21 Tucson Air Guardsmen indicted; $1M fraud alleged by 'Black Sheep'

The former commander and 20 other members of a Tucson Air National Guard unit have been indicted for allegedly defrauding the government of more than $1 million. Over three years, the members of the 214th Reconnaissance Group, which operates drones over Iraq and Afghanistan, falsified military records to bump their pay, Attorney General Tom Horne said Monday.

Horne's announcement comes four years after an Air Force investigation into the allegations led to the commander's firing. It also follows a finding last week by Yavapai County Attorney Sheila Polk that Horne illegally coordinated his 2010 run for office with an outside campaign committee.

Col. Gregg Davies, the former head of the Predator drone unit based at Davis-Monthan Air Force Base, provided assistance to the 20 co-defendants in the alleged fraud, a news release from Horne's office said Monday.

Eight officers and 13 enlisted members are alleged to have taken home a total of $1.4 million in Temporary Duty Disbursements between November 2007 and September 2010. Horne said at a news conference Monday that “the majority” of the defendants received more than $100,000.

Davies was fired in November 2009, following an internal investigation into the allegations.

Davies "his position of authority to circumvent measures that were supposed to prevent unauthorized temporary duty entitlements when military members are neither deployed nor away for training from their home," spokeswoman Stephanie Grisham wrote.

“The colonel in charge used his position of authority to obtain this temporary duty payment himself for over $100,000 and also to help the 20 others do that, and he used to that position to circumvent measures put in place to prevent this type of fraud,” Horne said.

Horne said that while living in Tucson, some of those indicted listed addresses outside of the state as their homes of record in order to collect Temporary Duty Disbursements.

If convicted, the defendants could face up to 12.5 years in prison, Horne said.

From the release:

Between November 2007 and September 2010, the Defendants are accused of intentionally falsifying military records and using fake home addresses in order to receive Temporary Duty Disbursements (TDY), money meant for military members who are on short-term orders and traveling outside their home.  Over the course of three years, the majority of defendants fraudulently took home more than $100,000 by claiming to live outside of Tucson.

Grisham would not provide a complete list of those who were indicted.

"We are not giving that out until the arraignment later this week – we have to be sure everyone has received their summons," she wrote in an email response to a request for that information.

Davies could not be located for comment on the allegations.

The indictments are the result of an 18-month investigation by the FBI, the Attorney General's Office, the U.S. Air Force, Arizona National Guard and the Air National Guard, the release from Horne said.

Horne's statement did not mention that the allegations that resulted in Davies' 2009 dismissal were made public in 2012, when the Arizona Republic reported on the internal investigation:

Air Force policy allows airmen on temporary duty away from home to collect payments for housing, meals and other expenses. Auditors found a majority of the accounts scrutinized were invalid or contained "admitted fraudulent activity," in some cases authorized by the group commander. The report said more than two dozen airmen in Tucson used fictitious addresses and collected housing and per diem expenses even though they lived there. In one case, investigators found airmen had rented one another's homes so they could submit fraudulent receipts.

"This condition occurred due to a complete breakdown of management controls," auditors wrote. "The lack of effective procedures allowed 214th RG members to illegally exploit opportunities for personal gain without penalty."

Available records show at least one officer received an Article 15 — the military punishment beneath a court martial. Those who profited from illicit expense checks were ordered to pay reimbursements of up to $90,000. Suspected criminal conduct was referred to the FBI and the Air Force Office of Special Investigations, but no known prosecutions have occurred.

Monday, Horne said he is "committed to the investigation and prosecution of individuals who fraudulently collect taxpayer money and will use the full resources of my office to prosecute to the fullest extent."

"When some individuals allegedly defraud the military system for financial gain it tears away at the very fabric of duty and honor," said Douglas G. Price, FBI Special Agent in Charge, Phoenix Division.

"Somebody deployed to Afghanistan gets a little over $3 a day, which is about a $1,000 a year, and you have people in this case who live in Tucson and have collected over $100,000 even though they went home to their families every night," Horne said at a news conference.

The unit, nicknamed "The Black Sheep," employed 188 full and part-time military personnel and 20 civilians in 2012, according to an Air Force fact sheet.

Eight of the 21 indicted are still members of the Arizona Air National Guard, said Brig. Gen. Michael R. McGuire, director of the Arizona Department of Emergency and Military Affairs.

“I welcome the efforts of these agencies to provide an accurate view of the facts and circumstances that have led to these indictments,” McGuire said at the news conference. “We fully support the legal process.”

Assistant Attorney General Mike Jette, who is prosecuting the case, said the defendants would face charges including conspiracy, conducting an illegal enterprise, fraud, theft and money laundering.

The indictment will be made public following an arraignment set for Friday, he said.

Horne said that a small percentage of any group, even those responsible for defending the country, will be dishonest.

“When that happens, the role that they play and the reverence we have for the role they play is no excuse for committing a crime and defrauding the government,” he said.

Illegal coordination

Horne has denied that he coordinated his 2010 run with the group Business Leaders of Arizona.

Sheila Polk, Yavapai county attorney, said last week that there is evidence that Horne and a campaign consultant coordinated the message of a TV commercial. She ordered $513,340 spent by the supposedly independent group to be returned to donors. Polk said she would sue Horne and Kathleen Winn, the head of the outside committee, for three times the amount if they refused to return the funds.

A previous finding by Maricopa County Attorney Bill Montgomery that Horne broke election laws was thrown out after Horne raised procedural objections.

Horne was elected the state's top prosecutor by about 63,000 votes. His opponent in that race, Felicia Rotellini, is the only Democrat announced to be seeking the office in the 2014 election. Horne faces a primary opponent in Mark Brnovich, a former state gaming director.

Asked whether the timing of Monday’s news conference was intended to deflect attention from Polk’s announcement, Horne said that wasn’t the case and that his office would release documentation proving Polk incorrect.