Military Pay: DOD Improperly Paid Army National Guard and Army	 
Reserve Soldiers in Deserter Status (28-JUL-06, GAO-06-848R).	 
                                                                 
Over the past several years, we have reported examples of	 
hundreds of Army National Guard and Army Reserve (Army Guard and 
Reserve) soldiers who received inaccurate and untimely payroll	 
payments due to a labor-intensive, error-prone pay process; human
capital weaknesses; and the lack of integrated pay and personnel 
systems. As part of that work, we reported several cases for	 
which mobilized Army Reserve soldiers never reported for active  
duty and improperly received pay that they did not earn. If a	 
soldier remains absent, without authority, from his or her unit, 
organization, or place of duty with intent to remain away	 
permanently, a soldier is guilty of desertion. Desertion from the
military is a serious offense. The civilian law enforcement	 
community sometimes assists the Army on desertion cases. For	 
example, the U.S. Army Deserter Information Point (USADIP) enters
data about soldiers in deserter status into the Federal Bureau of
Investigation National Crime Information Center's (NCIC) Wanted  
Person File that is used by civilian law enforcement officers.	 
Whenever a civilian law enforcement officer has reason to	 
question someone about any apparent unlawful activity, standard  
practice for the law enforcement officer is to determine whether 
there are any outstanding warrants for the arrest of that person.
If the person is a soldier with an outstanding arrest warrant for
desertion, the civilian law enforcement officer is to arrest and 
hold the soldier until the soldier can be transferred to military
custody for subsequent legal proceedings to determine innocence  
or guilt. This report follows up on earlier-identified issues	 
concerning Army Guard or Reserve soldiers who did not report for 
active duty and who may have continued to get paid. Specifically,
as part of our earlier work we had notified the Army Reserve 99th
Regional Readiness Command about a number of Reserve soldiers who
were improperly paid after they failed to report for duty related
to the Global War on Terrorism (GWOT). The objectives of this	 
investigation were to (1) determine what the 99th Regional	 
Readiness Command had done regarding the Reserve soldiers	 
assigned to the 1004th Quartermaster Company who failed to report
for duty as ordered and whether their retention of the pay	 
represented possible criminal behavior, (2) look for other	 
examples of improper pay to Army Guard and Reserve soldiers who  
were charged with desertion related to GWOT missions, and (3)	 
determine the status of arrest warrants for any soldiers charged 
with desertion that we identify.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-848R					        
    ACCNO:   A57679						        
  TITLE:     Military Pay: DOD Improperly Paid Army National Guard and
Army Reserve Soldiers in Deserter Status			 
     DATE:   07/28/2006 
  SUBJECT:   Arrests						 
	     Crimes						 
	     Erroneous payments 				 
	     Fraud						 
	     Law enforcement					 
	     Military deserters 				 
	     Military pay					 
	     Military personnel 				 
	     Military reserve personnel 			 
	     National Guard					 

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GAO-06-848R

     

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July 28, 2006

Congressional Requesters

Subject: Military Pay: DOD Improperly Paid Army National Guard and Army
Reserve Soldiers in Deserter Status

Over the past several years, we have reported1 examples of hundreds of
Army National Guard and Army Reserve (Army Guard and Reserve) soldiers who
received inaccurate and untimely payroll payments due to a
labor-intensive, error-prone pay process; human capital weaknesses; and
the lack of integrated pay and personnel systems. As part of that work, we
reported several cases for which mobilized Army Reserve soldiers never
reported for active duty and improperly received pay that they did not
earn. If a soldier remains absent, without authority, from his or her
unit, organization, or place of duty with intent to remain away
permanently, a soldier is guilty of desertion.

Desertion from the military is a serious offense. The civilian law
enforcement community sometimes assists the Army on desertion cases. For
example, the U.S. Army Deserter Information Point (USADIP) enters data
about soldiers in deserter status into the Federal Bureau of Investigation
National Crime Information Center's (NCIC) Wanted Person File that is used
by civilian law enforcement officers. Whenever a civilian law enforcement
officer has reason to question someone about any apparent unlawful
activity, standard practice for the law enforcement officer is to
determine whether there are any outstanding warrants for the arrest of
that person. If the person is a soldier with an outstanding arrest warrant
for desertion, the civilian law enforcement officer is to arrest and hold
the soldier until the soldier can be transferred to military custody for
subsequent legal proceedings to determine innocence or guilt.

