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Thread: Strip clubs, casinos: DoD gets $1 million surprise

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    Senior Member Bos Mutus's Avatar
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    Strip clubs, casinos: DoD gets $1 million surprise

    A Navy SEAL traveling to El Paso on official duty recently visited several strip clubs, laid down his official government credit card and spent a total of more than $1,000 at adult entertainment establishment during his 17 days of travel.
    At the Navy, however, the charges raised no eyebrows.
    And that was not an isolated incident. Across the Defense Department, government credit card holders improperly spent more than $1 million at casinos and adult entertainment clubs in a single year, the DoD Inspector General has found.
    In a report released Tuesday, the IG documented widespread abuse of military credit cards for personal use and repeated failure of DoD's detection system for flagging potential abuse of taxpayers' dollars.
    In response, Pentagon officials emphasized that Government Travel Cards are issued to, billed to and paid for by the employees who hold them. The improper charges flagged by the IG were not reimbursed by the Defense Department and taxpayers sustained no losses, because individual employees are ultimately responsible for paying the balances for any outstanding charges with out-of-pocket cash.
    Nevertheless, the IG noted, standard rules restrict government credit cards to use for official business.
    Specifically, in a single 12-month period running from July 2013 to June 2014, DoD cardholders ran up 4,437 transactions totaling $952,258 in charges that likely involved personal use at casinos.
    At strip clubs and other adult entertainment establishments, cardholders also rang up 900 additional transactions totaling nearly $100,000, according to the report.
    In many cases, the defense agencies overseeing those credit cards did not detect the improper transactions because:

    • The compliance programs did not have a mechanism for identifying and flagging charges at casinos and adult entertainment establishments



    • DoD had no policy requiring its its components to identify "high-risk merchants" that might suggest wrongful personal use of government credit cards at casinos or adult entertainment establishments In the case of government credit cards, banks were not required to notify military agencies or management officials of potential fraudulent activity or suspension of accounts, because individual cardholders resolve those matters. So it was unclear whether the transactions that occurred at casinos or adult entertainment establishments involved misuse by government employees or a credit card scam.


      To identify wrongful spending in its investigation, the IG used the Visa IntelliLink Compliance Management system, a service in which the Visa company provides data on credit card transactions for businesses and others to use in identifying improper charges.
      The IG recommended that the Defense Department adopt policies requiring its agencies to use this Visa service, according to the report.
      Other IG recommendations included developing ways for DoD credit card compliance officers to identify transactions that:

      In response to the report, the Defense Travel Management Office agreed to pursue new ways to better track improper use of government credit cards. The DTMO also told the IG that the report does not highlight the strengths of the DoD Government Charge Card program.
      Defense Department spokesman Lt. Cmdr. Nate Christensen told Military Times that the IG report overstated the problems with the Government Charge Card program.
      "The report language applies a very broad stroke against all cardholders when, in reality, personal use of the Government Travel Charge Card is negligible when compared to the size and scope of the program," Christensen said.
      "Clearly, the behavior displayed by these individuals neither comports with our values nor represents the good service of the vast majority of our service members and DoD civilians. Action is being taken to address individual instances of misuse," he said.
      Christensen reiterated that the federal government is not financially liable in any case of card misuse, including the misuse described in the DoD IG report.
      "Taxpayer funds are not being obligated to pay for this misuse, directly or indirectly through reimbursement to the traveler," he said.
      • Are not linked to official travel status or official travel locations.
      • Are automated teller machine withdrawals that exceed the overall meal and incidental expense amounts while the cardholder is in a travel status.
      • Occur at specific known casinos, casino-processing centers, and adult entertainment establishments.


    Read more: http://www.militarytimes.com/story/m...ards/27600437/
    • I never really understood the big "problem" with people using their govt. credit card for "unauthorized" purchases if they pay the card off themselves.

      I think this problem is indeed overstated...it costs the govt nothing if a member uses his card and pays it off. If anything, the govt. probably benefits through rebates.

      I also wonder about these transactions "at a casino"...last time I checked you can't just go lay your credit card down at a table...I suppose you could put it in a slot machine, maybe...but, more likely, maybe members are using the ATM that is in a casino to get cash...which is their per diem anyway. Again, what's the big deal?
    • Same deal with strip clubs...last I checked, strippers don't take credit cards...so he's either using the ATM which is in a strip club...or at worst, running a bar tab.

      Would be different if this were IMPACs and the govt was paying the bill...
    Last edited by Bos Mutus; 05-20-2015 at 03:27 PM.
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    Banned sandsjames's Avatar
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    Quote Originally Posted by Bos Mutus View Post
    • I never really understood the big "problem" with people using their govt. credit card for "unauthorized" purchases if they pay the card off themselves.

      I think this problem is indeed overstated...it costs the govt nothing if a member uses his card and pays it off. If anything, the govt. probably benefits through rebates.

      I also wonder about these transactions "at a casino"...last time I checked you can't just go lay your credit card down at a table...I suppose you could put it in a slot machine, maybe...but, more likely, maybe members are using the ATM that is in a casino to get cash...which is their per diem anyway. Again, what's the big deal?
    • Same deal with strip clubs...last I checked, strippers don't take credit cards...so he's either using the ATM which is in a strip club...or at worst, running a bar tab.

