A common scenario that occurs in military fraud cases: On a TDY trip to a conference, an NCO submits a voucher for hotel nights when he slept at his friend’s house, charges a few beers to the government credit card, pockets the per diem for meals he skipped, then lies about all of it when the command investigator pops in for a chat. From that one sequence of bad ideas, the government can charge larceny under Article 121, fraudulent use of the card under Article 121a, false claims and false writings under Article 124, and false official statement under Article 107. The good news is that the government has to prove specific intent, which amounts to mind-reading, and it often proves hard to do beyond a reasonable doubt.
Why Prosecutors Stack Fraud Charges
Sometimes prosecutors charge as many UCMJ crimes as the evidence calls for. But they also toss in multiple charges for tactical reasons. Panels don’t get all that wound up about a sergeant who fudged a TDY voucher or claimed BAH he wasn’t entitled to. Adding as many charges as possible gives a prosecutor a way to make the case look worse than it is. Four UCMJ articles on a charge sheet suggests a pattern of dishonesty even when the underlying conduct is one bad decision that occurred in stages.
Charge “stacking” also gives prosecutors fallback options. If the panel doesn’t buy the government’s larceny argument, a false claim charge might still be viable. If the false claim charge is weak because it’s based on an irrelevant lie, a charge under Article 107 for false official statement to the investigator might still work.
That’s why anyone being investigated or court-martialed for military fraud will almost certainly face more than one allegation.
Article 121: Larceny and Wrongful Appropriation
This is the most common UCMJ fraud charge and it applies to a wide scope of situations. The prosecution has to prove several things: (1) a wrongful taking, obtaining, or withholding of property (2) from someone (3) with a superior claim of right (4) with the specific intent (5) to permanently deprive that person of the property.
With so many components involved, fraud cases can be tricky and the courts of appeal have to step in from time to time to clarify what constitutes a crime and what doesn’t. The Court of Appeals for the Armed Forces held in Helms that once a service member realizes he or she is receiving pay that isn’t owed, and has the intent to keep it, the larceny is complete. An earlier standard, based on the Watkins case, was that a simple failure to report an overpayment isn’t enough for a conviction. The Antonelli and Helms cases refined the rule: an accused’s steps to conceal the overpayment, or formation of intent to steal once the member realizes she was overpaid, can support a conviction.
For government property valued over $1,000, the maximum punishment is a dishonorable discharge, total forfeitures, and ten years’ confinement. For amounts under $1,000, the max is a bad-conduct discharge, total forfeitures, and one year.
Article 121a: Fraudulent Use of Credit Cards, Debit Cards, and Other Access Devices
Article 121a is a relatively recent addition to the UCMJ. It became necessary because the government kept losing on appeal when they charged unauthorized credit card use as larceny under Article 121. Over time, confusion emerged over who the actual victim was in that kind of case. The bank? The merchant? The cardholder?
In the Lubasky and Cimball Sharpton cases, the courts reversed convictions because the prosecution named the wrong victim. Article 121a sidesteps the problem by focusing on the fraudulent card use, not on who lost money. Gagne, Scherer & Associates litigated the same victim-identification issue at trial in Cimball Sharpton before the appellate courts adopted our view and Congress responded by adding Article 121a.
For property worth $1,000 or less, the maximum punishment is a bad-conduct discharge, total forfeitures, and ten years’ confinement. For use over $1,000 in a one-year period, the max is a dishonorable discharge, total forfeitures, and fifteen years.
If you misuse a government card but intend to repay before the bill comes due, that’s still a crime. Intending to repay isn’t a defense. Your defense has to focus on absence of intent.
Article 124: Fraudulent Claims
Article 124 addresses multiple fraud theories. They’re all based on the concept of a “claim” against the United States. The most common versions: making a false claim, presenting a false claim for payment, making or using a false writing in connection with a claim, and forging a signature in connection with a claim.
Claim, making, and presentment are different stages of the same transaction. A “claim” is a demand for money or property; “making” requires submitting the claim; “presentment” means submitting it to someone with authority to pay.
Every military member has heard of travel voucher fraud, DITY fraud, and BAH fraud. In those scenarios, each false statement on each voucher can be charged as a separate crime. A single PCS move with multiple reimbursable categories (mileage, weight, fuel, lodging) can get you a charge sheet with a dozen Article 124 specifications.
But no matter how scary the charge sheet looks and no matter how many false claims it makes, Article 124 is still a specific intent crime.
Also, the “materiality” requirement can be a path to an acquittal. As we explain in detail below, the false statement of the claim has to trick (or intend to trick) finance into paying a debt that isn’t due. Inaccuracies or lies that don’t affect whether the claim gets approved are not material.
The maximum sentence for a false-claim is a dishonorable discharge, total forfeitures, and five years’ confinement per specification.