1 GAO, Military Pay: Inadequate Controls for Stopping Overpayments of
Hostile Fire and Hardship Duty Pay to Over 200 Sick or Injured Army
National Guard and Army Reserve Soldiers Assigned to Fort Bragg,
GAO-06-384R (Washington D.C.: Apr. 27, 2006); Military Pay: Gaps in Pay
and Benefits Create Financial Hardships for Injured Army National Guard
and Reserve Soldiers, GAO-05-125 and GAO-05-322T (Washington, D.C.: Feb
17, 2005); Army National Guard: Inefficient, Error-Prone Process Results
in Travel Reimbursement Problems for Mobilized Soldiers, GAO-05-79
(Washington, D.C.: Jan. 31, 2005) and GAO-05-400T (Washington, D.C.; Mar.
16, 2005); Military Pay: Army Reserve Soldiers Mobilized to Active Duty
Experienced Significant Pay Problems, GAO-04-911 (Washington, D.C: Aug.
20, 2004); and Military Pay: Army National Guard Personnel Mobilized to
Active Duty Experienced Significant Pay Problems, GAO-04-89 (Washington,
D.C.: Nov. 13, 2003).

This report follows up on earlier-identified issues concerning Army Guard
or Reserve soldiers who did not report for active duty and who may have
continued to get paid. Specifically, as part of our earlier work we had
notified the Army Reserve 99th Regional Readiness Command about a number
of Reserve soldiers who were improperly paid after they failed to report
for duty related to the Global War on Terrorism (GWOT). The objectives of
this investigation were to (1) determine what the 99th Regional Readiness
Command had done regarding the Reserve soldiers assigned to the 1004th
Quartermaster Company who failed to report for duty as ordered and whether
their retention of the pay represented possible criminal behavior, (2)
look for other examples of improper pay to Army Guard and Reserve soldiers
who were charged with desertion related to GWOT missions, and (3)
determine the status of arrest warrants for any soldiers charged with
desertion that we identify.

Summary of Investigation

We confirmed that at least seven Army Reserve soldiers assigned to the
1004th Quartermaster Company, located in Greensburg, Pennsylvania, did not
report for active duty in December 2003 in accordance with their orders.
During the following 8-month period, they cumulatively improperly accepted
$195,000 of military pay. The Army Reserve did not stop improper military
pay to these soldiers until we notified Reserve officials in August 2004
during a prior assignment. Even after our notification, one of the seven
soldiers continued to be paid for an additional 8 months and accepted a
total of about $58,000 in improper payments, including about $28,000 for
the later 8-month period. We found no evidence that arrest warrants had
been filed against any of the seven soldiers as of May 2006.

Our limited investigation showed that at least 68 additional soldiers, 38
with the Army Guard and 30 with the Army Reserve, received improper and
potentially fraudulent pay, estimated at $684,000, while in a deserter
status. This number and amount likely significantly understates the number
and amount the Department of Defense (DOD) paid to Army Guard and Reserve
soldiers in deserter status. Army, Army Guard, and Reserve officials
acknowledged that they were unaware of the extent to which Army Guard and
Reserve soldiers in deserter status improperly received potentially
fraudulent military pay. They explained that determining the extent to
which soldiers charged with desertion continue to receive improper
payments is difficult for several reasons. First, initiating and
processing desertion cases depend upon unit commanders preparing timely
manual paperwork. Second, there is no central database that electronically
stores this paperwork. Without these data, military leaders do not have
readily available aggregate data affording visibility over the number of
desertion cases initiated. Additionally, they do not have a readily
available tool to match against pay data to ensure that soldiers in
deserter status have not been paid.

Knowingly keeping unearned military pay is potentially fraud.
Additionally, many of the 75 cases (7 cases from the 1004th Quartermaster
Company and the 68 other cases) of Army Guard and Reserve soldiers in
deserter status that we identified as having received unearned pay may
have willfully converted the pay to their own use, which is punishable by
a maximum confinement of 10 years.2 For example, six of the seven Reserve
soldiers who were assigned to the 1004th Quartermaster Company admitted to
us that they received unearned military pay when we initially interviewed
them in late 2004. Of these six, five told us that they had spent the
money and one said she had put the money in a separate bank account.
Although we confirmed that the seventh soldier also received unearned
military pay, she advised us that she thought that the money she had
received was an educational benefit.

Subsequently, between April 2005 and September 2005, the Defense Finance
and Accounting Service (DFAS) sent the first debt collection letter to
each soldier asking for repayment of the unearned pay. Little has been
repaid thus far. DFAS information shows that about 9 percent of the
estimated $195,000 in improper payments had been repaid as of May 2006.
Two of the seven soldiers had not yet made any repayments.

Arrest warrants had been issued for 51 of the 75 soldiers. Regarding the
soldiers from the 1004th Quartermaster Company, USADIP had no record of
arrest warrants. However, 1 of the 7 soldiers voluntarily surrendered to
military authorities and received an other than honorable discharge from
the military in December 2005 in lieu of a court-martial. Thus, all 51
arrest warrants applied to the 68 other deserter cases we identified. As
of May 11, 2006, 18 of the 51 had been apprehended by civilian
authorities, 2 soldiers had voluntarily surrendered to military
authorities, and 31 soldiers remained at large.

