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Ariz. National Guard airmen indicted in $1.4M expense scam

Oct. 22, 2013 - 01:56PM   |  
Tom Horne, Michael McGuire
Arizona Attorney General Tom Horne, left, walks past Brig. Gen. Michael T. McGuire, the Adjutant General of the Arizona National Guard, as both arrive for a news conference on Monday. Horne announced the indictments of 21 members of the Arizona Air National Guard, accusing eight officers and 13 enlisted men and women of falsifying records to fraudulently receive extra pay. The charges were announced after an 18-month investigation by state and federal agencies. (Ross D. Franklin / AP)
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PHOENIX — Twenty-one Arizona National Guard airmen once responsible for top-secret Predator drone flights over Iraq and Afghanistan now face felony charges for allegedly bilking $1.4 million in federal funds through a phony expense scam.

Attorney General Tom Horne on Monday announced the indictments of retired Col. Gregg Davies, seven other officers and 13 enlistees accused of falsifying home addresses so they could collect expenses meant for personnel on short-term assignments.

All of the defendants belonged to the Air National Guard’s 214th Reconnaissance Group, which operates MQ-1B Predators out of Davis-Monthan Air Force Base in Tucson, where pilots at satellite-linked stations remotely fly the unmanned aircraft.

Because some of the accused had not been notified Monday, Horne withheld names of defendants other than Davies. But an attorney for retired Lt. Col. Michael “Kav” Kavanaugh, a former member of the Predator unit, confirmed Monday that his client was among the airmen who face charges.

Prosecutors said charges include fraud, conspiracy, operating an illegal enterprise, money-laundering and theft. Some airmen could face prison sentences of up to 12½ years. The accused were not arrested, but authorities sent them summonses for an Oct. 25 arraignment in Pima County Superior Court.

Horne said he is “committed to the prosecution of individuals who fraudulently collect taxpayer money.” He said Davies faces the most serious charges because he allegedly facilitated the conduct of others. “In any group, no matter how good the group is, you’re going to have a small percentage who are dishonest,” Horne added.

Lee Stein, an attorney for Davies, said his client was surprised by the criminal charges.

“Colonel Davies has served his country for over 31 years with dignity and honor fighting the Global War on Terror from Tucson,” Stein wrote in an e-mail. “In light of his history of distinguished service, this indictment is both disappointing and bewildering.”

Stein said he had not had a chance to review the indictment Monday so could not discuss its substance. “But Colonel Davies believes in this country,” Stein added, “and has confidence that justice will prevail.”

Kavanaugh previously told The Arizona Republic that allegations of fraud are untrue and unfair. On Monday, Kavanaugh referred questions to his attorney, Jordan Green, who noted that the investigation has been going on more than three years. Green said his client will “finally get an opportunity to clear himself in a court of law.”

About 200 personnel work in the 214th Predator Group, also known as “The Black Sheep,” which was formed in 2007 with many of the airmen brought to Tucson from other locations.

The alleged conspiracy occurred from 2007 to 2010 and involved Air Guard personnel who were on federal assignment, paid with U.S. tax dollars. According to prosecutors, most of the defendants collected more than $100,000 each in improper expenses. The total loss is estimated at $1.4 million.

Air Force auditors first uncovered the alleged scheme in 2009, and reported at least two dozen Tucson airmen had submitted false temporary duty, or TDY, claims. Some of the airmen were disciplined and ordered to reimburse the military, while suspected criminal conduct was referred to the FBI and the Air Force Office of Special Investigations.

It is unclear why the Attorney General is now handling the case rather than federal prosecutors. Horne declined to explain, as did a spokesman for U.S. Attorney John Leonardo.

Former Attorney General Terry Goddard said Horne’s office may have taken jurisdiction because Arizona’s criminal statutes covering conspiracy and money-laundering are “more prosecutor friendly,” and carry stiffer sentences, than federal law.

Air Force policy allows airmen on temporary duty away from home to collect payments for housing, meals, travel and other expenses.

But auditors in 2009 found many accounts contained “admitted fraudulent activity,” in some cases authorized by the group commander. “This condition occurred due to a complete breakdown of management controls,” they wrote. “The lack of effective procedures allowed 214th RG members to illegally exploit opportunities for personal gain without penalty.”

Horne said some of the defendants collected up to five times their salaries in unwarranted expenses.

Brig. Gen. Michael McGuire, who became commander of the National Guard in September, said only eight of the 21 defendants remain in the organization, and all have been removed from the Predator unit.

The criminal indictments come one year after Arizona Republic articles on National Guard corruption publicly revealed the TDY scandal, and just three months after Maj. Gen. Hugo Salazar retired as Guard commander.

The Republic articles documented a systemic patchwork of criminal and unethical conduct that included sexual abuse, embezzlement, drug-dealing, fraternization, cronyism and failure to discipline.

The newspaper findings were corroborated in May by a Pentagon agency investigation conducted at the urging of Gov. Jan Brewer. That review found senior leaders in Arizona failed to uphold military standards of integrity in part because they were ethically compromised by their own misconduct.

In August, Brewer named McGuire, an Air Guard officer from Tucson, to lead the Arizona Department of Emergency and Military Affairs as adjutant general. McGuire has stressed that the vast majority of Arizona military personnel are honest and honorable, while vowing to enforce “firm but fair leadership.”

The controversy over temporary-duty pay spawned a three-year leadership upheaval in the Guard’s aviation division, leading to the ouster last year of Brig. Gen. Michael Colangelo as Air Guard commander. Based on the damning audit, Colangelo relieved Davies as the Predator group boss. One of Davies’ subordinates, Lt. Col. Thomas “Buzz” Rempfer, also was dismissed after he complained about the firing and other issues. The Air Force Inspector General subsequently issued a report concluding that Colangelo abused his authority.

Salazar issued a letter of reprimand to Colangelo, who was fired when he protested the discipline.

McGuire was not part of the command chain for those actions. He oversaw the 162nd Fighter Wing in Tucson from 2011 until this year, and before that headed the 214th Reconnaissance Group at Davis-Monthan Air Force Base.

McGuire, who joined Horne at Monday’s announcement of criminal charges, said: “I welcome the efforts of these law enforcement partners to ensure that we receive an accurate view of the facts. …We fully support the legal process.”

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