The first hint of the scandal that has engulfed the California National Guard came more than eight years ago with a one-page memo that disclosed an internal investigation of a sergeant working at Mather Airport in Sacramento.
Master Sgt. Toni L. Jaffe, the California Guard’s bonus and incentives manager, was suspected of attempting to “commit fraud” by awarding bonuses to three “ineligible officers,” the inspector general wrote in August 2008.
The case has exploded into a national embarrassment. Under pressure from the White House and Congress, the Pentagon has suspended its attempts to force more than 9,700 veterans to repay what the California Guard claimed were improper bonuses and other incentives, many awarded by Jaffe.
Congress will hold its first hearing on the bitter saga Wednesday. Maj. Gen. David S. Baldwin, the California Guard commander who was appointed by Gov. Jerry Brown in 2011 to clean up the mess, will testify before the House Armed Services Committee.
Baldwin will tell the committee that investigators found “gross mismanagement and fraud” within the California Guard incentives program and that “dozens of personnel, including senior leaders and general officers,” were punished, according to his prepared testimony.
Most, however, got off with reprimands or early retirement. Jaffe was the only soldier sent to prison.
In her first interview since she was released in 2014, Jaffe told The Times that she approved thousands of improper bonuses because she faced pressure to help fill Pentagon quotas for troops for the wars in Iraq and Afghanistan.
“I had too much work,” she said. “People were sending me emails and phone calls, saying, ‘Where’s my bonus?’ I begged those people for their paperwork.”
Jaffe said some officers at Recruiting Command, which had about 250 staff members, criticized her for being overweight and ignored her pleas for help in processing claims.
“Is it fair that I took the full brunt of this? No,” a sometimes tearful Jaffe, 56, said in a telephone interview from her home in Citrus Heights, near Sacramento. “I owned up to my responsibility. They need to own up to theirs.”
In August 2011, Jaffe pleaded guilty in federal court to making a false claim and was sentenced to 30 months in prison. According to her plea agreement, she was responsible for $15.2 million in wrongfully paid bonuses and loan repayments between 2007 and 2009.
Jaffe’s lawyer, Johnny L. Griffin III, told the court in a sentencing memo that the married mother of two daughters was an “emotionally frail woman who lives day to day in a state of depression.”
The Army’s Criminal Investigation Command later estimated that Jaffe personally approved $261 million in legitimate and improper bonuses and other incentive payments. She was never accused of taking any money herself.
At least 31 people, including eight colonels, lieutenants colonels or majors, received military reprimands and several were forced to retire, according to a summary of the results of the investigations provided by the California Guard, which refused to release their names.
One unidentified officer, according to the summary, was accused of “dereliction of duty” in connection with payments of bonuses and student loans and was “permitted to retire in lieu of involuntary separation,” according to the summary.
At least eight other junior officers and enlisted soldiers were convicted or pleaded guilty to federal or state charges from 2012 to 2015 for knowingly accepting improper payments or other misconduct, according to the California Guard summary. None was sentenced to prison.
Although she was a relatively junior noncommissioned officer, Jaffe’s job made her solely responsible for approving bonuses in the California Guard between 2007 and 2009, when the Pentagon had launched a troop surge in Iraq and fighting was intense in Afghanistan.
The pressure apparently overwhelmed her as the National Guard, which oversees state Guard units, began offering the most generous incentives in its history to recruit and retain soldiers.
Jaffe approved thousands of bonuses involving tens of millions of dollars with little or no paperwork, federal investigators would find.
In October 2013, while still in prison, she told California state prosecutors conducting a separate investigation of the bonus payments that she had been mistreated by her colleagues at Recruiting Command.
Jaffe “was ‘blackballed’ by her command,” Anthony Colannino, the California prosecutor who investigated the bonus fraud, said in a brief filed in Los Angeles County Superior Court, quoting Jaffe’s statements to him. “People were told not to talk to her, eat with her, sit with her or ‘go around’ with her,” Colannino said. “In short, Jaffe was treated like ‘a second-class citizen.’”