Scope and Methodology

To investigate whether any Reserve soldiers who were assigned to the
1004th Quartermaster Company in Greensburg, Pennsylvania, received
military pay for duties that they did not perform, we reviewed DFAS pay
account data for soldiers for whom we received investigative leads about
potential improper payments. We looked for any pay that they received
after the date that they failed to report for duty as required by their
mobilization orders. To investigate whether any of the Army Reserve
soldiers were potential deserters, we interviewed their company commander
and several people responsible for their personnel status at their
company, their battalion, and the 99th Regional Readiness Command. In
addition, we reviewed available paperwork regarding the deserter status of
these soldiers. Their chain of command provided limited paperwork,
including copies of personnel forms recommending deserter status for seven
soldiers. We interviewed these seven soldiers to determine their awareness
of receipt of improper payments. We also developed case studies to
illustrate the experience of these seven soldiers.

2 18 U.S.C. S: 641.

To determine whether the 7 cases were isolated cases or part of a larger
problem, we compared the list of active desertion cases on 2 days with
DFAS pay data and identified another 68 cases where soldiers were paid
with GWOT funds while in deserter status. On April 23, 2005, and March 8,
2006, we obtained USADIP's working file for arrest warrants, which
contained names of Army Guard and Army Reserve soldiers who had been
charged with desertion. The number of names in this working file varies.
For example, names are deleted whenever soldiers surrender or are
apprehended. Conversely, names are added when USADIP receives new
desertion cases. Our investigation was not designed to determine the total
number of Army Guard and Reserve deserters who were not paid. In addition,
the scope of our investigation did not include verification of the
accuracy of soldiers' pay accounts.

Because of data reliability concerns we identified in our prior work,3 we
did not rely on DFAS records to calculate precise improper payments.
Instead, we estimated improper payments based on the time period, starting
with the date the soldier was dropped from the Army's personnel
availability rolls because of desertion status until the date the
soldier's improper pays were stopped. We performed procedures to assure
ourselves that the data we used were sufficient for our purposes. We
provided Army officials an opportunity to confirm our estimates and take
appropriate action, including initiating criminal proceedings and
recovering improper payments.

To determine the status of arrest warrants for the previously mentioned 7
soldiers assigned to the 1004th Quartermaster Company and the other 68
GWOT soldiers charged with desertion that we identified, we obtained
information from USADIP for these specific soldiers. We independently
confirmed the number of outstanding arrest warrants USADIP reported to us
as of May 11, 2006, by verifying that NCIC also listed outstanding arrest
warrants for the same soldiers.

We informed the 99th Regional Readiness Command about our initial concerns
stemming from investigative leads about soldiers in potential desertion
status receiving unearned pays in August 2004. Regarding this
investigation, we requested comments from the Secretary of the Army, the
Under Secretary of Defense (Comptroller) and the Under Secretary of
Defense (Personnel and Readiness) who conveyed DOD's position. We
conducted this investigation, including follow-up on our seven case
studies, from April 2005 through May 2006 in accordance with quality
standards for investigations as set forth by the President's Council on
Integrity and Efficiency.

Background

A soldier is guilty of desertion when, without authority, he or she
remains absent from his or her unit, organization, or place of duty with
intent to remain away permanently. Desertion from the military is a
serious offense with serious legal consequences. Soldiers charged with
desertion who knowingly keep military pay that they did not earn may also
be found guilty of fraud and/or conversion or theft of government funds,
which is punishable by a maximum confinement of 10 years.

3 GAO, Global War on Terrorism: DOD Needs to Improve the Reliability of
Cost Data and Provide Additional Guidance to Control Cost, GAO-05-882
(Washington, D.C: Sept. 21, 2005).

In the Army Guard and Army Reserve, the process for charging a soldier
with desertion begins with unit commanders. Unit commanders are required
to maintain accountability for all personnel assigned to their units,
including those soldiers who fail to report for active duty. When a unit
commander determines there is no legitimate reason for a soldier's
absence, the commander has 48 hours to report the soldier as absent
without leave to the installation's personnel office, provost marshal,
deserter control officer, and finance office.4 The unit commander is to
use a personnel action form (DA Form 4187) to document unauthorized
absences and as justification to stop the pay and benefits of a soldier
absent without leave.

Once a commander determines that the absent soldier knew of or received
mobilization orders and the soldier fails to report for duty 30 days5
after the orders require, the unit commander is required to change the
soldier's duty status to deserter and to inform the commander, personnel
control facility.6 Within 72 hours of the desertion determination, the
unit commander is to send the control facility commander copies of the
initial paperwork required to charge the soldier with desertion and drop
the soldier from the rolls.7 Within 30 days of reporting a soldier as a
deserter, the unit commander must complete paperwork (called deserter
packets) to drop the soldier from the rolls and forward it to the Chief of
USADIP. "Dropped from rolls" is an administrative action that removes the
soldier from the unit's personnel strength-or the number of soldiers
available for deployment.

