The federal agency in charge of funding for the National Guard has started to examine its procedures for detecting fraud after a report revealed allegations of misuse of $100 million.
The National Guard Bureau is responsible for federal funds given to state Guard organizations.
The California Army National Guard gave millions of dollars to soldiers who didn't qualify for the money, according to federal auditor documents and interviews cited in an article published Sunday by the Sacramento Bee.
Federal auditors looking into the disbursement of funds suspected Master Sgt. Toni Jaffe of using loan repayments and cash bonuses to draw recruits, even though some may not have qualified for the money. Also, the program allocated tens of thousands more dollars than allowed, the newspaper reported.
The agency's national investigation into its own procedures was launched after the Bee report.
"We take this very seriously, we are going to take a look at the broader processes across the entire National Guard," said Jack Harrison, spokesman for the National Guard Bureau, which oversees federal funds given to state Guard organizations.
A federal auditor reported the allegations to the FBI and the Internal Revenue Service, and a federal criminal investigation led by the U.S. Department of Justice was launched in August.
California National Guard's spokesman, Maj. Thomas Keegan, said, "we're fully cooperating with the U.S. attorney on the active investigation."
The Guard is financed mostly by federal taxpayers. State and federal lawmakers expressed outrage on Tuesday and called for a probe into the matter.
"These allegations are shocking and I support a swift and thorough investigation by federal officials," Sen. Barbara Boxer, D-Calif, told the Bee.