In 2016, Army finance officials in Wiesbaden, Germany, home to U.S. Army Europe and Africa, reversed precedent that allowed payment of a dual housing allowance for reservists. A group of plaintiffs who sued the Army over the consequences they suffered from this improper reinterpretation will be repaid and have their service records cleared of any wrongdoing, the Army said in a court filing this week. (Paul Hughes/U.S. Army)
STUTTGART, Germany — Dozens of Army reservists who endured criminal probes, reprimands and crushing debt after the service seized hundreds of thousands of dollars in housing allowance payments have prevailed in a contentious legal fray spanning more than five years.
The 41 plaintiffs will be repaid and have their service records cleared of wrongdoing, the Army said in a court filing this week, a decision that appears to bring the case to an end.
“Everyone who joined the lawsuit is getting monetary relief of some fashion,” attorney Patrick Hughes of the Patriots Law Group said in a statement Monday. He called the outcome a “huge victory.”
In a Feb. 22 memo filed in federal court Monday, the Army said it will follow through with recommendations by its highest review panel to repay the reservists who sued.
They argued that the Army was violating federal law by demanding repayment after reneging on allowances it had initially authorized. The action proved financially ruinous for many of those involved.
Signed by Deputy Assistant Secretary of the Army Michael Mahoney, the memo states that administrative action to correct the soldiers’ records is to be taken no later than Aug. 26.
William Schneck, one of the reservists involved in the lawsuit and a de facto spokesman for the group, said the victory will result in financial awards adding up to more than $2 million collectively. That number could go higher as the calculations are completed, he said.
“We began this process in 2017, and the years that followed yielded some of the worst instances of regulatory departure and retaliation that I have ever experienced,” Schneck said.
“One soldier contemplated suicide, another nearly went to prison for five years, and all of our careers were derailed in the process,” he said.
The plaintiffs encountered an Army Criminal Investigation Division that was “weaponized” against them, he added. Stars and Stripes reported in August 2021 that Schneck was owed about $56,000.
The dispute centered on a decision by Army finance officials in Wiesbaden, Germany, in 2016. Reversing long-standing precedent, they said reservists mobilized from the U.S. for assignments abroad aren’t entitled to receive a basic housing allowance for their American residence and also an overseas housing allowance if the Army fails to provide on-post accommodations.
They reinterpreted the Joint Travel Regulation to permit only one allowance and applied the change retroactively.
As a result, the Army began imposing claims against soldiers reaching six-figure sums. Many of the soldiers had their wages garnished and received letters of reprimand.
But in 2021, the Army’s Board of Corrections ruled in favor of the reservists, saying the service’s actions violated federal regulations and led to “unjust actions.”
The board ordered that the reservists were to be paid back and have their records cleared because of the Army’s erroneous “investigative and disciplinary actions.”
At the time, the matter seemed settled, but in 2022, the Army argued that it couldn’t pay the reservists as ordered because the Defense Finance and Accounting Service said the decision was in conflict with certain family separation regulations.
Now, the situation appears to be resolved by the latest Army ruling. It calls for a second housing allowance for reservists with dependents, and those without dependents will get per diem in lieu of a second housing allowance.
The allocation of per diem means those reservists will receive more money than they would have gotten with a second housing allowance, Hughes said. DFAS could raise a new issue to counter the reservists’ claims, but Hughes thinks that is unlikely.
The issue likely affects thousands of other soldiers, who either were unaware of the wrong done to them or were too afraid to speak up, Hughes said.
As of December 2022, the lawsuit had 33 plaintiffs. Eight more reservists subsequently joined them, bringing the number to 41.
Schneck said congressional assistance could be needed on behalf of soldiers not covered by the lawsuit.
“Given my prior position with U.S. Army Europe, I estimate that approximately 1,000 more reservists may be similarly affected,” he said.
Plaintiff Richard Gulley, a former colonel who was serving at U.S. Africa Command headquarters in Stuttgart, Germany, had his Army career cut short because of the housing allowance issue.
“Like others, I lost promotions, money, reputation and had the legal issues used against us in various other ways,” Gulley said.
In 2017, military law enforcement officers read him his rights, fingerprinted him and arrested him. The Army never prosecuted the case, but the arrest trailed Gulley for years.
Besides the $103,000 in debt he accumulated as a result, Gulley, a commercial airline pilot, was always stopped for questioning at customs checkpoints because he was flagged by the electronic trail of charges against him.
The situation points to a broader issue in Army corporate culture that has tarnished the service’s image, according to Schneck.
“Congress can correct pay regulation, but it cannot force leaders to do the right thing when no one’s looking,” he said. “How can we expect our veterans to actively recruit when their own experiences can be so damaging?”
