The Nation just published its lengthy investigation into a massive Pentagon fraud scheme where DoD misstated its budget to Congress, year after year, piling billions into secret accounts to fund projects without oversight.

The scheme itself, as you will see from excerpts below and if you read the report, seems eerily familiar with what we see from the Department of Veterans Affairs year after year. This makes me wonder if the Pentagon is doing it, how much money is VA actually sitting on that is off its balance sheet, and what is the agency doing with the money?

All Out Pentagon Beancounter Fraud

According to The Nation:

The fraud works like this. When the DoD submits its annual budget requests to Congress, it sends along the prior year’s financial reports, which contain fabricated numbers. The fabricated numbers disguise the fact that the DoD does not always spend all of the money Congress allocates in a given year. However, instead of returning such unspent funds to the US Treasury, as the law requires, the Pentagon sometimes launders and shifts such moneys to other parts of the DoD’s budget.

This practice is essentially money laundering. Any civilian guilty of the same would be in prison for decades. The practice violates Article I Section 9 of the Constitution, which also requires a publication of monies dispensed by the Treasury.

But since when does the Constitution apply to whatever the upper crust is doing?

Nippering Fraud

The Nation also exposed another fraud scheme:

Among the laundering tactics the Pentagon uses: So-called “one-year money”—funds that Congress intends to be spent in a single fiscal year—gets shifted into a pool of five-year money. This maneuver exploits the fact that federal law does not require the return of unspent “five-year money” during that five-year allocation period.

The phony numbers are referred to inside the Pentagon as “plugs,” as in plugging a hole, said current and former officials. “Nippering,” a reference to a sharp-nosed tool used to snip off bits of wire or metal, is Pentagon slang for shifting money from its congressionally authorized purpose to a different purpose. Such nippering can be repeated multiple times “until the funds become virtually untraceable,” says one Pentagon-budgeting veteran who insisted on anonymity in order to keep his job as a lobbyist at the Pentagon.

$6.5 Trillion Fraud In 2015 (yes, Trillion with a “T”)

In 2015, Congress appropriated $122 billion for the US Army. DoD records show the Army’s budget that year included $6.5 trillion in plugs that “lack[ed] supporting documentation.” This means no ledger entries or receipts exist to show how the money was spent. Instead, DOD IG indicated the 16,000 records possibly showing how the money was utilized was “removed”.

Again, this is not directly on point with VA’s own budget, but most VA employees are former DOD or military employees of some kind. Given the overlap, it seems plausible that some of the individuals moving money around in DOD are passing on the same tricks to their VA brothers.

Personally, I find this news report as a bit of a bombshell. While we suspected Pentagon’s fraud was huge, we did not know it was that huge. Sadly, though, based on the 3 comments (at the time of this writing) at the end of the report, it does not look like the public cares about how the money is spent.

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22 COMMENTS

  1. VA common practice around the third quarter in the federal fiscal year is to shift monies from clinic to another clinic in a RO division. This also holds true for Vet Centers, in that, a Vet Center may request new project money during this period, and if unused funds are available from another Vet Center´s budget, the Vet Center Regional Office will pull the money and disperse it to the requesting Vet Center, rather than return it unused.
    The reasoning surrounds the new budget being downsized if money goes unspent from the prior budget.

    Are the new ¨necessary¨ projects completed? Who knows? But, the yearly budget is saved for the upcoming projections.

  2. This is ridiculous, year after year the govment loses TRILLIONS of dollars purposely widening the gap between the haves and have-nots and typical american have-nots get sent to prison for the same crimes the haves get away with… year after year.. -_-
    America the great – scam.

  3. C’mon Ben. That’s not fraud. It’s freedom, liberty, democracy, nation building…. Funny – $21 trillion – isn’t that the amount of the national debt?

  4. Funny how the VA does everything in it’s power to stop Vets from getting to 100%. That $3000 a month per Vet must really put a strain on their $21 Trillion budget.

    • The ¨strain: From a recent GAO report, the agency that oversees VA spending, in the 2017 fiscal year, the VA paid about $72.4 billion dollars to 4.5 million disabled veterans.

  5. Been knowing about the Black Budget for some years “Catherine Austin Fitts broke it on Coast to Coast maybe like 2006, she has done extensive research on this Govt. Scam back when she worked for Bush’s Budgeting Director until she knew or questioned too much and got pushed out. I’m so Glad some portions of the Media like yourself and the Nation are bringing this thing to the surface.

  6. It is not so much about how much? as it is about how, who, and where. Whose pocket is it in? Haliburton for one. And the rest of the military industrial complex. And yes they are branching out to get some of that VA tax payer money.

    Eisenhower warned us.

  7. And to think, people want to reduce the Military services budget and VA budgets, without consideration of the damage that does to our nation and the Veterans. Perhaps their energies would be much better focused on the Defense Contractors instead.

