Bernie Beck Gate at Fort Cavazos, Texas. (Rose L. Thayer/Stars and Stripes)
A former Army sergeant was sentenced to three years in prison for defrauding millions of dollars from the service in a rideshare scam using illegally obtained personal information from more than 800 soldiers, the Justice Department announced Tuesday.
Kevin Romulus Pelayo, 45, co-owned and operated a rideshare company, Soldiers Vanpools LLC, out of Killeen with his wife, Cristine Furio Fredericks, 40, according to court documents. The company claimed to shuttle military personnel to and from Fort Cavazos, then known as Fort Hood, from Jan. 1, 2014, through June 10, 2020. Killeen is the city just outside the gates of Fort Cavazos.
The rideshare company was funded by the Army’s Mass Transportation Benefit Program, a federal subsidy for government workers to use mass transit, according to a statement from the U.S. Attorney’s Office of Western District of Texas.
“Pelayo and Fredericks submitted the names, Social Security numbers, and other identifying information of active-duty soldiers to the MTBP on a monthly basis from 2014 to midway through 2020, falsely claiming that the soldiers were active participants in the rideshare program,” according to federal authorities.
Pelayo was sentenced to three years in prison for one count of conspiracy to commit wire fraud and two counts of engaging in monetary transactions in criminally derived property, according to the Justice Department. Fredericks was sentenced to five years of probation for two counts engaging in monetary transactions in criminally derived property.
Pelayo, who was a platoon sergeant, arrived at Fort Cavazos in 2010 and set up the van company to give employees rides to and from the base under the transportation program, The Associated Press reported in 2020.
Pelayo had access to the personnel records of soldiers under his command and Fredericks had worked for Army human resources, according to court records. Investigators said Pelayo used this access to sign soldiers up for the transportation subsidy without their knowledge and then routed the payments to his business’ bank accounts, the AP reported.
The couple also purchased vans, SUVs and other vehicles in order to convince the MTBP that they were operating a legitimate business and transporting the riders that they claimed in their scheme.
“The couple spent a large portion of the millions of dollars in funds they received on real estate, personal vehicles, and other property,” the Justice Department said. “In total, Pelayo and Fredericks purchased 43 vehicles, 129 luxury purses and jewelry items, and 12 real properties in Bell County and Coryell County.”
The couple admitted in June 2021 to defrauding the Army in the multimillion-dollar scam. Pelayo and Fredericks agreed to forfeit proceeds from the scheme including a dozen real estate properties in Killeen, Harker Heights, Copperas Cove and Kempner, 43 automobiles, SUVs, ATVs and a trailer, more than 120 designer bags and wallets, and more than $600,000 in cash, federal authorities said.