Article 107: False Official Statements
Article 107 is the charge prosecutors add when they think an accused lied to some kind of investigator orally or in writing. Submit a fraudulent travel voucher, and you face Article 124. Lie to the command investigator who asks about the trip, and you can be charged with Article 107 too. Article 107 is particularly toxic to your credibility. Any proven lie can undermine your chances of beating the fraud charges. In any case with an allegation of false official statement, the defense has to investigate whether the statement was made after a proper rights advisement. Agents and command investigators often don’t want an accused to know his rights when confronted with a fraud allegation, so they do their best to make the question seem administrative instead of part of a criminal investigation.
The maximum for a false official statement is a dishonorable discharge, total forfeitures, and five years’ confinement.
How the Prosecution Charges Fraud
The varieties of military fraud can be confusing and often overlap, but they all focus on the same essential behavior: theft by dishonesty. The prosecution will charge multiple violations of the UCMJ whenever it can.
Military Fraud Under the UCMJ
| Conduct | Article 121 | Article 121a | Article 124 |
|---|---|---|---|
| Personal use of government card | Sometimes | Yes | Maybe |
| BAH for wrong area | Yes | N/A | Yes |
| DITY with inflated weight | Yes | N/A | Yes |
| Sham marriage for benefits | Yes | N/A | Yes |
| Travel voucher for fake expense | Yes | N/A | Yes |
How to Get an Acquittal in a Military Fraud Case
An accused on an unaccompanied OCONUS tour uses Honolulu as his family’s home of residence for BAH purposes. The prosecution alleges his family lives in rural New Mexico, and charges him with Articles 121, 124, and 107 for over $70,000, for stealing the money through a false claim and then lying about it when asked. Helpful facts: the family spends significant time in both locations and the accused has longstanding ties to Honolulu. Now it isn’t just a question of whether he has a defense (he does) but whether he also has a lawful claim to the money so the government can’t claw it back (likely yes).
Specific intent is the key to victory in many military fraud cases. Law enforcement agents don’t pay much attention to it, but if the case goes to a court-martial, specific intent will be the most important aspect of the case.
The government has to prove that when the accused signed a form, used a government credit card, or made a statement, he knew what he was doing (stealing, lying) was wrong and intended to do it.
“Knowledge” and “intent” are mental states. Because mind-reading is impossible, and doubly impossible in hindsight when the person (the prosecutor) wasn’t even there, intent has to be proved through evidence. Rental agreements, hotel receipts, circumstances, witness testimony. Even with this other evidence, proving a specific intent is often very difficult, especially if the defense can frame the prosecution’s efforts as amateur mind-reading. Of course, mind reading gets a lot easier when the evidence shows the accused loaded up the bed of his pickup with kitty litter for the weigh-in during a DITY move, but in most fraud cases, there’s a lot more (or less) to the story than you see on the charge sheet.
Military members don’t care for finance regulations. They’re a headache for everyone. TDY, PPM, GTCC, JFTR. Acronym hell. Thousands of pages, with annotations and fine print, constantly changing with stealthily published updates, and they’re presumed to know and understand all of it. OSI, NCIS, CGIS, finance personnel, and prosecutors often act as if military fraud is a strict liability crime, but it’s not, and panel members often go into a case biased against the prosecution. The defense needs to know how to play to that bias.
The panel doesn’t have to be persuaded that the accused was a saint. The panel has to decide whether the government has proved beyond a reasonable doubt that the accused intended to steal or to defraud. A panel that believes the accused was disorganized, sloppy, or confused, but not dishonest, will acquit. Sometimes the panel will acquit even if they think the member’s guilty. That’s much more likely if the accused is a strong asset, fit, presents well, and has witnesses who can attest to his character. Give the panel a choice between benefit of the doubt for the Finance or a squared away service member, and the member often wins.
Some examples of what’s helpful:
- Understandable ignorance of a rule
- Understandable confusion
- Supervisor approval beforehand
- Claim made without any concealment
- Wrong document filed by mistake
- Investigator fails to give Article 31(b) notice
- Immaterial false statement
What a materially false statement is and isn’t
Article 124 requires the false statement to be “material.” It must be relevant to whether the dollar amount the member received was inflated due to the lie. A lie that doesn’t change whether the claim gets approved or how much gets paid out isn’t a crime, even though it’s a lie.
Imagine that a service member submits a meal reimbursement claiming he ate at Chipotle, but he ate at KFC. The price of the meal at Chipotle was the same as what he would have eaten or been authorized to spend if he had eaten at KFC. The government hasn’t lost anything. The lie is irrelevant to the claim, so under the law, it’s not material and wouldn’t justify a charge under Article 124.
Other common examples: a rental car submitted as a Toyota when it was a Nissan in the same price class; a hotel room on the 14th when it was the 15th, same authorized rate and date; mileage reported as from the accused’s home when he drove from a friend’s house two blocks away instead. None of these errors (or lies) changes the dollar amount the member was entitled to.
Gagne, Scherer & Associates: Experienced Military Fraud Lawyers
If you’re under investigation for any UCMJ fraud offense, call (224) 935-6172 for a candid strategy conversation with an experienced military lawyer. These cases sometimes look hopeless but they’re far from it.