As we have previously reported, internal control weaknesses in Army
processes, human capital problems, and the lack of integrated systems
caused improper payment of active duty military pay. As our prior reports
have shown, active duty military pay is initiated by finance offices and
continues for the period of time specified on the soldier's mobilization
orders-typically for 1 to 2 years for mobilized Army Guard and Reserve
soldiers-unless finance offices receive authorization to stop military pay
before the mobilization end date stated on these orders.

4 This requirement became effective January 22, 2005. Commanders were
previously required to report absent personnel to the provost marshal and
had no time limits to do so. See AR 630-10 (Aug. 31, 2001) and as revised,
December 22, 2003.

5 The Army's previous policy only required that the commanders wait 7
days, notwithstanding their ability to determine whether a soldier
received his/her orders, before placing the soldier into deserter status.
See AR 630-10, para. 6-2b (2), 6-5b (Dec. 22, 2003).

6 There are two personnel control facilities, one at Fort Sill, Oklahoma,
and the other at Fort Knox, Kentucky.

7 The initial paperwork includes a completed DA Form 4187 requesting that
the soldier's duty status be changed to deserter, a completed DD Form 553
providing the absentee's personal information for the law enforcement
officials who will be responsible for arresting the absentee, and a
completed DD Form 458 charging the soldier with desertion. The final
paperwork for dropping a soldier from the rolls includes the three
completed forms and the supporting investigative documentation.

USADIP is responsible for initiating arrest warrants for all Army soldiers
charged with desertion, including Army Guard and Reserve soldiers. After
reviewing the deserter information packets for completeness, USADIP is to
enter data regarding these soldiers into NCIC's Wanted Person File that
contains data on outstanding arrest warrants. There is no statute of
limitations for arrest warrants. Arrest warrants are valid until the
wanted soldier (1) voluntarily surrenders to military authorities, (2) is
arrested by military police or civilian law enforcement officers, or (3)
dies. The USADIP Chief told us there is no systematic effort to locate
these individuals, and DOD military police are not routinely charged with
the responsibility for finding and arresting soldiers charged with
desertion. Instead, whenever a civilian law enforcement officer has reason
to question someone about any apparent unlawful activity, the law
enforcement officer also checks NCIC to determine whether there are any
arrest warrants for that person. If the person is a soldier and there is
an outstanding military arrest warrant, the civilian law enforcement
officer arrests and holds the soldier until the soldier is transferred to
military custody for subsequent legal proceedings leading to acquittal or
conviction and punishment for desertion.

Details of Investigation - 1004th Quartermaster Company, Greensburg,
Pennsylvania

We confirmed that at least seven Army Reserve soldiers assigned to the
1004th Quartermaster Company, in Greensburg, Pennsylvania,8 under the
authority of the 99th Regional Readiness Command, received improper and
potentially fraudulent payments totaling an estimated $195,000. We also
found that USADIP had no record of arrest warrants for these soldiers for
failure to report for duty when we initially referred this problem to the
99th Regional Readiness Command in August 2004.

As of May 2006, we determined that one of the seven soldiers had been
discharged from the Reserve under other than honorable conditions in lieu
of a court-martial. Although a human resource officer with the 99th
Regional Readiness Command told us that a second soldier had received an
honorable discharge after a surgeon determined that the soldier was unfit
for military retention, the soldier told us that she had not received a
Certificate of Release or Discharge from Active Duty (DD Form 214)
authorizing her discharge from the Army Reserve. The human resource
officer informed us that the 99th Regional Readiness Command had sent
deserter packets for the other five soldiers to the U.S. Army Reserve
Command in March 2005 but did not know the status of those cases.

Improper payments to these seven soldiers had been made each pay period
during the 8 months from the December 2003 mobilization date through our
initial August 2004 inquiry and stopped shortly thereafter. It took
another 8 months to stop payments to the seventh soldier, who received
more than $58,000 in total estimated improper payments, including about
$28,000 improperly paid to this soldier after our initial notification.
Only a small amount of the improper payments had been repaid as of May
2006.

8 Each of the seven soldiers had been transferred from other units within
the 99th Regional Readiness Command into the 1004th to increase the number
of soldiers within the 1004th for a prior deployment.

The unit commander for the soldiers assigned to the 1004th Quartermaster
Company did little to prevent or detect improper payments to these seven
soldiers, who admitted to us that they did not report for active duty at
the required location. The unit commander did not maintain accountability
for their physical presence at their assigned duty location or monitor
their pay in a timely manner as required. The unit commander should have
ensured desertion paperwork was completed within 7 days after the report
date stated on the soldiers' active duty orders, as required by Army
policy in effect at that time, unless there was a legitimate reason for
their absence from duty.

