Brian Martin knew he was getting too much money, the sailor told the court.

After renting an apartment on the economy in Japan, a space opened up at Yokosuka Naval Base so the petty officer first class moved his family there. But Martin’s Overseas Housing Allowance, or OHA, kept rolling in.

"It wouldn’t shut off," Martin said of the $69,000 he collected in fraudulent housing allowance.

Though Martin said he tried to cut off the wrongful OHA, he eventually stopped trying to correct the mistake. And he sealed his fate by signing off on the payments on his "page two" personnel form.

"I really didn’t think about what I was doing at the time," Martin testified in September at his special court-martial. "I knew that someone was going to catch it and that I’d have to repay it."

But it’s not just a matter of paying the money back, military authorities say. This misperception can have disastrous effects because housing fraud comes at a much higher price.

"In a legal sense, OHA fraud is larceny, not just an overpayment. It is akin to knowingly submitting a fake check to a bank and taking money that is not yours," said Lt. Mario Correa, a defense attorney who worked with cases at Yokosuka. "Many of these people have a lot to lose."

Larceny carries a maximum punishment of 10 years in prison and a dishonorable discharge under the Uniform Code of Military Justice. A housing fraud conviction may also include confinement, a reduction in rank to E-1 and forfeiture of pay.

BAH or OHA?Military personnel in Europe and the Pacific pay for housing in several ways. For the most part, single people living on base don’t get a housing allowance. Unaccompanied servicemembers draw Basic Allowance for Housing, or BAH, to house dependents back in the States.

BAH rates are set by location, pay grade and dependency status. For example, an E-4 with family in New York City is entitled to $2,367 a month. The same family in Mobile, Ala., gets $920 a month, according to the Pentagon’s online BAH calculator.

BAH is a lump sum entitlement, meaning that personnel can pocket the difference between their set allowance and the rent they pay.

The trouble starts when overseas troops lie about where their family is living in order to pad their pocketbooks by collecting a higher BAH rate.

Unit commanders are the first line of defense in this kind of crime, said Maj. Lawrence Seward, chief of internal control for the 175th Financial Management Center at South Korea’s Yongsan Garrison.

"They must know their soldiers and their marital status," Seward said. Commanders also get a report showing what their servicemembers draw for BAH and should know if they’re getting the "complete picture," he added.

But U.S. investigators can quickly and easily check out BAH claims by matching addresses to the paperwork.

This isn’t always the case with OHA, where payments sometimes flow to areas with no housing offices and little oversight.

OHA is organized differently, with maximum caps based on average rental costs for the area, pay grade and dependency status.

Like BAH, OHA is used to cover rent or mortgage. But unlike BAH, servicemembers can’t pocket the difference — no matter how tempting the situation.

According to the Navy, the Defense Department pays OHA to about 44,000 servicemembers in 430 locations overseas. Current annual expenditures are $519 million with the average recipient getting about $11,800 a year.

Air Force fraud dropsThe Air Force says it remains vigilant in tracking down BAH fraud, even as investigations have declined in the last three years.

In 2007 in Europe, the service prosecuted five cases — one of the five is still open — and got two convictions, according to the Air Force Office of Special Investigations. That was down from eight prosecutions and six convictions in 2006.

There were five cases in 2008 throughout the theater with one conviction. Three remain open.

Tech. Sgt. John Jung, an AFOSI spokesman in Maryland, said most were uncovered at Ramstein Air Base, Germany, and RAF Lakenheath and RAF Mildenhall in England.

"Many claim that they were not aware that what they were doing was illegal," Jung said. "They are typically caught through record reviews, witnesses, anonymous calls and sources."

Two years ago, a lieutenant colonel at Lakenheath received nonjudicial Article 15 punishment and had to forfeit $1,500 in pay for two months and was ordered to shell out $4,000 in restitution for his role in a housing fraud scheme with his wife, an Air Force captain. A witness tipped off an AFOSI agent to the fraudulent activity, which went on for 25 months.

According to Jung, the couple cheated the system by both claiming OHA at the full rate for the rented home they shared. The two had separate rental agreements with the same landlord but were supposed to split the cost of rent and only claim half, which would have triggered an allowance of 50 percent at the lieutenant colonel’s rate and 50 percent at the captain’s rate.