    Just imagine if the VA Was pro-Veteran instead of vehemently anti-Veteran!?!

  8. On top of that, from a credible friend that’s been at these certain places, said they’re really moving into building big underground complexes and tunnels, super expensive. He said “Out of sight-out of mind” is pretty much their motto. But I’m sure there are lot’s of satellites that nobody knows about, and all kinds of secret goodies nobody knows about that keep a lot companies flush in cash. The VA is probably on the bottom three as far as funding considerations, compared to wherever this $$$ goes. But $21,000,000,000,000 unaccounted for? That’s falling into the “If i told you-I’d have to kill you.” category- Seriously…

  9. DoD employees come to the VA and perch, shittin all over the place like some kinda sick bird. It’s not that people don’t care, it’s more like how can one even rap their mind around that much money.

  10. It’s not that people don’t care, it’s more like how can one even rap their mind around that much money.

    That is outside of the realm of understanding and comprehending. My wife is a CPA and does not have a clue how that number could go unnoticed unless many on the inside are on the take. If I deposit or withdraw anything from my bank in access of $10000 the IRS is supposed to be notified. Now in the case of Billions, and it does take many Billions to make a Trillions how does that get past them.

  11. Can we get a TS38 to weigh in on what’s happening here? Guess who is charge of the country? Its not the President folks, its the people ( above him and i don’t mean Soylent Green although the TS folks are soiled with the blood of the Veteran Community they continue to attack). Don’t tell me you guys don’t know about this styff…

  12. Most of us know of (and there are some records of), the “use it or lose it” campaigns that happen EVERY September within the VA system. $5K “stand up desks”, millions spent for IT “initiatives” that literally fail before they begin (Ipads in RO’s so veterans can file claims), Millions in scanners put into RO’s so that VBA can scan vets records – that project ended after 12 MONTHS (without a dime going back to the treasury) and the most recent but best kept secret??? – The VA Caregiver program. Began operation in 2011. Every.Single.Year has claimed that the “number of approved applications is double (or more) than the previous year”; therefore (they) need XXXXX MILLIONS more to accommodate the increase in caseload. EXCEPT…Since 2014, the numbers are falling faster than the temps outside! At the current calculations (provided by numbers supplied BY THE VA); there have been nearly 40,000 veterans “revoked” (kicked off) the program without cause. We now have VA employees recorded as stating that they need to “lower their numbers” (kick more people off), so that they can get their bonuses (for being under budget). The biggest issue (beyond deliberately denying veterans care and benefits they are entitled to), is that the BUDGET DIDN’T GO DOWN. Millions are unaccounted for! Millions that are supposed to provide services and staffing for this program that are NOT BEING SPENT. Not a single person (outside of my organization) is asking – WHERE IS THE MONEY?!?!

    • Hi yourself!

      Would this be ‘Uncle First CWO5’ Angela? If it is – – – I have missed seeing your take on things for quite awhile! Hope this finds you well and in good health!

      Disgruntled Veteran
      Escaped from Hawaii
      Dances with Armadillos
      Plays with Rattlesnakes

  13. Simple math says that Six point Five Trillion dollars would (split equally) make INSTANT MILLIONAIRES of Six Million Five Hundred Thousand disabled veterans.

    Think about THAT the next time you hear some feeble ass excuse from a VBA counselor with respect to your claim being denied, lost, etc.

    And now CBO has the nerve to talk about reducing our benefits?

  14. Hay you does anyone out there think that when you talk about that kind of money you can see it all and know where it’s going to. You big dumb ass it’s what they count on and the best we can do is stepback and let them who have taken the money go because you have no right to put them in jail if you wouldn’t put most of the house and Sen and most past president in with them for stelling from us. The country should kick out all of them except for Trump and put people who are not out for them selves but for the good of all the country and the people who are part of the country by law. Stop giving money to any country who are not our friends and to those who break our laws and regulations to be in this country we love. You and I have a right to put it into action and always had given by the law and the blood of those who fought for and died our great country.

  15. 11/29/2018

    Dear Benjamin Krause,

    I recall a member of Congress telling the Public that there are several sets of books.

    Sincerely,

    Don Karg

  16. Talk about feeling entitled! These people are part of a plutocracy that have been filling their pockets at the tax payer’s expense since the beginning. Nothing has ever chnged from the times of European Aristocracy with all the cronies and sycophants shaking hands and patting backs. The more things change, the more they stay the same. How and when can we make this stop?

    Godspeed

  17. Hmmmm! I recall a program formulated under Bush, the lesser regime and administered under OBummer regime that was bailing IN Banks with a monthly stipend to the toon of $85 Billion Per MONTH or $1.2 Trillion per YEAR called Quantitative Easing.

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