About 6 weeks after the seven soldiers failed to report for active duty on
December 7, 2003, as directed by their mobilization orders, the unit
commander signed paperwork requesting that his senior officers approve
personnel actions documenting that six of the seven soldiers were absent
without approved leave. He subsequently signed additional paperwork for
the six soldiers recommending approval of additional personnel actions for
desertion. However, he did not ensure that finance officials stopped the
soldiers' pay. Although we found no evidence that the 1004th Quartermaster
Company completed personnel actions for the seventh soldier, another
reserve official assigned to the 99th Regional Readiness Command
recommended approval for personnel actions documenting that the seventh
soldier was both absent without approved leave and in desertion status. We
also found that no one timely stopped the pay for the seventh soldier.

During our interview with the Commander for the 1004th Quartermaster
Company, he acknowledged not completing or overseeing completion of the
necessary support for the deserter packets that are required to be sent to
USADIP and others. The commander told us that he believed deserter
soldiers were his reserve battalion's responsibility. The 99th Regional
Readiness Command, which had oversight responsibility for the 1004th
Quartermaster Company, provided no information regarding whether anyone
else in the seven soldiers' chain of command knew anything about their
failure to report for duty. In fact, several individuals whom we spoke
with at the 99th Regional Readiness Command explained that this problem
was not limited to the 1004th. Additionally, the USADIP Chief explained
that compiling deserter packets were not a high priority for commanders
and that they did not understand deserter processing procedures. The
USADIP Chief estimated that 30 to 35 percent of the deserter packets
USADIP receives are incomplete and returned to the points of origin
without action taken to issue arrest warrants.

It was not until April 2005 that the first debt collection letter was sent
to one of the seven soldiers. Letters demanding payment were sent to the
other six soldiers between June and September 2005. The amount of debt
established by DFAS for the seven soldiers-about $187,000-was in the same
order of magnitude as our estimated $195,000 in improper payments. Only
about 9 percent of the improper payments have been repaid, and as shown in
figure 1, two of the seven soldiers have yet to repay anything as of May
2006.

Figure 1: Army Reserve Soliders Who Accepted Improper and Potentially
Fraudulent Military Pay

aGAO estimated unearned pay by reviewing DFAS pay extracts and calculating
payments made to the soldiers after the date that they were dropped from
personnel availability rolls due to deserter status.

bDate of the initial letter from DFAS to the soldier asking for payment to
recoup amounts paid to the soldier while in deserter status and previous
absent without leave status. According to a DFAS official, the debt was
for nonperformance of duty, which is equivalent to unearned pay.

cDOD established debt for unearned military pay does not equal
GAO-estimated unearned pay because some amount may have been repaid by the
soldier before the DFAS demand for payment was issued or because of other
information that DFAS had obtained subsequent to our estimates.

dAmounts paid as of May 2006.

During our interviews with the seven soldiers, each admitted to failing to
report for active duty and six admitted to knowingly receiving military
pay that they did not earn. One soldier told us that she believed that the
payments that she received were financial educational benefits. However,
our investigation confirmed that this soldier received about $17,000 in
military pay under the GWOT code after being charged with desertion.
Knowingly keeping unearned military pay is potential fraud and/or
potential conversion or theft of government funds, which is punishable by
a maximum confinement of 10 years.

One of the two soldiers who did not repay any debt during our
investigation voluntarily surrendered to military authorities as a
deserter. He subsequently received an other than honorable discharge from
the military in December 2005 that stated that it was in lieu of a
court-martial.

The results of our interviews with these seven soldiers are summarized
below. Case numbers correspond to the case numbers of the soldiers listed
in figure 1.

Case 1: Soldier was a specialist in an Army Reserve, Maryland unit and was
a nurse's aide in civilian life. We confirmed that the soldier resided at
the address stated on his mobilization orders. Although the soldier said
he never received written mobilization orders, he did admit that he
received a phone call from his Maryland Reserve unit in October 2003
advising him that he was going to be transferred to a Reserve unit in
Pennsylvania. He also admitted that he received a phone call in November
2003 from his new Reserve unit, advising him that he was going to be
mobilized to active duty. The soldier acknowledged receiving active duty
pay beginning in January 2004 and continued to receive pay until April
2005. Although he was aware that he was not entitled to this military pay
since he did not report for active duty, he said he used the money. He
told our investigators that if required, he would be willing to make
restitution to the Army for the improper payments, which according to DFAS
pay data, totaled about $58,000. DFAS records show that he has not paid
any of his debt as of May 2006.

