Pentagon IG: Civilian, military employees used gov't credit cards for escorts, gambling

Critics of the Pentagon have often called for procurement reform, but perhaps not quite so literally. An audit by the Inspector General of the Department of Defense revealed that civilian and military employees used their DoD-issued credit cards to get cash for gambling in casinos and hire escorts in Las Vegas and Atlantic City. The report suggests that the employees might have been trying to hide the spending from their spouses.

That still may work out for them, too, as the IG isn’t recommending any individual action:

A Pentagon official briefed on some of the findings stressed that the federal government did not necessarily pay the charges; holders of the cards pay their own bills and then submit receipts to be reimbursed for expenses related to their government business.

The official said that the employees may have used the government cards for gambling and escort services in order to shield the charges from spouses.

Because the review was an audit of the credit card system and not an investigation of particular individuals, the official said the likely result will be that the agencies and military branches most affected will be compelled to remind employees that the practice violates policy — and possibly the law.

It’s tempting to make jokes about this, especially given the lack of effective oversight on normal procurement. How did the IG find out about the abuse? The Pentagon was paying $25,000 for a lap dance. It’s not quite as funny, though, when one considers that this kind of activity represents opportunities for enemies of the US to penetrate the DoD through blackmail and honeypot schemes. If these employees are already hiding this activity from spouses, they might be hiding it from their bosses too, thinking that they can manipulate the system to keep it secret from both. Once an outside agency discovers the activity, they can put pressure on a mark by threatening to expose it.

It’s not easy to catch this outside of an audit. Those who use corporate cards will be familiar with this kind of system. During the expense report process, one simply marks certain purchases as “non-reimbursable.” When complete, the person pays the unreconciled balance out of their bank account or by check as a lump sum, which makes it untraceable to their spouses — who may still be left wondering why so much cash suddenly disappeared.

That’s why the consequence of this has to be more significant than a strongly worded memo to those who abused the system in this manner. All of these employees would have been briefed on preventing security gaps and maintaining discipline as part of their work. The DoD needs to make those warnings stick with some form of punishment. Perhaps a mandatory briefing with their spouses on the purchases made with the cards will be sufficient.

Meanwhile, also at Politico, Nick Gass reports that a former VA employee in Michigan managed to embezzle $150,000 from a VA store, and blew it all on gambling, a stripper named Ashley … and lap dances:

A former federal employee in Michigan has admitted to embezzling at least $150,000 from a Department of Veterans Affairs retail store and spending it all on an addiction to gambling, prostitutes and strippers, including lap dances from a stripper named “Ashley,” according to a criminal complaint filed this week in U.S. District Court for the Eastern District of Michigan.

The complaint states that Glenn Allen Bates, 57, admitted to the accusations while meeting with investigators last summer. Bates told investigators that he stole from the VA Ann Arbor Healthcare System retail store that he managed, as well as its vending machines. He faces 10 years in prison if convicted. …

He “became friendly with a stripper named ‘Ashley’ and often paid her $500.00 or more per night for lap-dances,” reads the complaint from Special Agent Frederick Lane of the VA’s Office of the Inspector General. “Bates stated he also saw other strippers and prostitutes, but he primarily saw Ashley. Bates stated that he became addicted to the sexual encounters and he stole cash from the Canteen to pay for this addiction.”

How did the VA allow $150,000 to disappear before catching onto Bates’ criminality?