Principal Deputy Auditor General Joseph Bentz and Director of the Army Staff Lt. Gen. William Grisoli listen to the Senate subcommittee's response to their testimony. Christophe Haubursin / MEDILL

Principal Deputy Auditor General Joseph Bentz and Director of the Army Staff Lt. Gen. William Grisoli listen to the Senate subcommittee’s response to their testimony. Christophe Haubursin / MEDILL

WASHINGTON – An Army National Guard program that gave freelance recruiters a bonus for each recruit they referred is under investigation after the reported abuse of $29 million in taxpayer dollars, according to information disclosed at a Senate hearing Tuesday.

The Recruiting Assistance Program, created in 2005 to boost military enrollment and buttress forces in Iraq and Afghanistan, allowed non-recruiters to receive “referral payments” of $2,000 to $7,500 for each new member that they referred.

But by the time the program was shut down in 2012, official recruiters had been giving away information on their own enlistees to Recruiting Assistance Program recruiters, earning them payment in exchange for kickbacks to the officials.

According to the Army’s original audit, 705 recruiters were involved in potentially fraudulent Recruiting Assistance Program payments to 2,022 recruiter assistants. Those assistants consisted of both soldiers and civilians, including several high school counselors who signed up for referral payment after learning of students’ interest in the military.

“These are criminals who have dishonored the uniform that we’re proud of,” said Financial and Contracting Oversight subcommittee chairwoman Claire McCaskill, D-Mo. “It’s going to break my heart if a lot of people get away with this.”

An Alabama marketing firm called Docupak was contracted to manage the Recruiting Assistance Program, receiving payment for each recruit. In 2007, the organization alerted the Army Criminal Investigation Command of possible fraud, prompting an investigation that led to the program’s eventual shutdown in 2012. According to McCaskill, the oversight process — both on Docupak’s level, and on a state level, didn’t properly monitor fraud.

“It’s going to be a while before the dust settles and we figure out how many people we put into jail for this,” McCaskill said. “But at the time it does, we’ll do a report card, and we’ll go after the states that did such a poor job at this.”

McCaskill proposed creating a specific fraud oversight position within the military, given that Army officials claimed an absence of clues before Docupak’s investigation.

“There was really nothing that jumped to our attention that would show that we had a major problem,” said Maj. Gen. David Quantock, commanding general of the United States Army Criminal Investigation Command, who spoke on first panel before the Homeland Security subcommittee.

Other panel members defended the $366 million program — which enlisted more than 150,000 new recruits in total — as one of the most effective peer-to-peer methods for recruiting. But they acknowledged the need for fraud control.

“There are certain times when the market is tough,” Director of the Army Staff Lt. Gen. William Grisoli said. “We need to have those tools in order to expand the force.”

The top recipient accused of fraud — and currently facing prosecution — fraudulently earned $275,000, the Army said, while five others made more than $100,000 each. Of the soldiers and recruiters under investigation, none has been jailed or had benefits confiscated.

“It’s not whether the idea was a bad idea, it’s whether the execution was done properly,” McCaskill said. “What we’re here to argue about is whether it was designed in a way so that people were making money without adding value.”