Basic Allowance for Housing (BAH) fraud occurs when a service member deliberately provides false information to receive higher housing allowances than they are entitled to. This serious offense can lead to severe penalties, including court-martial, dishonorable discharge, fines, and imprisonment. With the ballooning U.S. budget deficit and proposed cutbacks in military funding, the Armed Forces have ramped up efforts to uncover and prosecute BAH and Overseas Housing Allowance (OHA) fraud. Service members in high-cost living areas are particularly at risk for investigation or audit. These audits typically compare Leave & Earnings Statements (LES) against other financial documents to identify discrepancies.
Service members might commit BAH fraud in several ways. Some claim BAH at the “with dependents” rate without actually having eligible dependents, while others provide false information about their residence location to receive higher BAH rates. Fabricating rental agreements to justify higher BAH payments is another common method, as is failing to report changes in dependent status, such as divorce or children moving out.
Military investigators detect BAH fraud through various methods. Regular audits of financial records can reveal discrepancies, while targeted investigations focus on high-cost living areas or unusual patterns in BAH claims. Financial document reviews, including comparing LES with other financial documents like bank statements, rental agreements, and dependent records, help identify fraud. Cross-checking information with external sources such as marriage licenses, birth certificates, and school enrollment records also plays a crucial role in fraud detection.
The consequences of being found guilty of BAH fraud are severe under the Uniform Code of Military Justice (UCMJ). These can include court-martial, which can lead to severe penalties; dishonorable discharge, which permanently affects the service member’s military and civilian life; restitution and fines, where the convicted service member may be required to repay the fraudulently obtained amount and pay additional fines; and imprisonment, particularly in cases involving significant amounts of money or repeated offenses.
It’s not just BAH and OHA fraud that are being investigated and prosecuted. Audits are also conducted on Defense Travel System (DTS) vouchers to ensure that claimed travel-related costs were actually incurred and that the service member actually traveled on the claimed Temporary Duty Assignment (TDY) or Temporary Additional Duty (TAD). The military strictly scrutinizes all travel and reimbursement claims submitted through DTS. Some service members attempt to abuse the system by creating fraudulent travel authorizations for unauthorized missions, extending travel without justification, and claiming higher expenses than were actually incurred. Frequent travelers using the DTS system, especially those who frequently travel to high-cost locations such as Hawaii, Japan, Okinawa, or Korea, could be targeted for a DTS audit or investigation.
Typical examples of BAH and DTS fraud include false dependent location claims, fraudulent lease agreements, misrepresentation of marital status, and creating fraudulent travel authorizations. For instance, a service member might falsely claim that their dependents live in a high-cost area to receive higher BAH. An O-3 living in Korea with dependents in Fort Liberty (formerly Fort Bragg), NC, is entitled to $1,530 per month. If falsely claimed to be living in Honolulu, HI, the rate increases to $3,669 per month, leading to nearly $25,698 in unauthorized entitlements over a year. Another example involves a service member stationed overseas submitting a fake rental agreement to receive higher OHA. Claiming a $2,500 monthly rent in Bangkok, Thailand, instead of the actual $500, can lead to $24,000 in unauthorized entitlements annually. Misrepresentation of marital status, such as not updating marital status changes like failing to report a divorce, to continue receiving higher BAH rates for married service members is also common. DTS fraud can involve creating fraudulent travel authorizations for non-existent missions or inflating travel expenses. For example, claiming travel to a high-cost area like Tokyo instead of a nearby military base to receive higher per diem rates can trigger investigations.
Additional examples include a service member claiming to be married when they are not, or failing to inform Finance of a divorce. For instance, a married E-6 stationed at Schofield Barracks, Hawaii, would receive $3,669 per month from BAH. If that same E-6 were single, they would only receive $2,751 per month. Over a one-year period, this could lead to an accumulation of over $11,000 in unauthorized entitlements. Another instance might involve a service member stationed at Fort Shafter, Hawaii, who travels TDY to Camp Zama, Japan, and Torii Station, Okinawa. On a trip to Camp Zama, Japan, the traveler lists his destination in DTS as “Tokyo City” instead of “Camp Zama,” knowing that the “Tokyo City” location authorizes $404 a day in total per diem, while the “Camp Zama” location authorizes $288 per day. The service member, TDY to Camp Zama, Japan, for ten days, files his DTS voucher upon his return and receives over $1,000 in unauthorized entitlements based on his claimed location of Tokyo City.
Real-world cases highlight the severe consequences of BAH and DTS fraud. A Navy Senior Chief was accused of conspiring to defraud the government of nearly $100,000 using DTS. The defense highlighted deficient command controls and system oversight, leading to most charges being dropped. The Senior Chief was allowed to retire, confined for only four months, received an honorable discharge, and retained his military retirement. In another case, a service member was charged with nearly $30,000 in fraud for allegedly obtaining BAH, OHA, and Family Separation Allowance by falsely claiming her husband lived in Brooklyn, NY. The defense kept much of the investigation out of evidence, resulting in a not guilty verdict on most charges.
Given the complexities and severe penalties associated with BAH and DTS fraud, having an experienced military defense attorney is crucial. An attorney can help navigate complex regulations, build a strong defense, and argue for reduced penalties by highlighting mitigating factors such as lack of intent, financial hardship, or administrative errors. Ensuring that your legal rights are protected throughout the investigation and trial process is paramount.
BAH and DTS fraud are serious offenses with potentially severe consequences for military personnel. Understanding how these types of fraud are detected, the penalties involved, and the importance of legal representation can help service members navigate this challenging situation. If you are accused of BAH or DTS fraud, it is critical to seek the assistance of an experienced military defense attorney to protect your rights and build a robust defense.
At Bilecki Law Group, we specialize in defending service members against charges of BAH fraud, DTS fraud, and other military offenses. Our experienced attorneys understand the intricacies of military law and are committed to providing the best possible defense for our clients. Contact us today to discuss your case and explore your legal options.
Timothy Bilecki, the lead defense attorney at Bilecki Law Group, brings a unique background in finance and extensive experience in military law. With a Bachelor’s degree in Finance from Boston College and an MBA from the F.W. Olin Graduate School of Business at Babson College, Mr. Bilecki has the financial acumen necessary to dissect complex BAH fraud cases. Additionally, having served with the U.S. Army JAG Corps, he possesses a deep understanding of the military justice system. His expertise and dedication make Bilecki Law Group a formidable advocate for service members facing financial fraud allegations. If you are under investigation for BAH fraud, OHA fraud, or any other financial misconduct, reach out to Bilecki Law Group for a robust defense grounded in both legal and financial expertise. Contact us today for a free consultation.
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