Case 2: Soldier was a sergeant in an Army Reserve, Maryland unit and was
unemployed in civilian life at the time of our investigation. We confirmed
that the soldier resided at the address stated on her mobilization orders.
However, the soldier said that she never received any notice that she had
been mobilized to active duty. The soldier acknowledged receiving active
duty pay beginning in December 2003. She also acknowledged that she was
aware that she was not entitled to this military pay since she did not
report for active duty. According to the soldier, she contacted her
Reserve unit in December 2003 to report the overpayments. In October 2004,
she told our investigators that she spent the overpayments and would make
restitution to the Army, which according to DFAS pay data, totaled about
$37,000. According to DFAS records, she subsequently paid $10,543 of her
debt as of May 2006.

Case 3: Soldier was a staff sergeant in an Army Reserve, Maryland unit and
worked in administration at a pharmacy office in civilian life. She said
she received notice that she had been mobilized to active duty in November
2003. She also acknowledged that she started receiving active duty checks
beginning in December 2003, continued to receive these checks until August
2004 and used the money. She said she was aware that she was not entitled
to this military pay since she failed to report for active duty in
November 2003. According to DFAS pay data, these improper payments totaled
about $26,000. DFAS records also show that she has paid about $6,836 as of
May 2006.

Case 4: Soldier was a sergeant in an Army Reserve, Maryland unit and was a
firefighter in civilian life. We confirmed that the soldier resided at the
address stated on his mobilization orders. He said he received his
mobilization orders to active duty in mid-December 2003. The soldier
acknowledged receiving active duty pay beginning in December 2003 and said
he was aware that he was not entitled to this military pay since he did
not report for active duty. He said he spent the money. He also told our
investigators that he wanted to make restitution to the Army for the
overpayments, which according to DFAS pay data, totaled about $22,000.
DFAS records also show that he has paid about $50 as of May 2006.

Case 5: Soldier was a specialist in an Army Reserve, Maryland unit and was
a student in civilian life. We confirmed that the soldier resided at the
address stated on her mobilization orders. However, the soldier said that
she never received any notice that she had been mobilized to active duty.
The soldier did acknowledge that she started receiving bimonthly active
duty checks beginning in December 2003 and continued to receive these
checks until August 2004. She said she thought the checks were educational
payments. However, according to DFAS pay data, this soldier received about
$17,000 in military pay under the GWOT code after being dropped from
personnel rolls due to deserter status. DFAS records also show that she
has not paid any of her debt as of May 2006.

Case 6: Soldier was a private first class in an Army Reserve, Virginia
unit and was unemployed in civilian life at the time of our investigation.
We confirmed that the soldier resided at the address stated on his
mobilization order at the time the order was issued. However, the soldier
said that he never received any notice that he had been mobilized to
active duty. The soldier did acknowledge that he started receiving active
duty payments beginning in December 2003 and continued to receive these
payments until August 2004. He said he was aware that he was not entitled
to this military pay since he did not perform any military duty during the
pay periods from December 2003 through August 2004 and that he spent the
money for his personal use. He said he would be willing to make
restitution to the Army for the improper payments, which according to DFAS
pay data, totaled about $17,000. DFAS records also show that he has paid
about $300 as of May 2006.

Case 7: Soldier was a specialist in an Army Reserve, Maryland unit and was
a student in civilian life. She said that she was an active duty member of
the U.S. Army and was honorably discharged in August 2002. Shortly after
her discharge, she joined the Army Reserve and became a member of the
374th Finance Detachment located in Owings Mill, Maryland. In November
2002 she was involuntary transferred to the 424th Medical Logistics Unit
in Pennsylvania and on November 8, 2003, she was transferred to the 1004th
Quartermaster Company in Greensburg, Pennsylvania. Although mobilization
orders required her to report to her new unit-the 1004th--on December 7,
2003, she said she continued to report for monthly drill with the 374th.
Drill records indicate that she attended drills for the 374th in November
and December 2003 and January and February 2004. She acknowledged
receiving active duty pay beginning in December 2003 and said she was
aware that she was not entitled to this unearned military pay since she
failed to mobilize for active duty with the 1004th. She told us that she
kept the unearned money in a separate account. She also stated that she
saw a debt on her leave and earnings statement but she believed that the
amount of debt was inaccurate. DFAS pay data show that she was improperly
paid about $18,000. DFAS records also show that she has paid about $248 as
of May 2006.

