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Pentagon seeks to waive troops' debt in California Guard bonus scandal

Top-level Pentagon officials are exploring ways to potentially waive the debts imposed upon more than 10,000 military reservists after the California National Guard sought to force the veterans to repay generous recruitment bonuses that were fraudulently awarded a decade ago.

"This has the attention of our leadership, and we are looking at this to see what we can do to assist," Navy Capt. Jeff Davis, a Pentagon spokesman, said Monday. "We take doing right by our service members very seriously, and the senior leadership of this department is looking very closely at this matter."

The Pentagon's close attention comes amid a growing controversy highlighted by a recent Los Angeles Times report that revealed California Guard officials are demanding the return of bonuses up to $15,000 that were offered to help recruit part-time troops at the height of the Iraq war in the 2000s

A federal investigation several years ago found that widespread fraud and mismanagement by California Guard officials resulted in local units paying out more than $20 million in bonuses and student loan payments to soldiers who did not qualify for them or were approved despite problems with their paperwork.

The improper bonuses came at a time when the military's reserve components were struggling to meet recruiting goals because of frequent combat deployments and high operational tempo.

The individual veterans did not know at the time that the bonuses were fraudulent. The debt — which now includes interest accrued over the years — is causing financial hardship among some veterans, many of whom spent the money long ago and are now retired.

Some reservists have already repaid their debts.

The matter has sparked outrage on Capitol Hill, where lawmakers have called the move unfair and vowed to launch an official inquiry.

The Pentagon said the best immediate option for troops who received those bonuses and now face payback demands is to file an appeal with the Defense Department’s Office of Hearing and Appeals.

"We want ... the chain of command to work with these individuals who are affected by them to help walk them through the process to seek some sort of waiver," Davis said Monday.

For now, attorneys say the Pentagon only has the authority to waive debts for individual service members. "There is not currently the authority to wave these things writ large," Davis said. "It might require working with Congress to be able to change authorities."

Congress is scheduled to return to Capitol Hill on Nov. 14. In the meantime, those troops affected by the repayment orders may face interest charges, wage garnishments and tax liens if they’re unable to pay.

"We always know the importance of keeping faith with our people," Davis said. "We want to make sure that were doing everything we can within the boundaries of the law to be able to help our people."

In 2013, Army Master Sgt. Toni Jaffe, a former incentives program manager with the California Army National Guard, was sentenced to 30 months in federal prison after a joint investigation by the FBI and U.S. Army Criminal Investigations Command found that her actions contributed to the improper disbursement of the bonuses, according to the Defense Department's Inspector General.

On Monday, a spokesman for the California National Guard said its leaders welcome attention to the predicament of nearly 10,000 soldiers ordered to repay the enlistment bonuses.

Spokesman Capt. William Martin said the Guard has been trying to inform those people that an appeals process is available.

Martin says "bad actors" working for the Guard misled soldiers with outsized bonuses.

He says they’ve been replaced with leaders trying to resolve problems.

The Associated Press contributed to this report.

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