A former high-ranking official at the Maryland Department of Veterans Affairs has been accused of running a kickback scheme from his state office, allegedly fabricating military achievements and disability claims in exchange for a cut of the resulting government payouts.
According to a federal indictment made public Wednesday, David Clark secured $1.4 million in fraudulent payouts over 16 years. An Army veteran, Clark rose to deputy chief of claims at the state agency before retiring in 2011.
The indictment says he used his knowledge of the system to get the largest possible payouts before accepting cash in unmarked envelopes from veterans who were in on the scheme. He allegedly made up records including Vietnam tours, Purple Hearts and chronic illnesses caused by exposure to Agent Orange, which entitled his associates to federal health benefits and state tax waivers.
He saved some of his best work for himself, prosecutors say, claiming that he had been awarded medals including the Air Medal, Army Commendation Medal, Republic of Vietnam Gallant Cross and the National Service Defense Medal. He allegedly received benefits and waivers worth $153,633 between 1995 and 2012.
Clark is charged with wire fraud alongside eight other veterans, for whom he is accused of securing the benefits. Neither Clark nor his attorney could be reached for comment, and no court dates have been set in the case.
Phil Munley, the director of the Veterans Service and Benefits Program at the Maryland veterans department, said the agency conducted an investigation after learning of the allegations about Clark last spring.
"We didn't get any indication through our internal investigation that there was anyone [else] involved," Munley said, adding that he is not aware of any similar cases in Maryland. "Our staff is completely dedicated to serving veterans."
The allegations come as the Baltimore branch of the U.S. Department of Veterans Affairs faces one of the worst backlogs in the country. More than 16,000 claims have been unresolved for more than 125 days, according to government data published last week, leaving veterans unable to receive benefits to which they were entitled.
Joe Moore, a partner at Bergmann & Moore, a law firm that represents veterans making claims, said the department's outdated systems make it more difficult to catch schemes like the one in which Clark is accused.
"It's the kind of thing that if the VA were not 10 years behind the rest of the government, forget about the private economy ... just would never have happened," he said.
The charges stem from a U.S. Department of Veterans Affairs inspector general's investigation, which reported that it pursued 21 cases of fraudulent benefits claims in the most recent fiscal year, and Moore said he's seen other cases like Clark's.
"It goes on a lot where local guys like him take money on the side," he added.
A spokesman for the VA declined to comment because the case is continuing.
The department is upgrading to electronic files but still relies on paper records, which, according to the indictment, Clark was able to falsify undetected for many years. Moore said the way he is accused of carrying out the scheme suggests he knew the system well and had worked out how not to get caught.
"To be frank, it's fairly smart," he said.
Clark is accused of amending the records to back up claims that he and other veterans had been exposed in Vietnam to Agent Orange — a toxic chemical used to kill vegetation — and had contracted type 2 diabetes as a result.
He did that by submitting fake doctors' letters using the names and addresses of real physicians that stated that the claimants had the illness, according to the indictment. The doctors did not know what Clark was up to, the filing says.
Some of the veterans received lump sum payments and returned up to half of them to Clark in exchange for his help, according to the indictment.
Munley said the Maryland veterans department processes too many claims to double-check the accuracy of all information submitted to the federal department. Still, he said, the department has now built in extra checks on the activities of people who process applications.
In addition to creating the medical documents, Clark is accused of using counterfeit Department of Defense forms to change his service record and those of five other veterans. He changed the information of one Marine Corps veteran to show that he served for over a year in Vietnam, according to the indictment, and came home with three medals.
U.S. Attorney for Maryland Rod J. Rosenstein said the charges against Clark are among the most "egregious" of the government fraud cases he's handled.
"His job was to screen the claims and detect fraud, rather than introducing fraud into the system," he added.
Baltimore Sun reporter Yvonne Wenger contributed to this article.
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