Details of Investigation - Other Cases

In addition to the 7 soldiers assigned to the 1004th Quartermaster Company
who improperly received unearned military pay, we identified 68 other
soldiers, 38 with the Army Guard and 30 with the Army Reserve, who
continued to receive military pay that we estimated to total $684,000
after they were charged with desertion.9

The improper payments continued for all 68 soldiers after desertion
charges were made by unit commanders from calendar year 2001 through
February 2006. Arrest warrants were issued for 51 of the 68 soldiers
wanted for desertion. As of May 11, 2006, 18 of the 51 soldiers had been
apprehended by civilian authorities, 2 soldiers voluntarily surrendered to
military authorities, and 31 soldiers remained at large (listed in NCIC as
having an outstanding arrest warrant). Arrest warrants had not been issued
for 17 of the 68 soldiers at that time.

A summary of the improper payments by year and related arrest warrant
status is shown in figure 2.

9 Although we asked DFAS for the amount of outstanding debt on their
records for these 68 soldiers, a DFAS official told us that the data were
not readily available and that some of the data had been purged.

Figure 2: Other Army Guard and Reserve Soldiers Who Accepted Improper and
Potentially Fraudulent Military Pay

aData for 2006 represent desertion charges made in January and February.

Although we identified 68 soldiers in deserter status, this number likely
understates the problem. Determining the extent to which soldiers charged
with desertion continue to receive improper payments is difficult for
several reasons. First, initiating and processing desertion cases depend
upon unit commanders preparing timely manual paperwork. Second, there is
no central database that electronically stores this paperwork. Without
these data, military leaders do not have readily available aggregate data
affording visibility over the number of desertion cases initiated.
Additionally, they do not have a readily available tool to match against
pay data to ensure that soldiers in deserter status have not been paid.

The USADIP Chief informed us that the USADIP system was not intended to be
and is not an historical source of all Army Guard and Reserve soldiers
ever charged with desertion. Instead, it was designed to be a working file
to track the status of arrest warrants. As such, the working file is not
an accurate account of all soldiers in deserter status because USADIP

           o  manages arrest warrant status for only the desertion cases it
           receives and has no way to confirm whether all deserter packets
           for Army Guard and Reserve soldiers in deserter status have been
           prepared and approved,
           o  deletes the names of soldiers when informed about their
           apprehension or surrender, and
           o  returns incomplete desertion packets to the points of origin
           without initiating arrest warrants and is not required to follow
           up to ensure that the packets are completed properly and returned
           to USADIP in a timely manner.

In addition to the USADIP Chief, one Army official documented his concern
about the processing of potential deserter cases. In a memorandum dated
March 21, 2003, the Deputy Commanding General, U.S. Army Reserve Command
stated,

"The processing and reporting of USAR soldiers who fail to report for
mobilization are primarily the USAR unit commander's responsibility. In
attempts to track the soldiers who have failed to report, it has become
apparent that Commanders are not doing an adequate job of reporting and/or
processing these soldiers in accordance with the applicable regulatory
guidance."

Improper payments to soldiers charged with desertion were not unique to
citizen-soldiers in the Army National Guard and Army Reserve called to
active duty since the Army's full-time soldiers in deserter status have
also received improper payments. The U.S. Army Audit Agency issued a
report on November 13, 2002, concerning the Army's policy, procedures, and
controls for reporting active duty Army soldiers in deserter status to the
pay system and whether the pay and benefits of these Army soldiers were
promptly curtailed. The results of the audit disclosed that policy,
procedures, and controls for reporting deserters or absentee soldiers to
the pay system did not ensure that pay and benefits for these Army
soldiers were promptly curtailed. As a result, the Army made more than
$6.6 million in improper payments to 7,544 Army soldiers from October 2000
through February 2002 for pay that they did not earn. The report also
noted that collection rates were only about 40 percent. The U.S. Army
Audit Agency recommended policy changes to require concurrent notification
to applicable pay and personnel offices whenever approved personnel forms
documented a soldier's unauthorized absence from duty. The requirement
became effective in January 2005.10

Conclusions

Unless the Army specifically identifies and mitigates the unique risks
applicable to desertion cases, the Army will remain vulnerable to soldiers
taking advantage of flawed pay and personnel systems, cumbersome
processes, and weak human capital functions by accepting pay they did not
earn. Army Guard and Reserve soldiers who fail to report to active duty
when their units are mobilized do not meet the military obligation that
they took an oath to fulfill when they enlisted and should not be rewarded
by receiving pay for active duty they never performed. Our investigation
showed that there are sometimes few or no consequences for soldiers-not
only for desertion from their appointed place of duty but also for keeping
unearned military pay. This is unfair to the vast majority of Army
National Guard and Reserve soldiers who fulfill their military obligation
by reporting for active duty, serving honorably, and earning the pay they
deserve.

10 See footnote 4.

Corrective Action Briefing

On June 16, 2006, we discussed the results of our investigation with Army,
Army Guard, Army Reserve, and DFAS officials. We also provided them with
details needed to take appropriate action on the 75 cases (7 cases from
the 1004th Quartermaster Company and 68 other cases) involving Army Guard
and Reserve soldiers in deserter status who had received improper and
potentially fraudulent military pay.

