On their first day at the Naval Academy, even before their heads get shaved, incoming freshmen sit at a table and sign an "agreement to serve" that obligates them to "reimburse the United States" the cost of their education if they later resign or are expelled.
Since 1993, an average of 44 midshipmen each year have broken that agreement. Most were expelled for misconduct or failing grades. Some were overweight or couldn't do the required number of chin-ups. Many simply decided that Annapolis and the Navy were not for them.
According to one Pentagon agency, 121 former midshipmen owe a total of $2.8 million. But the amount could be three times as much.
The Navy's loose debt collection practices have been manipulated by expelled midshipmen who employ political connections, legal tactics or flat out defiance to avoid payments, according to Mids, their lawyers and Navy and Pentagon officials.
Some former Mids say that, despite threatening collection letters, they've gotten away with refusing to pay. Those who do repay often pay 70 or 80 cents for each dollar owed.
Mids have delayed repayment for years with lawsuits. Some appeal to the Pentagon, which erases their debt. One Mid expelled for being overweight sued in federal court and had his debt waived after successfully arguing that his weight problem was a medical condition.
And late last year, one of the 15 Mids expelled in a 1995 academy drug scandal asked his senator to put pressure on the Pentagon, which in turn waived his $86,000 debt.
That decision -- in the case of Guy Ormsby III of Kentucky -- infuriated some Navy and academy officials and has brought to light some of the holes in the Navy's debt-collection net.
"The taxpayers have paid for their education, so they ought to pay the taxpayer back," said retired Adm. Charles R. Larson, who was superintendent when Ormsby was expelled and blames the Pentagon for letting politics interfere with debt collection.
"I've got a lot of friends in the Navy who are outraged by the lack of moral leadership by our civilian leaders."
Some Navy officials are concerned that Ormsby's case opened the door for Mids expelled for lesser reasons to escape their enormous debt.
"Why am I getting screwed and this guy's getting off?" said Bill Bradley, a Desert Storm veteran kicked out of the academy for poor military performance three weeks before graduating last year. He sued, lost and owes $94,000. "If they're letting him off, there's no reason why I should have to pay."
Defense Department policies state that midshipmen can resign or be expelled during their first two years and incur no obligation to the Navy.
But if they are kicked out or resign their junior or senior year, they must repay the Navy for their academy education, unless the academy agrees to let them serve two to three years as Navy or Marine Corps enlistees.
Dennis Murphy Jr., an Annapolis lawyer who has helped former midshipmen get their debts waived by the Pentagon, said he knows of many cases where Mids haven't had to pay or to serve.
"Generally, there are no guidelines by which senior Pentagon officials make these decisions, and it leaves room for unfairness based on political influence," Murphy said. "With prospective clients, one of the first things I ask is whether you or anybody in your family knows anybody in Congress."
According to the academy, 265 Mids were expelled or resigned in their junior or senior year from 1993 to 1998. Half were expelled for academic reasons and allowed to leave without repaying anything. Some who resigned or were expelled for poor military performance were allowed to repay their debt by enlisting in the Navy or Marine Corps.
Those expelled for honor or conduct violations -- 105 of the 265 -- were told to pay the Navy from $68,000 to $94,000. Though the academy doesn't keep track of the overall debt, if those 105 former midshipmen had to pay $80,000 apiece, the outstanding bill would be $8.4 million, which doesn't include the interest and penalties that accrue on the unpaid debt.
But according to the records of the Defense Finance and Accounting Service (DFAS), the Pentagon's accounting arm and the agency responsible for collecting such debt, 121 former midshipmen owe $2.8 million.
A Navy official said Friday that the Navy was aware of the "discrepancy" and "trying to reconcile it."
Assistant Navy Secretary Carolyn Becraft and Vice Adm. Daniel Oliver, chief of naval personnel, are reviewing the Navy's policy on midshipman reimbursement. Part of the problem is that the academy and DFAS officials don't appear to work together to collect debts.
Academy officials say that once a midshipman is expelled and told to repay the Navy, the matter is out of their hands. "Once it leaves the academy, we really don't get feedback," said Glenn Gottschalk, director of the academy's institutional research department.
DFAS officials say that until a Mid's debt becomes their responsibility, it's out of their hands. "We just collect money when we're told to collect money, and I don't know what happens from the point when they're kicked out of the academy," said Cathy Ferguson, a DFAS spokeswoman.
In between are a range of options that Mids increasingly exploit. They can seek a waiver of their debt by appealing to the Board for the Correction of Naval Records or the secretary of the Navy. They can appeal directly to DFAS, which will occasionally erase the debt of someone refusing to pay, as long as the amount is below $100,000, DFAS said.
Often, the debt just disappears. Mids, lawyers and Pentagon officials say stories abound of former midshipmen who were told to pay back the Navy but never got a letter and never paid a dime. Mids have been hounded by collection agents calling six times a day until, suddenly, the calls stop.
Mids can also sue in federal court. Or they can ask their congressional representatives to request a Pentagon review of their case. Those negotiations occur quietly and neither DFAS nor the academy is involved. Navy and Pentagon officials said it was a mistake to waive Ormsby's debt, and that it subsequently drew unwanted attention to the issue of Mids and their debt.
Ormsby was booted in 1995 under suspicion of buying LSD. Fourteen others were expelled on similar charges, and two Mids accused of leading the drug ring were court-martialed.
Ormsby said he was innocent. Wendell H. Ford, then a senator from Kentucky, apparently believed him and asked the Pentagon to review Ormsby's case. The Pentagon erased Ormsby's debt. Now some of the 14 others are filing appeals, arguing that they're innocent, too.
"It just seems if there's something wrong with Ormsby's case there's something wrong with all these cases," said William Ferris, an Annapolis attorney representing former midshipmen.
Ferris said Ormsby's debt waiver set a terrible precedent, coming five years after the Navy waived the debt of 24 Mids expelled in the infamous cheating scandal. "If those people get off without any recoupment, then why do people who get thrown out for lesser reasons warrant harsher treatment?" That's what Aaron Smith wants to know. Smith was kicked out of the academy last summer, charged with having sex with a female freshman in a dormitory. He left owing a $68,000 bill. Smith is negotiating with the academy to pay his debt by joining a Marine Corps training program and serving in the Marines for 3 1/2 years.
"I can't afford to pay that kind of money," Smith said.
And that's the flip side of the disappearing debt: the many midshipmen facing or paying mortgage-sized monthly installments. It takes 10 years, at $833 a month, to pay off $100,000.
"How do you collect $100,000 from a 20-year-old kid who just got kicked out of the Naval Academy and is working at McDonald's because they don't have a college degree?" Murphy asked.
Pub Date: 3/02/99