Jaffe also told Colannino, who interviewed her at Waseca Federal Correctional Institution in Minnesota, that superiors in Recruiting Command had urged her to authorize bonuses, according to a transcript of the interview filed as an exhibit in the Superior Court case.
“Did you receive any instructions from, say, your command … directing you to do things with these bonuses that you felt was either problematic, improper, perhaps illegal?” Colannino asked at one point.
“Yes, sir,” Jaffe replied.
She said Sgt. Maj. Kurt Muchow, who was the senior noncommissioned officer in Recruiting Command, and Maj. Steven Poteat, the executive officer, started pressuring her to approve reenlistment bonuses in 2006, according to the transcript.
Muchow “kept coming to me asking me to process payments” for soldiers, Jaffe said. “He didn’t want the yes or no. He just said, ‘Do it.’” She added that Poteat also would “come to me, saying, ‘Process these too.’”
In an interview with The Times, Muchow said he never told Jaffe to pay improper bonuses. “That’s categorically incorrect,” he said.
He said he dealt only with questions about what he called Jaffe’s lack of professionalism.
“I encouraged her to respond timely to phone calls and emails she received,” he said. “In no way was that encouraging her to respond on bonuses.”
Muchow and Poteat, who declined to comment, were not charged with any wrongdoing.
Current and former California Guard soldiers in Recruiting Command said pressure to meet Pentagon recruiting quotas was severe at the time and internal financial controls were lax.
Lt. Gen. Clyde Vaughn, head of the National Guard Bureau, the Pentagon agency that oversees Guard units and provides their budgets, told the California Guard commander in a December 2006 memo that his “highest priority” was achieving recruiting goals.
For California, that meant Recruiting Command had to sign up 1,495 officers and 14,445 enlisted soldiers in 2007 alone, according to the memo obtained by The Times.
Soldiers recalled being summoned to mass meetings, dubbed “retention seminars,” where Brig. Gen. Louis J. Antonetti, commander of the Army component of the California Guard, urged them to reenlist and described the generous bonuses, eventually turning the floor over to Jaffe.
Afterward soldiers would line up and Jaffe would process their bonus payments, she said.
The system began to crumble in August 2008 when the California Guard inspector general, Col. Richard Sobrato, informed Col. Diana Bodner, who ran Recruiting Command, of complaints that Jaffe had approved improper bonuses for three officers.
An officer outside Recruiting Command was appointed to investigate.
In an interview, Bodner said she and other officials decided not to reassign Jaffe from her job while the investigation was underway.
Investigators determined that two bonuses, totaling $30,000, involved “administrative errors” and that Jaffe “lacked intent” to commit fraud, according to an FBI summary of the findings.
Jaffe remained in her job and continued to process California Guard bonuses for another 17 months while a separate audit was carried out.
The audit, completed in July 2010, rang alarm bells.
Bonus payments in the California Guard had more than doubled from $10.9 million to $23.7 million between 2007 and 2008, it found.
When auditors checked a sample of $160,000 in bonus payments, they found that Jaffe had approved giving the money to six officers and two warrant officers “without uploading documentation” into computers, leaving the files incomplete.
But the audit did not blame the entire fiasco on Jaffe.
California Guard personnel “tacitly approved and/or encouraged widespread fraud and abuse, misappropriation, and misapplications of federally appropriated funds,” Wesley T. Kilgore, special agent in charge of the Army Criminal Investigation Command office in Los Angeles, wrote in an August 2010 memo.
“The preponderance of the evidence gathered to date indicates potential criminal culpability.”
Col. Peter Cross, a spokesman for the California Guard, said last week that Jaffe’s superiors were appropriately disciplined.
“Leaders that did not take decisive action to implement internal controls were held accountable,” he said.