Federal agents are investigating a US Army couple in Texas for allegedly defrauding the military of up to $ 11 million, according to an affidavit disclosed last week.
The affidavit, filed in court before a raid on the home of Kevin Pelayo and Cristine Fredericks near Fort Hood, accuses the couple of using a transportation reimbursement program for federal employees to defraud the Army of $ 2.3 million into $ 11.3 million. The federal agents raid dumped more than 20 vehicles and the money from 10 bank accounts belonging to married US Army veterans in Texas, according to the affidavit.
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, recently unrevealed federal records say.
FILE: Members of the media wait outside Bernie Beck Gate, an entrance to the Fort Hood Military Base in Fort Hood, Texas.
(AP)
Investigators told the court that there was probable cause to believe that the couple committed crimes including wire fraud, identity theft, and money laundering. There is no record that any of them have been criminally charged.
During the search for the couple’s home, investigators confiscated documents, computer hard drives, cell phones and more than 100 designer items, according to a list of what was collected. It also lists 23 cars, trucks, SUVs, and other vehicles, and a box containing more than 60 “multi-state” license plates.
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. Military investigators allege that it became a highly lucrative fraud.
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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.
The affidavit alleges that, as of 2014, Pelayo registered soldiers nationwide for subsidies of $ 255 or $ 265 per month. Several enrolled soldiers said they had never ridden the truck, 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. Pelayo and Fredericks moved 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.
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It was not immediately clear if the couple has an attorney who can talk about their behaviors.
Associated Press contributed to this report.
