Military reservists face tougher scrutiny on housing pay

FORT EUSTIS

Last week, Lt. Col. Ben Murphey went from living in a recreational vehicle to occupying a jail cell.

An Army reservist on active duty since 2004, Murphey was convicted in a court-martial at Fort Eustis of stealing $70,000 worth of housing payments, filing false travel and reimbursement claims and misrepresenting his out-of-pocket lodging costs.

Murphey wasn't using his monthly $3,000 stipend to pay for a palatial rental house with an in-ground pool. Spending the whole stipend in that way would have been legal. Instead, he lived in a camper at a Williamsburg campground.

According to testimony, for just over three years, Murphey spent up to about $1,000 a month for an RV loan and campground fees at American Heritage RV Park. But he submitted receipts showing his expenses totaled $3,030 a month - the maximum reimbursement allowed under Defense Department regulations for this region.

Military members are forbidden to ask for a larger reimbursement than what they actually spent, testified Ann Steele, an official with the Defense Finance and Accounting Service in Indianapolis.

"This case is a case about greed," Capt. Patrick Woolsey, the head prosecutor, said. "It's a case about a soldier coming up with a plan, an elaborate scheme to defraud the U.S. government."

It's unclear, however, whether Murphey knew he could only be reimbursed for what he paid out of pocket. His attorneys noted that the government's travel regulations are confusing; the primary guide numbers more than 700 pages - and it doesn't specifically address housing stipends for activated reserve soldiers.

The Murphey case is one of hundreds that have come to light as part of an Army task force that worked with the defense accounting service to ferret out housing fraud among National Guard members and reservists, Steele said.

The fraud cases involve a type of housing allowance called TCS pay, for temporary change of station. Reservists deployed to Iraq or Afghanistan don't get TCS pay; they live in military barracks or quarters. Instead, the allowance typically goes to personnel assigned to stateside bases or in support of active-duty units.

Until the terror attacks of 2001, TCS pay wasn't very common. But the wars in Afghanistan and Iraq have resulted in the call-up of thousands of reservists - some of whom, like Murphey, elect to extend their assignments multiple times.

Greg McCormack, a Virginia Beach lawyer who specializes in military law, has represented 30 to 40 clients on housing fraud charges.

"I've got them coming out of the woodwork," he said.

He acknowledges that there probably are people abusing Army entitlements, and noted the Navy is also pursuing cases against sailors who claim more housing allowance than they're entitled to. But McCormack said prosecutors have been "extraordinarily aggressive" with TCS cases, even when defendants clearly did not intend to deceive officials.

One of his clients, McCormack said, was willing to acknowledge wrongdoing but wanted to avoid a court-martial. Military lawyers refused to strike a deal, he said. "They were looking for conviction and jail time."

Murphey and others like him claim the task force grew out of active-duty resentment toward the reservists' benefits package.

In a telephone interview a few weeks before his trial, Murphey said Army investigators are on a "witch hunt" for reservists who might have misunderstood confusing regulations that regularly change.

During cross-examination, Steele said that other expenses Murphey may have incurred - for his parking space at the campground, furniture rental, telephone bills, and cleaning services - would have been reimbursable. But Murphey did not itemize those expenses, meaning technically, he couldn't claim reimbursement for them.

In November, 10 months after he was first interviewed, Murphey was formally charged with five felony counts of fraud.

Williamsburg lawyer Edgar Jones represented him.

Jones said he thought officials were trying to make an example out of Murphey.

"It's a major case. I think they're trying to make it a precedent," Jones said.

Why? To make a show of being good stewards of tax dollars at a time when ballooning military spending is under scrutiny, Jones theorized.

Phil Cave has represented a dozen service members in similar fraud cases related to temporary housing payments. About half are stationed near Washington; all are reservists or National Guard members called to active duty.

In one case, Cave was weeks away from going to Iraq for a court-martial before it was called off. That case made little sense, he said - the government would have spent $50,000 to transport witnesses to the combat zone, even though it involved just $10,000 in disputed housing payments.

In another case, he said, the military continued to pay a soldier his monthly housing allowance even as it prosecuted him for fraudulently claiming that amount.

Cave doesn't mind the government cracking down on people trying to cheat the system.

"I'm a taxpayer, and if there's fraud, waste or abuse, I'm not averse to tracking it down," said Cave, who works in the Washington suburbs. But he thinks law enforcement sometimes loses perspective.

William Cassara, a Georgia attorney, also has horror stories about military clients charged with housing fraud.

One client went to finance officials at his command with specific questions about using TCS pay for his mortgage and was told it was fine, Cassara said - only to later be prosecuted for claiming his entire mortgage payment, not just the interest.

Cassara said the military tends to go after the entire amount of housing pay the service member received, instead of the portion that's in dispute.

A recent case involved a soldier who had received $62,000 in housing payments over a few years. Task Force TCS maintained he only qualified for $56,000, but instead of letting him repay the $6,000 in question, military prosecutors insisted on going to trial, Cassara said.

To avoid that, the soldier wrote the government a check for $62,000.

Murphey said that from the beginning of his case, agents and prosecutors told him he'd be court-martialed. The trial was the most serious type: a general court-martial, which carries the most severe penalties.

The Alabama reservist could have faced 27 years in jail for his crimes. The jury - two lieutenant colonels and seven colonels - went easy on him, recommending three months confinement. Notably, they did not call for Murphey to leave the service, or to lose his pension.

Jones said Friday that Murphey will appeal his conviction.

His Army contract will expire while he serves his time in the brig, which - with time off for good behavior - should end in 60 days.

Kate Wiltrout, (757) 446-2629, kate.wiltrout@pilotonline.com