$9 billion credit card debt

see here,your tax dollars at work:

JULY 27, 03:06 EDT
$9B Debt for Pentagon Employees

By JOHN SOLOMON
Associated Press Writer

WASHINGTON (AP) â?? Here's what a Pentagon infamous for buying overpriced toilets and hammers produced when it handed out credit cards to its employees: 10 million purchases, $9 billion in debt and plenty of examples of fraud.

The fraud ranged from a soldier who spent $3,100 at a nightclub to an Army reservist's wife who went on a $13,000 shopping spree in Puerto Rico, according to documents obtained Thursday by The Associated Press. Congress intends to make the materials public next week.

In the past two years alone, there have been more than 500 purchase fraud cases filed involving military credit cards, according to information gathered by Sen. Charles Grassley's office. One bank company has been forced to write off $59 million in fraudulent debts from military cards.

``In the past, Pentagon employees needed a phony invoice to trigger a fraudulent government check, but that obstacle is gone,'' Grassley, R-Iowa, said. ``Credit cards provide a shortcut to the cash pile. The Pentagon is giving everyone a big scoop shovel and telling them to rip into the national money sack at both ends.''

Reviews by Grassley; Rep. Steve Horn, R-Calif., chairman of the House Government Reform subcommittee on government efficiency; and the General Accounting Office found the Pentagon has inadequate controls on the cards it issues for official purchases or travel and also is slow to respond even in the face of fraud.

Grassley said purchase credit cards, many with limits from $20,000 to $100,000, are being issued without credit checks on the employees receiving them and purchases are not being checked for legitimacy. ``There are no controls, no responsibilities, and no accountability,'' he said.

The Pentagon, along with other federal agencies, began issuing credit cards to employees in the 1990s to make purchases more efficient. So far, 1.8 million cards have been issued to defense workers, according to the GAO.

Defense officials say the cards have significantly sped up purchases and eliminated red tape, and the idea shouldn't be judged solely by instances of fraud. They promise to be responsive to problems that will be discussed Monday at a hearing by Horn's subcommittee.

``This administration, and specifically Secretary (Donald H.) Rumsfield, has made fiscal responsibility a hallmark,'' Pentagon spokeswoman Susan Hansen said Thursday. ``We will have representatives attending the hearing so we can hear the committee's concerns, answer their questions and make sure that any concerns are fully addressed.''

Documents gathered by Grassley from the Bank of America, which handles Pentagon travel credit cards, detail the case of a Marine sergeant who ran up $20,000 in charges, then left the service â?? and the bill unpaid.

The Marine's credit card for travel, issued in March 2000, was restricted because he had a questionable credit record. His bosses soon quadrupled its limit from $2,500 to $10,000, the documents show.

The bank issued a fraud warning in August 2000 after suspicious activity on the card, but the Marines raised the credit limit twice more to $25,000. The sergeant eventually made two cash withdrawals from the card over two months totaling $8,500.

The Marine's credit was finally revoked in February, almost a year after it was issued, and he left the service. The bank was forced to write off the debt as a loss.

Under its contract for travel cards, Bank of America isn't allowed to charge the government interest and must write off fraudulent purchases if it can't recover it from violators. The bank has written off $59 million in fraudulent debts involving more than 43,000 military travel credit cards.

A GAO review of purchase cards at two San Diego naval facilities also found abuses and weak protections against fraud, according to a final draft report prepared for Horn's subcommittee.

The GAO documented five recent fraud cases in San Diego involving at least $660,000 in personal purchases. They stretched over as long as two years before being detected.

``Items that were purchased for personal use in these cases included home improvement items from The Home Depot, numerous items from Wal-Mart, laptop computers, Palm Pilots, DVD players, an air conditioner, clothing, jewelry and other items such as eyeglasses, pet supplies and pizza,'' the GAO draft said.

Navy officials said they will dispute some of the GAO's conclusions at Monday's hearing, and explain what actions they have taken to correct problems.

The GAO found San Diego naval authorities were slow to react even in the face of fraud. For instance, the Navy still hasn't canceled all credit card numbers compromised in September 1999 when they showed up on a computer printout at a community college library, it said.

Navy investigators believe at least 30 of the compromised credit cards were used by 27 suspects to make more than $27,000 in fraudulent purchases involving pizza, jewelry, phone calls, tires and flowers, the GAO draft said.

The GAO draft documented other credit card excesses, such as $100 designer cases for a handheld computer and a $400 Coach leather briefcase.

Many items purchased with credit cards by Navy personnel were never entered into inventory as government property as required by law. A quick sampling of 65 items bought on military credit cards found 46 weren't listed in inventory, the GAO said.

Officials ``could not provide conclusive evidence that 31 of them, including laptop computers, personal digital assistants such as Palm Pilots and digital cameras were in the possession of the government,'' it said.