Federal agents have seized more than 20 vehicles and the money from 10 bank accounts belonging to married veterans of the US Army in Texas.
DALLAS – Federal agents have seized more than 20 vehicles and the money from 10 bank accounts belonging to married veterans of the US Army in Texas, saying the couple used stolen personal information from soldiers to defraud the military of up to $ 11 million.
Army investigators obtained orders last month to confiscate funds and property and to gather evidence of the alleged fraud during their search for the home of the retired sergeants, according to recently released federal court records.
In an affidavit seeking to search the home of Kevin Pelayo and Cristine Fredericks in Killeen, a city near Fort Hood, about 150 miles (240 km) southwest of Dallas, investigators described how the couple allegedly used a program of Transportation reimbursement for federal employees to defraud the Army of $ 2.3 million to $ 11.3 million.
Investigators told the court that there was probable cause to believe that the couple committed crimes including wire fraud, identity theft, and money laundering. But there is no record that any of them have been criminally charged.
Pelayo declined to comment during a brief phone call Wednesday and did not respond to a later message asking for the names of his lawyers.
“I think it is still an ongoing investigation,” he told The Associated Press. “I really can’t say anything about it. I have to speak to my lawyers.
After arriving at Fort Hood in 2010, Pelayo created a van company to take employees to and from base under a federal program that subsidizes government workers who use public transportation in an effort to reduce traffic and contamination. He told the Fort Hood Sentinel that the opportunity to save fuel first attracted him to the initiative.
The Sentinel, an official publication overseen by Army commanders, touted the truck’s growth in stories and quoted staff as saying it saved them time and money. In 2013, a pilot said, “It works perfectly, like a well-oiled wheel.”
Military investigators allege that it became a highly lucrative fraud.
As a platoon sergeant, Pelayo had access to the personnel records of the soldiers under his command, and Fredericks had worked for Army human resources, according to the affidavit. Investigators said Pelayo used this access to enroll soldiers in the mass transit subsidy without their knowledge, and then routed the payments to their business’ bank accounts.
As of 2014, according to the affidavit, Pelayo registered soldiers across the country for grants of $ 255 or $ 265 per month. Several enrolled soldiers said they had never ridden the van, and investigators discovered that many were not even at Fort Hood.
This plan allegedly continued for years, even while Pelayo was stationed in South Korea before his retirement last August. In a few months, according to the affidavit, the grants gave the couple an income of more than $ 200,000.
Pelayo and Fredericks transferred the money to a series of bank accounts, the investigators wrote in the court filing, saying they own more than 20 properties in Texas, New York, Washington and Hawaii. Pelayo also reportedly transferred money to an unidentified person in the Philippines.
Pelayo spent more than two decades with the Army and Army Reserve, including deployments to Iraq, Afghanistan and Bosnia-Herzegovina, according to an Army spokesman. Fredericks served for about a decade and was also deployed in Iraq and Afghanistan.
A spokesman for the Army’s Criminal Investigations Division and one of the Western District of Texas’ Attorney’s Office said they do not confirm or comment on the investigations unless charges are publicly filed. A Fort Hood spokesman declined to answer questions, saying he would defer statements from those agencies.
During the search for the couple’s home in Killeen, investigators confiscated documents, computer hard drives, cell phones and more than 100 designer items such as purses, jewelry and clothing, mainly from Chanel, according to a handwritten list by what was collected. It also lists 23 cars, trucks, SUVs, and other vehicles, and a box containing 64 “multi-state” license plates. The affidavit, filed in court before the raid and revealed last week, suggests that investigators felt they had to move quickly.
On March 24, investigators say they saw the couple load vehicles onto trailers and a flatbed truck. They were driven to the parking lot of the used car company in Austin. ———
Associated Press writer James LaPorta in Delray Beach, Florida, and researcher Randy Herschaft in New York contributed to this report.
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