In light of our investigative results, the officials acknowledged that
there is a need for a joint effort by personnel and pay officials within
Army, Army Guard, and Army Reserve components to develop a near-term
strategy covering human capital, business processes, and systems issues
relevant to potential desertion cases in order to provide better assurance
that soldiers who do not report for duty are not paid. They stated that
starting a componentwide effort would require a joint directive from Army,
Army Guard, and Army Reserve top leadership with DFAS cooperation.

The officials were unaware of the extent to which Army Guard and Reserve
soldiers failed to report for active duty and improperly received
potentially fraudulent military pay. They also acknowledged that there is
no readily available consolidated personnel data on potential Army Guard
and Reserve desertion cases for centralized oversight and comparison with
pay data. For example, National Guard Bureau officials did not ask for
periodic information regarding the number of potential desertion cases
initiated by Army Guard unit commanders. Although, the Army Reserve
personnel representative said that starting in January 2003, Army Reserve
staff informed her that a total of about 137 potential desertion cases had
been sent to USADIP, she did not receive information from USADIP on the
status of those cases, including how many deserter packets were returned
to unit commanders because they were incomplete. She also informed us that
she had no direct access to the pay records for the 137 potential
deserters to determine whether the potential deserters received improper
and potentially fraudulent military pay. She further stated that beyond
the 137 cases, she had no visibility over the number of personnel forms
recommending desertion status that had been prepared by unit commanders
and presented in paper form to their supervisors for approval.

Both Army Guard and Reserve officials acknowledged that oversight of pay
was a decentralized command responsibility and that unit commanders
receive reports on who is being paid within their units that they should
have reviewed to ensure that those soldiers who failed to report for
active duty were not getting paid. Because the policies and procedures
requiring commanders to notify finance offices to stop pay for soldiers
who do not report for duty within 48 hours were clearly defined, the
officials could not explain why some commanders were not complying with
this requirement. While they noted that the future integration of pay and
personnel systems may make it easy for a unit commander to push one button
that would stop pay and start desertion processing when justified, they
pointed out that the future availability of such integration would still
depend upon a commander's confirmation of the daily presence of all the
soldiers under his or her command.

Recommendations for Executive Action

Based on the input from officials attending our corrective action briefing
and consistent with the ongoing efforts to improve Army Guard and Reserve
pay account management that have been initiated in response to our
previous reports, we recommend that the Secretary of Defense direct the
Secretary of the Army, in conjunction with the Under Secretary of Defense
(Comptroller) and the Under Secretary of Defense (Personnel and
Readiness), to take the following three actions:

           o  take appropriate action, including initiating criminal
           proceedings where warranted and recovering improper payments, on
           the 75 cases of potential desertion identified in this
           investigative report;

           o  identify other existing desertion cases to determine whether
           additional Army Guard and Reserve soldiers have received improper
           and potentially fraudulent military pay, take appropriate action
           including initiating criminal proceedings where warranted, and
           recover improper payments on any additional cases identified; and

           o  to provide better assurance going forward, direct a joint
           effort by Army, Army Guard, and Reserve components to (1) develop
           a near-term strategy covering the human capital, business
           processes, and systems issues relevant to potential desertion
           cases in order to provide better assurance that soldiers who do
           not report for duty are not paid and (2) in the cases where future
           improper and potentially fraudulent acceptance of unearned pay are
           detected, take appropriate action, including initiating criminal
           proceedings and recovering those improper payments.

Agency Comments

The Director, Audit Follow-up and GAO Affairs in DOD's Office of Inspector
General orally informed us, on the basis of information he received from
applicable components, that DOD generally concurred with the report and
recommendations.

                         ______________________________

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If you or your staff have any questions regarding this report, please
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Gregory D. Kutz

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and Special Investigations

Enclosure

List of Congressional Requesters

The Honorable Tom Davis

Chairman

Committee on Government Reform

House of Representatives

The Honorable Christopher Shays

Chairman

Subcommittee on National Security,

Emerging Threats and International Relations

Committee on Government Reform

House of Representatives

The Honorable Todd Platts

Chairman

Subcommittee on Government Management,

Finance, and Accountability

Committee on Government Reform

House of Representatives

The Honorable C. A. Dutch Ruppersberger

House of Representatives

                     GAO Contact and Staff Acknowledgments

GAO Contact 

Gregory D. Kutz (202) 512-7455 or [email protected]

Acknowledgments

In addition to the individual named above, Mary Ellen Chervenic, 
Assistant Director; Kord Basnight; Gary Bianchi; Dennis Fauber;
Wil Holloway; Daniel Kaneshiro; Jason Kelly; Renee McElveen;
John Ryan; and Wayne Turowski made key contributions to this
report.

(192180)

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