One of the most notable things about the era we live in is the ability to move an issue forward quickly when multiple stakeholders agree on the need. We saw this when Indiana passed its religious freedom law, and this week we saw this happen at warp speed as the clawbacks of veterans’ reenlistment bonuses became public. In both cases, the response moved like a tidal wave and included the public, media and legislators, but in Indiana’s case, private companies were also in the mix.
This was one issue on which just about everyone seemed to agree. In the wake of the angry reaction from members of Congress since the Los Angeles Times broke the story this past weekend, Secretary of Defense Ash Carter ordered the Pentagon to stop “as soon as is practical” seeking repayments of enlistment bonuses given to California National Guard members who served in Iraq and Afghanistan. President Barack Obama warned the Defense Department not to “nickel and dime” service members who were victims of fraud by overzealous recruiters.
There are likely legal and policy barriers to simply agree with bipartisan calls in Congress to forgive the overpayments of an estimated $70 million that recruiters awarded to meet their enlistment quotas. Secretary Carter wants to resolve all the cases, case by case, by July 1, 2017. It is unclear if the process now underway will reimburse veterans who already made payments. In his statement, Secretary Carter also only addresses the issue of California National Guard bonus repayments. The problem is a national one.
Ultimately, we will provide for a process that puts as little burden as possible on any soldier who received an improper payment through no fault of his or her own. At the same time, it will respect our important obligation to the taxpayer.
I want to be clear: this process has dragged on too long, for too many service members. Too many cases have languished without action. That’s unfair to service members and to taxpayers. The steps I’ve outlined are designed to meet our obligations to both, and to do so quickly.
Reminiscent of the Wells Fargo’s phony-account scandal, almost 10,000 California National Guard soldiers were ordered to repay signing bonuses in excess of $15,000 they were offered between 2006 and 2010 by military recruiters with enlistment quotas to meet. The soldiers signed the contracts in good faith and risked their lives to honor them. The Pentagon has been aggressively seeking repayment.
After 21 years in the military, three deployments, and a roadside bomb blast that left him bleeding and unconscious, Christopher Van Meter got a letter from the Pentagon saying he improperly received enlistment bonuses and now owed the government $46,000.
“I was having to choose between buying diapers and food for my children and paying this debt,” said Van Meter, 42, a former U.S. Army captain who now teaches high school near Modesto, Calif. “I spent years of my life deployed, missed out on birthdays and deaths in the family, got blown up. It’s hard to hear after that that they say I haven’t fulfilled my contract.”
The soldiers were enticed to enlist or reenlist to serve in U.S. operations in Iraq and Afghanistan. The repayment demands are based upon audits that found that the bonuses and student loan repayments were improperly awarded to soldiers who did not qualify or were approved despite paperwork errors. Master Sergeant Toni Jaffe, the California National Guard’s bonus and incentive manager, apparently the most egregious offender, pleaded guilty in 2011 to filing false claims. She received a 30-month federal prison sentence. The Guard has already recovered $22 million in bonuses to date from soldiers and veterans.
This is only news because the Los Angeles Times broke (or updated) the story this past weekend. These soldiers have been trying unsuccessfully for years to make sense of this bait and switch catastrophe while struggling to repay the debts. Their appeals through military channels and to Congress were delayed or unanswered. Meanwhile, “Van Meter had to roll the debt into his mortgage to make ends meet. Others have ruined credit and face stiff penalties for missing payments.”
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Officials with the National Guard Bureau said that Guards in every state handed out excessive bonuses during the same period, but they have yet to be audited. No one fully knows the extent of the damage.
Sgt. 1st Class Bryan Strother filed a federal class action lawsuit that calls for an injunction stopping future collection efforts and for bonus money that has already been recovered to be returned. Federal officials filed a motion to dismiss Strother’s suit.
An Iraq and Afghanistan veteran, Robert Richmond, related his story in this petition on Change.org calling for an end to the collection of Guard bonuses.
To add insult to injury, I received a $15,000 bonus for a six-year term. They pre-taxed the bonus only paying me approximately $11,000 after the tax was taken out. But are now saying I have to pay the entire $15,000 back plus interest. They are demanding I pay them the $4,000 all ready paid to the IRS.
After 90 days they turned my debt over to the Department of the Treasury, who fined me a 28 percent penalty, including a penalty on the $4,000 paid to the IRS. So now I owe the government almost $20,000, when they were the ones who wrote the contract that they state is not valid. I’m being fined and penalized for their incompetence and lack of oversight and the Treasury Department is now trying garnishing my civilian wages.
Suddenly, these veterans are no longer alone in their quest for relief since the story became national news. California senators Dianne Feinstein and Barbara Boxer urged Defense Secretary Carter in this October 24th letter to use his authority to waive repayment and to assist service members who already repaid the incentives. His reaction on Wednesday indicates he received the full import of the message.
These men and women voluntarily reenlisted with the understanding that they would receive substantial bonuses. They accepted these incentive payments in good faith and at the height of the Iraq War, when the Department was having difficulty retaining service members. Many of these individuals paid a heavy price for their service—including severe injuries sustained after reenlisting. Now they are facing interest charges, wage garnishment, tax liens, and other penalties.
In 2005, after three years of war in Afghanistan and Iraq, the military’s all-volunteer force faced a recruitment crisis. The Army alone was 42 percent off its target. More than 40 percent of the ground troops in Iraq were consequently from the Army’s National Guard or Reserve. Traditional recruiting commercials were not working so the message was aimed at the parents. Signing bonuses were increased from $8,000 to $10,000. College scholarships were increased from $50,000 to $70,000. A Rand study indicates that between 2000 and 2008, the Defense Department increased enlistment and re-enlistment bonuses from $266 million to $625 million and selective re-enlistment bonuses from $891 million to $1.4 billion.
The Sacramento Bee broke the original story in 2010. Master Sgt. Toni Jaffe ran “a high-speed assembly line for bonuses and loan repayments, in which Jaffe single-handedly processed some 8,600 payments over a 16-month period in 2007 and 2008—about 25 per workday.” A Guard auditor turned federal whistle-blower helped the government put the brakes to the fraudulent practices.
In his statement, Carter said that while many soldiers did not know the payments were improper, “some soldiers knew or should have known they were ineligible for benefits they were claiming.” So the case-by-case process begins—or continues, but perhaps more hastily to hasten the end of this new public relations nightmare.—James Schaffer
