defense Department is screening them and forgiving cases that involve older debts, smaller debts and cases with people who are junior in rank and wouldn’t be expected to understand their bonus eligibility. Levine estimates that this process will eliminate 15,000 of the 16,000 cases.

“The basic criteria we’ve been applying in looking at those is: Did this — if the service member fulfilled their service commitment and there’s no obvious reason to believe that they knew or should have known that there was an erroneous payment, then we don’t need further review and we’ll get rid of that case,” Levine said.

The remaining cases, about 1,000, will go through a screening process, which is similar to what the 1,500 cases where a debt has already been officially established will go through.

In those 1,500 cases, the California National Guard had already established a debt and referred the case to the Defense Finance and Accounting Services for recoupment before Defense Secretary Ash Carter put the recoupment efforts on hold in late October. Levine estimates that half of this population will have their debts dismissed.

These 2,500 total cases will go before the Army Board for Correction of Military Records, where the service member will be given the opportunity to present his or her case and argue against debt collection.

“There will be some cases in which we have fraud or evidence of fraud or knowledge or should’ve known,” Levine said. “But most of the cases in which we’ll be recouping, we will be recouping because the soldier didn’t fulfill their [service] commitment.”

Levine said California National Guard soldiers with debts dismissed should start receiving notices next month on a rolling basis.

Levine said that a review of other state’s National Guards found no similar problems. While there was a flaw in the bonus system nationwide — wherein a single person could sign off on a bonus, be the approval authority and the review authority — the situation in California was unique because the lack of internal controls was exploited with criminal intent.

“What we had in California was the vulnerability was systematically exploited, that’s why we had the problem there that we didn’t have elsewhere,” said Levine. “We had individuals who’ve been convicted of fraud and have been disciplined.”

Levine said that the Defense Department will do what it can for soldiers to remedy secondary effects of the recoupment efforts, like the loss of a mortgage, as required under the 2017 defense policy bill. He said that upon forgiving the debts, the Pentagon will notify credit agencies.

There may be little we can do in those cases, but we’ll look at those and see if there’s something — if somebody comes to us and says that there was some secondary effect to their detriment — we’ll look at it and see if there’s something we can do,” said Levine.

Those who qualify for debt dismissal who have already begun paying back their bonuses will be reimbursed, Levine said.

The Pentagon expects to resolve all outstanding cases by July 1, a deadline set by Carter in October when he suspended reimbursement collection until a “streamlined, centralized process that ensures the fair and equitable treatment of our service members and the rapid resolution of these cases” was put in place.

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