"In effect, they were each paid double the entitled authorization," Jung said, adding the combined loss to the Air Force was $38,311. "They were also claiming excess utility entitlements for the same period."

In the Pacific, AFOSI detachments launched eight criminal investigations into BAH fraud in 2006 and 2007, according to Jung. He said most ended with guilty verdicts in military court.

The majority of offenses occurred at Kunsan Air Base in South Korea. Since 2005, officials there have prosecuted 15 cases of housing fraud.

Navy, USMC probes risingBAH fraud investigations within the Navy and Marine Corps increased worldwide from 72 in 2004 to 143 in 2006, the most recent year for complete data, said Ed Buice, a Naval Criminal Investigative Service spokesman.

Sixty-five percent of case subjects were ranked E-4 to E-6, according to the Navy’s Annual Crime Report 2006, compiled by NCIS.

The service lost more than $5.2 million from 2004 to 2006. Fines, forfeitures, restitution and recoveries during the same span totaled $878,596, about 17 percent of the reported losses.

Buice said falsifying residence location and arranging sham marriages were the most prevalent methods of defrauding the government of BAH entitlements, accounting for 42 percent and 33 percent of all cases, respectively. They made up almost 70 percent of the Navy’s total money lost, he added.

"Some scams of OHA fraud involve marrying foreign nationals. By marrying into the U.S. military, the foreign national qualifies to apply for U.S. citizenship and receive a military dependent identification card," Buice said. "In many cases, military members also claim their foreign spouses live in a higher cost area to qualify for a higher amount of housing allowance or claim false addresses overseas."

In the Philippines, an E-4 with family can get up to $3,285 monthly, with $400 in move-in costs, according to October’s OHA numbers. The average annual salary for workers there is just $4,000.

That disparity and the absence of housing offices make such fraud "a crime of opportunity," said Lt. Garrett Snow, an attorney at Yokosuka Naval Base, Japan.

Army keeping close watch on dataSoldiers can get caught engaging in fraud through audits of housing allotments and when the command or law enforcement compares Leave and Earning Statements with other documents, revealing a discrepancy. Entitlement checks are reviewed periodically.

Because of this proactive stance, it’s unusual for a housing allowance fraud case to be higher than $30,000 and most are lower, according to Hilde Patton, a U.S. Army Europe spokeswoman.

She said there were about 30 cases prosecuted overall in 2006 and 2007 and the vast majority resulted in a conviction. According to the Provost Marshal’s database, which only documents cases reported through military police channels, Ansbach accounted for 38 percent while Stuttgart made up 27 percent.

Amounts taken ranged from $15,000 to more than $60,000 and offenders came from both enlisted and officer ranks, with a majority of offenders ranked below E-8, according to Patton.

It is the soldier’s responsibility to properly report their family and living situation to ensure a correct entitlement, she added.

"Occasionally, there will be an honest mistake where the soldier did the right thing and through some circumstance did not notice an overpayment for a given time period," Patton said. "In these cases, soldiers are not charged [but] merely required to pay the money back."

Pacific Command, the Pentagon and Army Criminal Investigation Command said they did not track data when contacted about BAH fraud statistics and trends in the Pacific. U.S. Forces Japan did not respond to a query seeking comment.

Crime and punishmentHome or abroad, the consequences for committing housing fraud can be severe. While commanders determine whether the situation will be handled by court-martial or through nonjudicial punishment, most cases involve thousands of dollars in stolen government money.

In May, a master sergeant at Japan’s Yokota Air Base with more than 20 years of military service was convicted of stealing $80,000 in housing allowances.

His sentence included a year in prison, reduction in rank to airman basic and a bad-conduct discharge.

He claimed his family lived in Laguna Hills, Calif., when they actually lived in the Philippines.

Martin, the Yokosuka sailor court-martialed this fall, was confined for 89 days with forfeiture in pay of $1,000 a month for six months. He also had to pay restitution.

In the end, it’s up to the servicemember to do the right thing, said Capt. Stuart Belt, head of Commander, Naval Forces Japan’s Region Legal Service Office at Yokosuka.

"It’s your responsibility to make sure you’re not getting any unauthorized entitlements of any sort," Belt said.

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