national guard
© The Sacramento BEE
When Staff Sgt. Troy Torres and his wife, Sgt. Lori Torres, joined the California National Guard more than five years ago, they were stirred by patriotism and persuaded by something more tangible - the prospect of paying down some student loans.

Each was promised $20,000 in loan repayments over six years, an enticement for recruits. Now, the Guard is asking for it back.

Fraud and wrongdoing in the incentive program were exposed in a 2010 Sacramento Bee investigation, and since then the Guard has revisited the program to clean it up. The Guard had approved applications improperly. Now, pending payments have been suspended, and checks garnished. That means many soldiers, including some who served tours in Iraq or Afghanistan, have learned that they weren't qualified for the incentives.

"We have been vilified, like we have done something wrong and must be punished," after having accepted fully approved incentive payments in good faith, Troy Torres, 52, said. "Neither of us have committed a crime nor violated U.S. Army regulations."

He called the situation "a financial nightmare for our family."

Torres, a medic, said he and his wife, who have three children - Alec, 16, Ethan, 13, and Olivia, 11 - struggle to pay food and utility bills. They had to seek help from relatives to pay for a long-awaited educational trip to Washington, D.C., for Ethan, on top of costs for Olivia's music lessons and science camp.

The couple have fallen behind on the mortgage for their Galt home. A slip in their credit rating could jeopardize Torres' security clearance - required for his job.

"Lori is in Afghanistan today, at great personal risk," in part, because soldiers in combat zones earn more money, and they needed to compensate for their garnished wages, Torres said. "We live paycheck to paycheck like everyone else," he said. "When you take $1,500 out of my paycheck, you can't budget that." Torres takes home $2,100 twice a month.

In two cases, the military garnished 100 percent of his wife's family separation pay for soldiers deployed to a war zone. Lori Torres earned about $2,800 per month before she was deployed; $5,500 since.

By policy, the Guard can take no more than 20 percent of a soldier's check, and normally no funds are garnished from a soldier at war. Yet only in October, three months after Lori Torres, a supply specialist, left for Afghanistan, did she begin to collect full pay.

Both Lori and Troy Torres have tried since last year to get their cases reviewed, and collections ended or reduced. Requests to the Guard unit that audits the incentive payments and helps ensure that necessary recoupment proceeds humanely haven't had any effect. Staff for Sen. Barbara Boxer, D-Calif., and former U.S. Rep. Dan Lungren contacted the military about the Torres cases, without results.

Rampant abuses

Such apparent unfairness, which extends to other soldiers, suggests the difficulty of unwinding the incentive fraud scandal. Adjutant Gen. David Baldwin was appointed by Gov. Jerry Brown as the Guard's top leader in 2011 after the problems occurred. Baldwin vowed to correct them yet minimize personal hardship for soldiers who had to repay benefits.

In a recent interview, Baldwin called the "financial burdens and emotional distress to soldiers that really thought they were eligible for this money" heart-rending. Balancing their needs with those of taxpayers can be "extraordinarily difficult," he said. He said the Guard is doing whatever it can to find reasonable exceptions to policies that would allow soldiers to keep their incentive payments. "But, unfortunately, you can't accept taxpayers' money that you are not due."

For years, the incentive programs earned plaudits for bringing in new recruits or persuading soldiers to sign up for another term of duty. The careers of top recruitment managers soared. But thousands of bonuses and student loan repayment awards were paid or promised fraudulently and given erroneously to soldiers who did not qualify or were approved despite paperwork errors.

After a series of Bee investigations about the incentive fraud and other corrupt practices in the Guard, much of the top leadership was replaced.

Col. Michael Piazzoni heads a team of 42 auditors paid out of federal funds who are examining about 17,000 soldiers' benefits. He estimated that $13 million in improper payments going back more than a decade have been slated for recoupment, a number he expects to grow to $47 million as the audits are completed over the next two years.

Soldiers find the Guard's obligation to collect misspent taxpayer funds painful, in part, because most were swept naively into a broken system by unscrupulous, incompetent or complacent officials.

Baldwin said he's asked Piazzoni to "err on the side of finding a way to help the soldiers."

"It's not just the morale, it's the credibility of the organization to our troops, which is a different way of looking at morale. Trust goes up and down both ways in the organization," he said. At the same time, he said, the Guard must convince taxpayers that "we're going to follow the law, be good stewards and have good internal controls to make sure this doesn't happen again."

Hundreds of appeals pending

The dilemma facing the Guard reflects a gulf between the relative few who created or willfully exploited the problem programs and the many who benefited unwittingly.

A federal investigation resulted in a handful of prosecutions. Master Sgt. Toni Jaffe, a former incentive manager involved in many of the problems, is serving a 30-month sentence for fraud at a federal prison in Minnesota. Three captains pleaded guilty to fraud, paid restitution and received two to four days in custody and a year's probation.

About 115 others - including about 80 officers - apparently engaged in willful misconduct. Baldwin said most will face legal or administrative punishment under the Uniform Code of Military Justice. Many already have seen their careers derailed.

But in thousands of cases, soldiers who received funds improperly, but without culpability, face protracted appeals through state and federal military bureaucracies. According to Guard records obtained by The Bee, hundreds of such appeals are pending in Piazzoni's office - where a crushing workload has slowed processing. In other cases, soldiers fail to call his office for help after being informed that they might have a problem, he said, leading to paychecks being garnished unnecessarily.

Appeals often bog down when forwarded to the National Guard Bureau, a federal agency that oversees funds given to state Guard organizations. The bureau has been inundated with similar fraud cases affecting other states, identified after California's problems became known. If the National Guard Bureau rejects a claim, the soldier often can appeal to other military authorities.

In some cases, soldiers have been struggling with the military financial bureaucracy without success for two years, said Sgt. David Partak, state retention manager, responsible for efforts to re-enlist soldiers. Such situations have angered some in the ranks, he said.

Lt. Colonel Daniel Williamson, who heads the Guard's recruiting command, said recruiting is on track this year, despite such concerns. But Baldwin said the problem has affected re-enlistment adversely.

Partak, who often fields individual complaints, said many soldiers have groused to colleagues after having "been promised something and it's either been delayed or being taken away. It doesn't take many of those soldiers in a unit to create a toxic environment."