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Bee exclusive: Massive fraud at California Guard, officials allege

• Charles Piller via Tha Sacramento Bee
She was known as "the M&M lady," for decorating her office cubicle with keepsakes of the confection's advertising characters.

But the treats she dispensed were sweeter than candy and are now the subject of a criminal investigation.

From 1986 until her retirement last year, Master Sgt. Toni Jaffe's job with the California Army National Guard was to give away money – the federally subsidized student-loan repayments and cash bonuses the Guard is supposed to use to tempt new recruits and entice Guard members to sign on for another stint.

Instead, according to a Guard auditor turned federal whistle-blower, as much as $100 million has gone to soldiers who didn't qualify for the incentives, including some who got tens of thousands of dollars more than the program allows.

For years, the auditor and other Guard officials allege in interviews or internal documents obtained by The Bee, California's incentives program was operated as a slush fund, doled out improperly to hundreds of soldiers with fabricated paperwork, scant supervision and little regard for the law.

Guard documents describe a high-speed assembly line for bonuses and loan repayments, in which Jaffe single-handedly processed some 8,600 payments over a 16-month period in 2007 and 2008 – about 25 per workday.

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