A Texas couple is under investigation for allegedly defrauding the U.S. Army out of millions of dollars. While the couple has not been formally charged, Army investigators obtained search warrants for the couple's home. They seized 20 vehicles along with money from ten different bank accounts. In an affidavit for the warrants, investigators said they had probable cause to believe the couple had committed numerous crimes, including wire fraud, identity theft, and money laundering.
Investigators say that Kevin Pelayo, who is a retired sergeant, signed up other soldiers for a mass transportation subsidy without their knowledge. He then directed the subsidies, which were $255 or $265 a month, to bank accounts which he controlled. His wife, Cristine Fredericks, is accused of helping him run the scam, which netted the couple around $200,000 every month.
Pelayo allegedly started scamming the Army in 2014, while he was stationed at Fort Hood, and since then he made off with an estimated $11 million before investigators uncovered his scheme. They said that Pelayo and his wife continued to collect the subsidies even while he was stationed in South Korea.
Officials have refused to comment on the ongoing investigation.
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