      Would be different if this were IMPACs and the govt was paying the bill...
    Agree...per diem is per diem. Does it matter where I use it? I ran into this issue when I went TDY to Vegas. It was in February and a Red Flag exercise was going on. Billeting was full so we were put off base (at a hotel/casino). All my meals were at the Casino on the card. It was such a pain in the ass explaining to my RA when I returned. Had to turn in all sorts of paperwork to prove why I was at a casino instead of a Motel 6. Either way, shouldn't have mattered. It was my per diem. Even if it wasn't, it was paid off immediately.

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    Senior Member TJMAC77SP's Avatar
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    Interesting points. I spent a lot of money (eating) in Vegas over the years. Well, comparatively not a lot of money but you get the point. I would have hated to have to explain it all. The travel cards were pretty new before I retired so it never came up.
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    Quote Originally Posted by Bos Mutus View Post
    • I never really understood the big "problem" with people using their govt. credit card for "unauthorized" purchases if they pay the card off themselves.

      I think this problem is indeed overstated...it costs the govt nothing if a member uses his card and pays it off. If anything, the govt. probably benefits through rebates.

      I also wonder about these transactions "at a casino"...last time I checked you can't just go lay your credit card down at a table...I suppose you could put it in a slot machine, maybe...but, more likely, maybe members are using the ATM that is in a casino to get cash...which is their per diem anyway. Again, what's the big deal?
    • Same deal with strip clubs...last I checked, strippers don't take credit cards...so he's either using the ATM which is in a strip club...or at worst, running a bar tab.

      Would be different if this were IMPACs and the govt was paying the bill...
    For me, the big question is what are they doing IN the casino/strip club using the ATM for in the first place?

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    Banned sandsjames's Avatar
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    Quote Originally Posted by garhkal View Post
    For me, the big question is what are they doing IN the casino/strip club using the ATM for in the first place?
    Why does it matter? Are casino's illegal? Are strip clubs illegal? Is there a difference if I draw the cash out at the bank, then spend it in the Casino?

    As long as I don't go over my limit and I pay the bill on time, who gives a fuck?

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    Senior Member Bos Mutus's Avatar
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    Quote Originally Posted by garhkal View Post
    For me, the big question is what are they doing IN the casino/strip club using the ATM for in the first place?
    My guess is gambling, drinking and looking at titties. It is TDY afterall.

    Not sure why this is a big question? If you get $60 per day per diem and choose to have hot dogs all week and then spend $200 in the strip club...why is this a concern? And how does it equate to abuse? Is it okay if I use the ATM on base before we go out rather than the one in the casino?

    Heck...I've had military conferences that took place in a casino...stayed there, ate there and did some gambling, too.
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    Senior Member TJMAC77SP's Avatar
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    Quote Originally Posted by Bos Mutus View Post
    My guess is gambling, drinking and looking at titties. It is TDY afterall.

    Not sure why this is a big question? If you get $60 per day per diem and choose to have hot dogs all week and then spend $200 in the strip club...why is this a concern? And how does it equate to abuse? Is it okay if I use the ATM on base before we go out rather than the one in the casino?

    Heck...I've had military conferences that took place in a casino...stayed there, ate there and did some gambling, too.
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    Quote Originally Posted by sandsjames View Post
    Why does it matter? Are casino's illegal? Are strip clubs illegal? Is there a difference if I draw the cash out at the bank, then spend it in the Casino?

    As long as I don't go over my limit and I pay the bill on time, who gives a fuck?
    In the finance community we think these rules are pretty idiotic as well. Heck, that's a big reason why the report says the charges weren't flagged. The Agency Program Coordinator (APC) absolutely could have identified all of these charges and followed up on them. Do most APCs do that though? Heck no, we don't have that kind of time.

    Usually, the first time charges get looked at is when someone goes TDY and doesn't pay their card. If they file a voucher, and the voucher isn't enough to cover the charges, questions get asked. In most cases I remember seeing, the traveler racked up a ridiculous amount of expenses because they have "a friend" who told them they were getting $140 per diem so they went bat shit crazy. When they returned they figured out they were only entitled to $39 per diem.

    In any event the charges are still the traveler's responsibility. The government gets dinged and can get a smaller rebate in the next cycle but the government doesn't pay any of the charges. If you are 120-150 days overdue at that point it starts coming out your pay.

    Most of the cases where someone spent way to much on a TDY were the result of gambling and strip clubs but honestly plenty of people have done it at bars as well. That's where the rule comes from.

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    Senior Member Bos Mutus's Avatar
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    Quote Originally Posted by TJMAC77SP View Post
    The travel cards were pretty new before I retired so it never came up.
    My first govt. travel card was issued around 1992. This was before travel cards were much of a thing...so they didn't have any rules on where or what you could use it on. It wasn't a big problem though because the cards were "Diner's Club" cards which no busnesses accepted.
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    Quote Originally Posted by TJMAC77SP View Post
    Crazy Horse. Hell, once I was in there with my commander.
    For Vegas, Olympic Garden IMO is the best overall (not that I've been to them all)...although, we generally will hit Glitter Gulch, which is kind of a clip joint, but we usually stay downtown Fremont area, so it's right there on Fremont, so, don't have to pay for a cab.
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